UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 
LIBRARY 

Gift  of 
Howard  Surr 


^ 


THE 


LAW  OF  INSURANCE, 


AS   APPLIED    TO 


FIRE,  LIFE,  ACCIDENT,  GUARANTEE, 


AND 


OTHER  NON-MARITIME   RISKS. 


BY 

JOHN   WILDER   MAY. 

"1 


BOSTON: 

LITTLE,   BROWN,   AND    COMPANY. 

1873. 


T 


Entered  according  to  Act  of  Congress,  in  the  year  1873,  by 

JOHN  WILDER  MAT, 

In  the  office  of  the  Librarian  of  Congress,  at  Washington. 


cambbidge: 

press  of  john  wilson  and  son. 


.^ 


PREFACE. 


An  effort  has  been  made  in  the  following  pages  to 
give,  within  the  limits  of  an  ordinary  volume,  such  a 
statement  of  the  law  of  Insurance  as  applicable  to 
non-maritime  subject-matters,  as  will  meet  the  require- 
ments of  those  engaged  in  the  various  branches  of  the 
business,  the  student,  and  the  practising  lawyer.  To 
extract  from  the  wealth  of  material  furnished  by  the 
reports  so  much  as  seems  to  be  essential  to  a  correct 
understanding  of  the  results  arrived  at ;  to  set  it  out 
with  the  requisite  fulness  and  precision ;  and  to  fuse  the 
whole  into  a  form  having  method,  unity,  and  complete- 
ness, —  has  been  found  to  be  a  work  of  much  greater 
difficulty  than  was  foreseen.  Nevertheless,  by  a  studied 
brevity  in  the  statement  of  the  earlier  questions  which 
may  now  be  regarded  as  settled,  room  has  been  found 
to  present,  with  considerable  fulness,  the  discussions  to 
be  found  in  the  reports  upon  many  of  the  more  recent 
questions  which  may  be  regarded  as  still  undergoing  the 
process  of  elaboration ;  such,  for  example,  as  the  lia- 
bility for  loss  by  explosion,  how  far  suicide  is  a  defence, 
and  the  import  of  the  phrase,  "  travelling  by  public 
conveyance."    Such  a  work,  however,  can  never  be  truly 


IV  PREFACE, 

said  to  be  finished.  That  it  has  been  successfully  be- 
gun, is  more  than  the  author  will  venture  to  affirm. 
Still,  he  believes  that  the  profession  will  here  find  results 
which,  however  imperfect,  they  will  welcome  as  a  fore- 
taste of  something  better,  bearing,  he  trusts,  such  evi- 
dence of  an  earnest  purpose  to  subserve  their  interests 
as  they  have  a  right  to  expect  from 

THE   AUTHOR. 

Boston,  December,  1873. 


CONTENTS. 


Page 
Table  of  Cases ix 


CHAPTER  I. 
Of  the  Nature  of  the  Contract 1 

CHAPTER  n. 
Of  the  Form  of  the  Contract  and  the  Parties  thereto  ....       13 

CHAPTER  in. 
Of  the  Consummation  of  the  Contract 41 

CHAPTER  IV. 

Of  the  Subject-matter  of  the  Contract ;  and  herein  of  Insurable 
Interest 72 

CHAPTER  Y. 
Of  Insurance  Agents,  their  Powers  and  Duties 119 

CHAPTER  VI. 
Of  Warranties 160 

CHAPTER  VII. 
Of  Representation 190 

CHAPTER  VIII. 
Of  Concealment 210 


VI  CONTENTS. 

CHAPTER  rX. 
Of  Special  Provisions  of  the  Contract.     Alteration      ....     230 

CHAPTER  X. 
Of  Special  Provisions  of  the  Contract  {continued).     Alienation     289 

CHAPTER  XI. 

Of  Special  Provisions  of  the  Contract  (continued).  Title.  Own- 
ership.   Interest.    Incumbrance 307 

CHAPTER  XII. 

Of  Special  Provisions  of  the  Contract  {continued).  Health. 
Habits.     Occupation 321 

CHAPTER  XIU. 
Of  Special  Provisions  of  the  Contract  {continued).    Suicide .     .     342 

CHAPTER  XIV. 

Of  Special  Provisions  of  the  Conti*act  {continued).  Death  by 
Violence,  Hands  of  Justice,  in  Military  Service.  Restrictions 
on  Residence  and  Travel 386 

CHAPTER  XV. 

Of  Special  Provisions  of  the  Contract  {continued).  The  Pre- 
mium and  its  Payment 406 

.    CHAPTER  XVI. 

Of  Special  Provisions  of  the  Contract  {continued).  Other  Insur- 
ance       437 

CHAPTER  XVII. 
Of  the  Assignment  of  the  Policy 456 

CHAPTER  XVIH. 
Of  the  Risk,  its  Duration  and  Extent 484 

CHAPTER  XIX. 
Of  the  Loss  and  its  Adjustment,  and  to  whom  Payable      .     .     .     523 


CONTENTS.  Vll 

CHAPTER  XX. 

Of  Notice,  Preliminary  Proof,  Particular  Account,  and  Payment 
of  the  Loss 564 

CHAPTER  XXI. 

Of  Limitation  of  Suit  as  to  Time  and  Place.     Arbitration     .     .     583 

CHAPTER  XXn. 
Of  "Waiver  and  Estoppel 605 

CHAPTER  XXni. 
Of  Accident  Insurance 628 

CHAPTER  XXIV. 
Of  Guarantee  and  other  Kindred  Insurances 675 

CHAPTER  XXV. 
Of  Mutual  Insurance 684 

CHAPTER  XXVI. 
Of  Remedies,  Evidence,  Pleading,  Bankruptcy 709 


Appendix 733 

Index 757 


TABLE    OF    CASES. 


Abbott  V.  Hampden  Mut.  F.  Ins. 

Co.  81,  289,  297 

V.  Howard  191,  225 

V.  Shawmut  Mut.  F.  Ins. 

Co.  149,  217,  312 

Acie  V.  Fernie  138 

Adams  v.  Lindsell  44,  50 

V.  Otterbach  720 

V.   Rockingham    Mut.    F. 

Ins.  Co.  290 

Addison  v.  Ken.   and  Louisville 

Ins.  Co.  80,  318 

Adm'rs  of  Stone  v.  U.  S.  Casualty 

Co.  163, 667 

./Etna  Ins.  Co.  v.  Harvey  718 

V.  Jackson  80, 183,  292, 

522 

V.  Maguire  622 

V.  Miers  86,  570 

V.  Taylor  457 

V.  Tyler    289,  438,  560, 

571,  573,  577 

.^tna  Live  Stock  and  F.  Ins.  Co. 

V.  Olmstead  607 

Alchorne  v.  Saville  25 

Aldridge  v.  Great  W.  R.  R.  Co.      557 
Alexander's  Cotton  34 

Allegre  i^.  Maryland  Ins.  Co.  574 

Allen   V.   Charlestown  Mut.  Ins. 

Co.  286,  310,  313 

V.  Franklin  F.  Ins.  Co.  81 

V.  Hudson  River  Mut.  Ins. 

Co.  319 

V.  Massasoit  Ins.  Co.  235 

V.  Mut.  F.  Ins.  Co.         234,  313 
V.  Vt.  Mut.  F.  Ins.  Co.         620, 
689 
V.  Winne  704 

Alliance  Mar.  Ins.  Co.  v.  Lou.  Ins. 

Co.  561 

Alliance  Mut.  Ins.  Co.  v.  Swift        69, 

691 
Alsop  V.  Cora.  Ins.  Co.  27,  31 

Alston  V.  Mechanics'  Ins.  Co.  202 

Althorp  V.  Wolf  558 


Page 
American  Horse  Ins.  Co.  v.  Pat- 
terson 42,  484,  485,  683 
American  Ins.  Co.  v.  Schmidt         699 
American  L.  and  H.  Ins.  Co.  v. 

Robertshaw  104 

Ames  V.  N.  Y.  Union  Ins.  Co.  132, 143, 
145,  451,  590 
Amesbury  v.  Bowditch  Mut.  Ins. 

Co.  584 

Amicable  Ins.  Co.  v.  BoUand  382,  386 
Amory  v.  Oilman-  74 

Anderson  v.  Edie  103 

V.  Fitzgerald     161,  177,  194, 
335 
Andree  v.  Fletcher  9,  711 

Andrewes  v.  Ellison  25 

Andrews  v.  Union  I\Iut.  Ins.  Co.  493 
Angelrodt  v.  Delaware  Ins.  Co.  538 
Anthony  v.  Slaid  549,  551 

Appleby  v.  Fireman's  Fund  Ins. 

Co.  245 

AppletoH  Mut.  Ins.  Co.  v.  Jesser  687 
Arago  V.  Currel  396 

Armstrong  v.  Toler  267 

V.  Turquand  435,  620 

Ashland  Mut.  F.  Ins.  Co.  v.  Hous- 

inger  528 

Ashley  v.  Ashley  483 

Associated  Firemen's  Ins.  Co.  v. 

Assum  301 

Atkins  V.  Sleeper  484,  486 

Atlantic  Ins.  Co.  v.  Fitzpatrick        699 

V.  Goodall       69,  439, 

484,  689 

V.  "Wright  131 

Atlantic  Mar.  and  F.  Ins.  Co.  v. 

Sanders  706 

Atwood  V.  Union  Mut.  Ins.  Co.  528 
Audubon  v.  Excelsior  Ins.  Co.  21 

Augusta  Mut.  Ins.  Co.  v.  French     704 
Aurora  F.  Ins   Co.  v.  Eddy     131,  209, 
265,  279,  492,  503,  607 
Austin  V.  Drewe  487,  493,  501 

Aveson  v.  Lord  Ivinnaird  226,  227,  228 
Ayers  v.  Home  Ins.  Co.  130,  298 

Ayres  i-.  Hartford  Ins.  Co.       147,  157, 
298,  299,  527,  619 


TABLE   OF   CASES. 


B. 


Babcock  r.  Montgomery  County 

Mut.  Ins.  Co.  189,  492 

BaJgt-r  I.'.  The  American  Popular 

L.  liis.  Co.  6«,  433 

Bagg  V.  Jerome  267 

Bagster  v.  Earl  of  Portsmouth  351,  302 

Baily  v.  Hope  Ins.  Co.  572 

Baker  v.  ("otter  126 

V.  Union  L.  Ins.  Co.     407,  432, 

722 

V.  Young  476 

Baldwin  v.  N.  Y.  L.  Ins.  Co.  399 

Baltimore  ¥.  Ins.  Co.  v.  Lovey  12 

V.  McGowan 

200,  306 

Bangs  V.  Baily  705 

V.  Duckinfield  699 

V.  Gray  699 

V.  jMcIntosh  705 

I'.  Sk'dmore  691 

Bank  of  Columbia  v.  Patterson         15 

Baptist    Society    v.   Hillsborough 

iMut.  F.  Ins.  Co.  451 

Barber  v.  Morris  113 

Barclay  v.  Cousins  79,  81 

Barnes  v.  Union  Mut.  F.  Ins.  Co.   301,. 

305,  450,  546 

Barrett  v.  Jermy  259 

V.  Union  Mut.  F.  Ins.  Co.    66, 

149,  54.5,  710 

Bartholomew   v.   Merchants'  Ins. 

Co.  140 

Bartlett  v.  Union  Mut.  F.  Ins.  Co. 

183,  593,  618 
Barton  v.  Home  Ins.  Co.  489 

Basset  v.  Buxton  348 

Bates  V.  Com.,  &c.,  Ins.  Co.  297 

Battaile  v.  jNIerchants'  Ins.  Co.         569 
Battles  V.  York  County  Mut.  Ins. 

Co.  316 

Baxendale  v.  Harvey        234,  254,  280 
Baxter  v.   Chelsea  Mut.  F.  Ins. 

Co.  152,  618 

V.  Massasoit  Ins.  Co.  21 

Baylies  v.  Payson  712 

Bay   State   Mut.  F.   Ins.   Co.   v. 

Sawyer  706 

Beach  v.  Bowery  Ins.  Co.  546 

Beal  V.  Park  Ins.  Co.         132,  145,  147 
Beals  V.  Home  Ins.  Co.  525,  534 

Bean  v.  Barney  &  Scott  311 

V.  Stupart  162 

Beatty  v.  Lycoming  County  Mut. 

Ins.  Co.  622 

Bebee  i-.   Hartford   Mut.  F.  Ins. 

Co.  142,  146,  218,  219 

Bell  i;.  Gilson  33 

V.  Shilley  686 

V.  Yates  686 

Belleville  Mut.  Ins.  Co.  v.   Van 

Winkle  65,  136,  152 


Benedict  v.  Ocean  Ins.  Co.  257,  451 
Benham  v.  United  Guaranty  and 

L.  Ins.  Co.  202,  677 

Benjamin  v.  Saratoga  County  Mut. 

Ins.  Co.  449,  560 

Bennett  v.  Union  Mut.  F.  Ins.  Co.  149 
Bentley  v.  Columbian  Ins.  Co.  125, 139 
Bergson  v.  Builders'  Ins.  Co.  722 

Berkshire  Mut.  L.  Ins.  Co.  v.  Stur- 

gis  717 

Bermon  v.  Woodbridge  711 

Bersche  v.  Globe  Mut.  Ins.  Co.        618 
Bevin  v.  Conn.  Mut.  L.  Ins.  Co.  7, 105, 
403,  405,  435,  612 
Biburt  V.  Whitman  690 

Bidwell    V.    St.    Louis    Floating 

Dock  Ins.  Co.  59,  467 

Bigler  v.  N.  Y.  Central  Mut.  Ins. 

Co.  439,  444,  521 

Bilbrough  v.  Mut.  Ins.  Co.      202,  270, 

571 
Billings  V.  Tolland  County  Mut. 

Ins.  Co.  201,  260 

Bindskopf  Bros.  &  Co.  t'.  Lyman     312 

Birdseye  v.  City  F.  Ins.  Co.  460 

Birmingham  v.  Empire  Ins.  Co.       312 

Bize  V.  Fletcher  163 

Black  V.  Columbian  Ins.  Co.  620 

V.  Winnesheik  Ins.  Co.  690 

Blackett  v.  Royal  Ex.  Ins.  Co.         184 

Blake  v.  Crowninshield  485 

V.  Exchange  Mut.  Ins.  Co.  151, 

174,  451,  520,  530,  574,  612 

Blakeley  v.  Phoenix  Ins.  Co.    568,  569 

Blanchard  v.  Atlantic  Mut.  F.  Ins. 

Co.  546 

Blood  V.  Howard  Ins.  Co.        171,  178, 
201,  208 
Boardman  v.   Maverick  Mut.  F. 

Ins.  Co.  202 

V.  N.  H.  Mut.  F.  Ins. 

Co.  172,  202,  269,  280 

Boatwright  v.  JEtna  Ins.  Co.   233,  235 

Bodine  v.  Exchange  F.  Ins.  Co.      136, 

159,  400,  413,  433 

Bodle  et  al.  v.  Chenango  Mut.  Ins. 

Co.  .       303,  306,  546,  572 

Boehen  v.  Williamsburg  Ins.  Co.    145, 

156,  434 

Boehm  v.  Combe  31 

Am.  Ins.  Co.      148,  202,  217, 

229 

Bogle  V.  N.  C.   Mut.  Ins.  Co.     153, 

674 
Borden  v.  Hingham  Mut.  F.  Ins. 

Co.  7,  27,  528 

Borradaile  v.  Hunter        162,  346,  349, 
351,  361,  362,  368,  375,  386 
Boston  and  Salem  Ice  Co.  v.  Royal 

Ins.  Co.  291,  292,  526 

Bou.ssmaker,  Et  parte  33 

Boutou  V.  Am.  Mut.  L.  Ins.  Co.     136, 

433 


TABLE   OF   CASES. 


XI 


Bowditch  Mut.  F.  Ins.  Co.  v.  Win- 
slow  229,  314,  707 
Bowman  v.  Pacific  Ins.  Co.      234,  263 
V.  U.    S.   Casualty  Ins. 

Co.  159 

Boyd  V.  Talbot  410 

Boynton  v.  Clinton  and  Essex  Mut. 

Ins.  Co.  301,  688 

Boynton  et  al.  v.  Middlesex  Mut. 

L.  Ins.  Co.  592 

Bradford  v.  Greenwich  Ins.  Co.       501 
Bradley  v.  Mut.  Ben.  L.  Ins.  Co.    394, 

396 
Brady  v.  North  Western  Ins.  Co.   200, 
492,  535 
Bragdon   v.   Appleton   Mut.   Ins. 

Co.  64,  433 

Bragg  V.  N.  E.  Mut.  F.  Ins.  Co.      297, 

300,  301 

Brandon  v.  Curling  32,  39 

Brannin  v.  Mercer  County  Mut. 

Ins.  Co.  706 

Braunstein  v.  Ace.  Death  Ins.  Co.  570. 

595 
Brealy  v.  Collins  323 

Breasted   v.   Farmers'   Loan   and 

Trust  Co.        343,  362,  370,  381,  401 
Brewer  v.  Chelsea  Mut.  F.  Ins. 

Co.  127,  152 

Brewster  v.  Kitchin  422 

Briclita  v.  N.  Y.  Lafayette  Ins. 

Co.  468,  526 

Brinley  v.  Nat.  Ins.  Co.     524,  528,  532 
British  American  Ins.  Co.  v.  Jo- 
seph 498 
British  Equitable  Ins.  Co.  v.  Great 

Western  Ins.  Co.  200,  715 

British  Ins.  Co.  v.  Magee  110 

Brockelbank  v.  Sugrue  129,  141 

Brooklyn  v.  Brooklyn  F.  Ins.  Co.      19 
Brough  V.  Whitmore  23 

Brown  v.  Cattaraugus  County  Mut. 

F.  Ins.  Co.  451 

V.  Commonwealth  Ins.  Co.    317 
V.  Gore  District  Mut.  Ins. 

Co.  312 

V.  Hartford  Ins.  Co.      461,  584 
V.  King's  County  Mut.  Ins. 

Co.  488 

V.  People's  Mut.  Ins.  Co.     301, 

316 

V.  Quincy  Mut.  F.  Ins.  Co.     30 

V.  Kailwav  Passengers'  Ins. 

Co.    '  71,  159,  657 

V.  Roger  Williams  Ins.  Co.  461, 
467,  584 
V.  Royal  Ins.  Co.  535 

V.  Savage  481 

V.  Springfield  F.  and  Mar. 

Ins.  Co.  291 

V.  Williams  312 

Browning  i\  Morris  711 

Bruce  v.  Gardner  110,  547 


Bruce  et  ux.  v.  Savannah  Mut.  Ins. 

Co.  584 

Bryant  v.  Poughkeepsie  Mut.  Ins. 

Co.  258 

Buck  V.  Colbath  473 

Buckley  v.  Garrett  et  al.  305,  465,  612 
Buckman  v.  Metcalf  685 

Buffalo   Steam  Engine  Works  v. 

Sun  Mut.  Ins.  Co.  82,  304,  461 

Buflfe  V.  Turner  219 

Buffum  V.  Bowditch  Mut.  Ins.  Co.  66, 
310,  311,  414 
V.  Fayette  Mut.  F.  Ins.  Co.  66 
Bulkley  v.  The  Derby  Fishing  Co.  14 
Bumstead  v.  Dividend  Mut.  Ins. 

Co.  669,  579,  618 

Bunker  v.  Green  23 

Bunell  V.  Jeremy  235 

Burbank  v.  Rockingham  Mut.  F. 

Ins.  Co.  291,  447 

Burchell  v.  Marsh  594 

Burgess  v.  Alliance  Ins.  Co.  521,  531 
Burnett  v.  Eufala  Home  Ins.  Co.  304 
Burritt  v.  Saratoga  County  Mut. 

F.  Ins.  Co.  218,  285 

Burroughs  v.  State  Mut.  L.  Ins. 

Co.  477 

Burt  V.  People's  Mut.  Ins.  Co.  451 
Buttman  v.  Hobbs  721 

Byrne  v.  Rising  Sun  Ins.  Co.  618 


c. 


Calvert  r.  Hamilton  Mut.  Ins  Co.    200 

Campbell  v.  Adams  090 

V.  Mtna.  Ins.  Co.  439 

V.  Am.  Pop.  L.  Ins.  Co.  600, 

723 

V.  Charter  Oak  Fire  Ins. 

Co.  581 

V.  Hamilton  Mut.  Ins.  Co. 

300,  317 
V.  Intern.  L.  Ass.  Soc.  415 
V.  Leonard  312 

V.  Merchants'  and  Farm- 
ers' Mut.  F.  Ins.  Co. 

144,  14.5,  173 
V.   Monmouth   Mut.   F. 

Ins.  Co.  495 

V.  N.  E.  Mut.  L.  Ins.  Co.  160, 

163,  165,  171,  172,  190, 

193,  194,  196,  204,  216, 

326,  723 

Cannel  v.  Phoenix  Ins.  Co.  269 

Canterbury  v.  Attorney-General      556 

Carey  v.  Goldsmith      '  280 

Carpenter  v.  American  Ins.  Co.      123, 

453 
V.  Prov.  Wash.  Ins.  Co. 

6,  11,  73,  80,  309,  439, 

444,  449,  453,  459,  465, 

476,  526 


Xll 


TABLE   OF   CASES. 


Carpenter  r.  Spelling  23 

Carroll  v.  Boston  Mar.  Ins.  Co.         95 

V.  Charter  Oak  Ins.  Co.      126, 

166,  468,  612 

Carson  i'.  Marine  Ins.  Co.  27 

Carter  v.  Boehm  73,  217,  720 

V.  Humboldt  F.  Ins.  Co.        88, 

269,  468,  584 

Case  V.  Hartford  Ins.  Co.         488,  492 

easier  v.  Conn.  Mut.  L.  Ins.  Co.     404 

Cassacia  v.  Phoenix  Ins.  Co.  725 

CatUn  V.  Springfield  F.  Ins.  Co.      178, 

204,  268,  270,  493,  495,  569 

Catoir  v.  Am.  L.  Ins.  &  Trust  Co.  136 

Caton  r.  Am.  L.  Ins.  Co.  407 

Catron  v.  Tenn.  Ins.  Co.  309,  453 

Cazenove  v.  Brit.  Eq.  Ins.  Co.        224, 

225,  324,  339 

Central  E.  R.  Co.  v.  Kisch  430 

Chaffee    i'.    Cattaraugus    County 

Mut.  Ins.  Co.  194,  217,  285 

Chaniplin  v.  Travellers'  Pass.  Ins. 

Co.  674 

Chandler  v.  Worcester  Ins  Co.        496 
Chapin  v.  Fellowes  474,  477 

Chapman  v.  Atlantic  &  St.  Law- 
rence R.  R.  Co.  88 
V.  Pote                      543,  580 
Charleston  Ins.  and  Trust  Co.  v. 

Neve  462,  572 

Charter  Oak  L.  Ins.  Co.  v.  Brant    476 
Chase  v.  Hamilton  Mut.  Ins.  Co.      52, 
133,  139,  287,  313 
Chattock  V.  Shaw  325 

Chisholm  v.  Kat.  Cap.  Life  Ins. 

Co.  548 

Chowne  et  al  v.  Baylis  479 

Cincinnati    Mut.   H.   Ins.  Co.   v. 

Rosenthal  718 

Citizens'  Ins.  Co.  v.  Marsh       493,  496 
V.  McLauglilin      188, 
257 
Citizens'   Mut.   Ins.  Co.  v.   Sort- 
well  687 
City  F.  Ins.  Co.  v.  Corlies       262,  481, 

498 
City  F.  Ins.   Co.  of  Hartford  v. 

Mark  461 

City  of  Davenport  v.  Peoria  Mar. 

and  F.  Ins.  Co.  15,  484,  709 

City  of  Worcester  v.  Worcester 

Mut.  F.  Ins.  Co.  494 

Clapp  V.  Union  Mut.  L.  Ins.  Co.      313 

Clark  V.  Durand  475 

V.  Firemen's  Ins.  Co.        81,  519 

V.  Hamilton  Mut.  Ins.  Co.      219 

V.  Inhabitants  of  Blything     555 

V.  Manufacturing  Ins.  Co.     218, 

229,  711 

V.  Middleton  718 

V.  N.  E.  Mut.  Ins.  Co.    300,  303, 

439,  573 

V.  Ocean  Ins.  Co.  28 


Clark  V.  Union  Mut.  F.  Ins.  Co.  145,  288 
V.  Wilson  115 

Clary  v.  Prot.  Ins.  Co.  528 

Clay  V.  Harrison  80 

Clift  V.  Schwabe  350,  352,  361,  368, 
369,  376 
Clinton  v.  Hope  Ins.  Co.  87,  165,  544 
Cluflf  V.  Mut.  Ben.  L.  Ins.  Co.  391, 396 
CockereU  v.  Cincinnati  Mut.  Lis. 

Co.  13,  16,  92,  93 

Cohen  v.  N.  Y.  Mut.  L.  Ins.  Co.  37,  415 
Coles  V.  Bank  of  England  '    614 

V.  Iowa  State  Mut.  Ins.  Co.    687 
Collett  V.  Morrison  16,  429 

Collins  V.  Charlestown  IMut.  Ins. 

Co.  310 

V.  Ins.  Co.  of  Phila.  58 

Colt  V.  Commercial  Ins.  Co.  185 

Columbia  Lis.  Co.  v.  Cooper  83,  132, 

142,  145,  164,  217,  687 

Columbian  Ins.  Co.  v.  Lawrence      81, 

'       86,  204,  288,  309,  457,  493 

Columbus  Ins.  Co.  v.  Walsh     445,  717 

Com.  V.  Shoe  and  Leather  Dealers' 

F.  and  Mar.  Ins.  Co.  729 

Com.  Ins.  Co.  v.  Bergen  271 

V. Ives  133 

V.  McLoon  716 

V.  Robinson  502 

Combes'  Case  379 

Combs  V.  Hannibal  Savings  and 

Ins.  Co.  132,  450,  609 

Commercial  Mut.  Mar.  Ins.  Co.  v. 

Union  Mut.  Ins.  Co.  21 

Commonwealth  v.  Mech.  Mut.  F. 

Ins.  Co.  691 

V.  Mass.  Mut.  Ins. 

Co.  705 

V.  Ordway  392 

V.  Union  Mut.  Ins. 

Co.  688,  705 

V.  Wetherbee  2 

Commonwealth  Ins.  Co.  v.  Mon- 

ninger  164 

Commonwealth  Ins.   Co.  v.  Sen- 

nett  524,  531,  535,  569 

Concord  Mut.  F.Ins.  Co.  v.  Wood- 
bury 115,  547,  559 
Conn.    Mut.   L.   Ins.  Co.  v.  Bur- 
roughs 474 
Conn.  Mut.  L.  Ins.  Co.  v.  N.  Y.  & 

N.  H.  R.R.  Co.  549 

Conover  v.  The  Mut.  Ins.  Co.  of 

Albany  141,  294 

Constant  v.  The  Allegheny  Ins. 

Co.  15,  128 

Converse  v.  Citizens'  Mut.  Ins.  Co.  91 
Conway  Tool  Co.  v.  Hudson  R. 

Ins.  Co.  449 

Cook  V.  Black  479 

Cooke  V.  Oxley  44,  45 

Coolidge  V.  Gloucester  -Mut.  Ins. 

Co.  27 


TABLE   OP   CASES. 


XIU 


Cooper  V.  Farmers'  Mut.  F.  Ins. 
Co. 

V.  Mass.  Mut.  L.  Ins.  Co. 

V.  Pacific  Mut.  L.  Ins.  Co. 

V.  Shaver 
Copper  Miners  v.  Fox 
Cornell  v.  Hope  Ins.  Co. 

V.  Leroy 

V.  ililwaukie  Mut.  F.  Ins. 
Co. 

V.  Moulton 
Cornfoot  i-.  Fowke        3,  123,  181, 
Couch  V.  City  F.  Ins.  Co. 
Coursin  r.  Penn.  Ins.  Co.  84, 

Courtney  v.  N.  Y.  City  Ins.  Co. 
Cousins  V.  Nantes 
Coutourier  v.  Hastie 
Craig  V.  Dimmick 
Crawford  v.  Hunter 
Cray  v.  Hartford  Ins.  Co. 
Crisp  V.  Bunbury 
Crocker  v.  Peoples'  Mut.  Ins.  Co. 
272, 

V.  Western  Ins.  Co. 
Cromwell  v.  Brooklyn  F.  Ins.  Co. 

Cronine  v.  Ken.  and  Lou.  Mut. 

Ins.  Co. 
'Cropper  v.  "Western  Ins.  Co. 
Crosby  v.  Franklin  Ins.  Co. 
Cross  V.  Andrews  351, 

Cumberland    Valley    Mut.   Prot. 

Ins.  Co.  V.  Mitchell 
Cumberland    Valley    Mut.    Prot. 

Ins.  Co.  V.  ScheU  133,  142,  173, 
468,  529, 
Currie  v.  Mut.  Ins.  Co. 
Curry  v.  Com.  Ins.  Co 


81,  82, 
218.  237, 


710 
368 

61 
687 

15 
570 
566 

618 
485 
226 
626 

,573 
468 
110 
425 
23 
78 
584 
596 

189, 
273 
183 

460, 
548 

538 
183 
520 

362 

612 

454, 
611 
687 
194, 
310 
591 
559 

257 


Curtis  r.  Home  Ins.  Co. 

Cushing  V.  Thompson  6, 

Cushman  v.  Xorth  Western  Ins. 

Co.  27,  29,  30, 


D. 


Dadman    Manufacturing    Co.    v. 

Worcester  Mut.  F.  Ins.  Co.  290 

Dalby  v.  India  and  London  L.  Ins. 

Co.  6,  8,  110,  114,  116,  117 

Dana  v.  Munro  685 

Daniel  v.  Robinson  804 

Daniels  i'.  Hudson  R.  F.  Ins.  Co.      68, 

160,  168,  188,  190,  193,  493,  720 

Date  V.  Gore  District  Mut.  Ins.  Co.  244 

Davenport  v.  N.  E.  Mut.  Ins.  Co.     317 

V.  Peoria  Ins.  Co.  147 

David  V.  Hartford  F.  Ins.  Co.  314,  440 

Davis  V.  Davis  564 

V.  North  River  Ins.  Co.  153 

V.  Quincy  Mut.  F.  Ins.  Co.  291, 

310,  561 


Dawes  i".  North  River  Ins.  Co.        573 
Day  V.  Charter  Oak  F.  and  Mar. 

Ins.  Co.        75,  199,  301,  312 

r.  Conway  Ins.  Co.  287 

Dean  v.  Am.  L.  Ins.  Co.   353,  367,  369 

Deforest  v.  Fulton  F.  Ins.  Co.    80,  526 

De  Gogorza  v.  Knickerbocker  L. 

Ins.  Co.  381 

De  Hahn  v.  Hartley  717 

Delaware  Ins.  Co.  v.  Quaker  City 

Ins.  Co.  11 

Delonguemare  v.  Tradesman's  Ins. 

Co.  164,  168,  185,  257 

Dennison  v.  Thomaston  JIut.  Ins. 

Co.  213,  217,  221,  287 

Denny  v.  Conway  Stock  and  Mut. 

F.  Ins.  Co.  143,  164,  165,  174 

Desilver  v.  State  Mut.  Ins.  Co.       575, 

619 
Deusen  v.   Charter  Oak  F.   and 

Mar.  Ins.  Co.  297 

Devendorf  v.  Beardsley    133,  699,  725 
Dey  V.  Poughkeepsie   Mut.   Ins. 

Co.  290,  304,  468 

Dezell  V.  Odell  613 

Dickson  v.  Eq.  F.  Ins.  Co.  453 

Diehl  r.  Adams  County  Mut.  Ins. 

Co.  245,  268,  622,  687 

Dillard  v.  Manliattan  L.  Ins.  Co.      37, 

399 
Disbrow  v.  Jones  5 

Dix  V.  Mercantile  Ins.  Co.        301,  305 
Dobson  V.  Sotheby  259,  262,  288 

Doe  I'.  Knight  62 

Donaldson  v.  Manchester  Ins.  Co.  447 
Dormay  i-.  Borradaile  383 

Dougherty  v.  Neal  422 

Dow  V.  Hope  Ins.  Co.  182 

Drake  v.  RoUo  730 

Draper  v.  Charter  Oak  Ins.  Co.       128, 
151,  174,  194 
Dreher  v.  JEtna  Ins.  Co.  305 

Drinkwater  v.  London  Ins.  Co.        489 
Duckett  V.  Williams  325 

Dudley  v.  Wells  23 

Dufaur  v.  Professional  L.  Ins.  Co.  362, 
384,  480 
Duke  of  Hamilton's  Trustees  v. 

Flemming  548 

Duncan  v.  Sun  F.  Ins.  Co.  248 

V.  Topham  52,  53 

Dupin  V.  Mut.  Ins.' Co.  490 

Durar  i'.  Hudson  County  Mut.  Ins. 

Co.  466 

Dutton  V.  N.  E.  Mut.  F.  Ins.  Co.     294 

V.  Vt.  Mut.  Ins.  Co.  593 

Dwyer  i'.  Edie  103 


E. 


Eadie  v.  Slimmon  473,  481 

Eagle  Ins.  Co.  v.  Lafayette  Ins. 
Co.  10,  11,  584 


XIV 


TABLE   OP   CASES. 


Eastabrook  i'.  Union  Mut.  L.  Ins. 

Co.  363,  370 

Eastern  R.  R.  Co.  v.  Relief  F.  Ins. 

Co.  81,  88,  91,  156 

Eastman  i-.  Carrol  County  Mut.  F. 

Ins.  Co.  467 

Eclipse  Ins.  Co.  v.  Schocmer  626 

Edeck  V.  Kanuer  23 

Edes  V.  Hamilton  Mut.  Ins.  Co.       461 
Edge  V.  Duke  435 

Edmonds  v.  Mut.  Safety  F.  Ins. 

Co.  297 

Edwards  v.  Baltimore  Ins.  Co.  565,  566 

V.  Barrow  229 

V.  Martin  481 

V.  Scott  481 

Egan  V.  Mut.  Ins.  Co.  528 

Eliason  v.  Hensliaw  50,  52 

Ellicott  i".  U.  S.  Ins.  Co.      73,  90,  681 

Elliott  V.  Hamilton  Mut.  Ins.  Co.    166, 

203,  252,  258 

V.  Royal  Exchange  Ins.  Co.  596 

Ellis  V.  Kreutginger  460 

Ellmaker  r.  Franklin  F.  Ins.  Co.     520 

Ellwell  V.  Crocker  686 

Emery  v.  Piscataqua  F.  and  Mar. 

Ins.  Co.  130 

Eminence  Mut.  Ins.  Co.  v.  Jesse    312, 

315 

Emmott  >:.  Slater  Mut.  F.  Ins.  Co.    70 

England  i\  Tredegar  544 

Ennis  v.  Harmony  F.  Ins.  Co.  545,  547 

Ensworth  v.  N.  Y.  L.  Ins.  Co.  721 

Equitable  L.  Ass.  Soc.  v.  Patterson  103, 

195,  380 

Evans  v.  Columbian  Ins.  Co.  518 

V.  Trimountain  Mut.  F.  Ins. 

Co.  1.52,  729 

Evans,  Administrator  v.  Bignold     109- 

Everett  v.  Desborough      123,  226,  335 

V.  London  Ins.  Co.  501 


F. 


Fabyan  v.  Union  Mut.  F.  Ins.  Co.      69 
Fairchild  v.  Liv.  and  London  F. 

and  L.  Ins.  Co.  539 

Falls  V.  Conway  Mut.  Ins.  Co.         312 
Farmers'  and  Mechanics'  Ins.  Co. 

V.  Simmons  260 

Farmers'  Insurance  and  Loan  Co. 

V.  Snyder  193 

Farmers'  Mut.  F.  Ins.  Co.  v.  Mar- 
shall ^  134 
Faunce  v.  State  Mut.  L.  Ins.' Co.  57,  58 
Fayette  Mut.  F.  Ins.  Co.  v.  Fuller  701 
Feise  v.  Aquilar  27,  28 
Fell  V.  McHenry  687 
Fernandez  v.  Merchants'  Mut.  Ins. 

Co.  492 

Ferree  v.  Oxford  F.  Ins.  Co.  463 

Ferris  v.  N.  A.  F.  Ins.  Co.  726 


Fessenden  ".  Great  Western  Ins. 

Co. 
Field  V.  N.  Y.  Cent.  R.  R.  Co. 
Finley  v.  Lycoming  County  Mut. 

Ins.  Co.  305,  G20, 

Fire  Ass.  of  Pliila.  v.  Williamson 

Fire  and  Mar.  Ins.  Co.  v.  Chesnut 
Firemen's  Ins.  Co.  v.  Powell 
First  Nat.  Bank  of  Ballston  v.  Ins. 

Co.  of  N.  A. 
Fitchburg  R.  R.  Co.  v.  Ch.  Mut. 

Ins.  Co. 
Fitton  V.  Accidental  Death   Ins. 

Co. 
Fitzherbert  v.  Mather  123, 

Fitzsimmons  v.  City  F.  Ins.  Co. 

Flanagan  v.  Camden  Mut.  Ins.  Co. 
Fletcher    v.  Commonwealth   Ins. 
Co.  81,  90,  194, 

Flindt  V.  Waters 

Flint  V.  Ohio  Ins.  Co.  42,  66, 

Foley  V.  Tabor 
Folger  V.  Columbian  Ins.  Co. 
Folsom  V.  Belknap  County  Mut. 
F.  Ins.  Co.  294, 

Fogg  et  al.  V.  Griffin  et  al. 
Fogg  et  als.  v.  Middlesex  Mut.  F. 
Ins.  Co.  150,301,460, 

Forbes  v.  Agawam  Mut.  Ins.  Co. 
157,  449, 
V.  American  Mut.  L.  Ins. 
Co.  102, 109, 

V.  Aspinall 

V.  Ed.  L.  Ins.  Co.        124, 
325, 
Forbush  v.  West  Mass.  Ins.  Co. 
Foster  v.  Mentor  L.  Ass.  Co. 

V.  U.  S.  Ins.  Co. 

Foster  et  al.  v.  Equitable  Mut.  F. 

Ins.  Co.  115,  301,  306,  459, 

Fowkes  V.  Manchester  and  Lon.  L. 

and  Loan  Co.    174, 184, 191,  325, 

Fowler  v.  Mtna.  F.  Ins.  Co.      188, 

V.  Mut.  L.  Ins.  Co.        370, 

V.  N.   Y.   Indemnity   Ins. 

Co.  74,  92, 

V.  Scottish  Eq.  L.  Ins.  Co. 

Fox  V.  Pha?nix  F.  Ins.  Co.  82,  284, 

France  v.  iEtna  L.  Ins.  Co. 

Francis  v.  Ocean  Ins.  Co. 

V.  Somerville     Mut.    Ins. 

Co.  235, 

Franklin  v.  Atlantic  Ins.  Co.    145, 

V.  Nat.  Ins.  Co. 

Franklin  F.   Ins.  Co.  v.  Chicago 

Ice  Co.  259, 

Franklin  F.  Ins.  Co.  v.  Coates  88, 

307,  309, 

V.  Hamil   2, 

V.  Hewell 


464 
563 

689 
245, 
302 
132 
89 

275 

520 

634 

,226 

536, 

725 

546 

310 

418 
406 

217 
727 

545 
133 

468 

620 

403 
27 
225, 
328 
438 
722 
711 

526 

716 
281, 
288 
380 

724 
711 
541 
581 
421 

618 
450 

467 

626 
193, 
574 
529 
709 


TABLE   OP   CASES. 


XV 


Franklin  F.  Ins.  Co.  v.  UpdegraflF  251, 

519,  580 

Franklin  Ins.  Co.  v.  Culver  580 

V.  Drake       81,  438, 

447 

V.  Findlay       81,  89, 

300 

V.  Massy        71,  156 

Franklin  L.  Ins.  Co.  v.  Hazzard       482 

Fraternal  Mut.  L.  Ins.  Co.  v.  Ap- 

plegate  228,  477 

Freeman  v.  Fulton  F.  Ins.  Co.    74,  729 

V.  People  379 

French  v.  Connelly  716 

V.  Hope  Ins.  Co.  80 

V.  Lafayette  Ins.  Co.  584 

Fried  i'.  Royal  Ins.  Co.        61,  327,  709 

Friedlander  v.  London  Ins.  Co.        281 

Friesmouth  v.  Agawam  Mut.  Ins. 

Co.  199,  301,  316,  711 

Frink  v.  Hampden  Ins.  Co.     460,  545, 

546 
Frisbie  v.  Fayette  Mut.  Ins.  Co.     166, 
201,  280 
Frost  V.  Saratoga  County  Mut. 

Ins.  Co.  285, 612,  691 

Fullam  V.  N.  Y.  Union  Ins.  Co.        584 
Fuller  V.  Boston  Mut.  F.  Ins.  Co.     14, 
28,  454,  455,  528,  611 
Fulton  V.  Lancaster  Ins.  Co.  711 

Furness  v.  Slierwood  729 

Furtado  v.  Rodgers  32,  35,  38,  39 


G. 

Galiagan  v.  Union  Mut.  Ins.  Co.      316 
Gale  V.  Belknap  County  Ins.  Co.    439, 

440 
V.  Lewis  132,  481 

Gales  V.  Hailman  556 

Gamba  v.  Le  Mesurier  32 

Gamble  v.  Aoc.  Ins.  Co.  568,  673 

Gamwell  v.  Merch.  and  Farmers' 

Mut.  F.  Ins.  Co.  268,  270 

Garcelon  v.  Hampden  F.  Ins.  Co.     32, 
190,  193 
Gardiner   v.  Piscataqua  Mut.   F. 

Ins.  Co.  235,  688 

Gates  V.  Madison  County  Mut.  Ins. 

Co.  194,  217,  218,  220,  243,  268, 

286,  493 

Gay  V.  Union  Mut.  L.  Ins.  Co.        372 

Gaylord  v.  Lamar  F.  Ins.  Co.  313 

Geach  v.  In  gall  327 

Gen.  Mut.  Ins.  Co.  v.  Phillips  718 

r.  Sherwood      518 

Gerhauser  v.  North  B.  and  M.  Ins. 

Co.  210, 454 

Germania  F.  Ins.  Co.  et  als.   r. 

Boykin  568 

Gibson  v.  Am.  Mut.  L.  Ins.  Co.       337, 

384,  672,  723 


Gilbert  v.  National  Ins.  Co.  724 

V.  N.  A.  F.  Ins.  Co.  291,  569, 
579 
GirardF.  and  Mar.  Ins.  Co.  v.  Ste- 
phenson 218,  229,  238,  246 
Girdleston  v.  N.  B.  Mar.  Ins.  Co.  405 
Givens,  Adm'r  v.  Rivers  103 
Gladstone  r.  King  123,  211 
Glen  V.  Lewis  238,  265 
Glendale  Mfg.  Co.   v.   Prot.  Ins. 

Co.  275 

Glens  Falls  Ins.  Co.  v.  Judge  of 

Jackson  Circuit  Court  719 

Gloucester  Mfg.   Co.    v.  Howard 

Ins.  Co.  62,  129,  1-30,  138,  179 

Godsall  V.  Baldero   8,  92,  110,  113,  114 
Goit  V.  Nat.  Protection  Ins.  Co.        69, 
136,  434,  468 
Goldstone  v.  Osborne  594 

Goodall  V.  New  England  F.  Ins. 

Co.  22,  43,  541,  546 

Gooden  v.  Amoskeag  F.  Ins.  Co.      588 
Goodfellow   V.  Times  and  Beacon 

Ins.  Co.  70 

Gordon  v.  Lon.  Ass.  Co.  12 

V.  Mass.  Ins.  Co.  293 

Goss  V.  Citizens'  Ins.  Co.  257 

Gotleib  I'.  Cranch  547 

Gould  V.  Emerson  477 

V.  York    County   Mut.  F. 

Ins.  Co.  199,  301,  310 

Goulstone  v.  Royal  Ins.  Co.         81,  87 
Govern  v.  Littlefield  23 

Granger  v.  Howard  Ins.  Co.  724 

Grant  v.  ^tna  Ins.  Co.  525 

V.  Howard  Ins.  Co.         243,  260 
V.  Lexington  F.  L.  and  Mar. 

Ins.  Co.  590 

V.  Parkinson  79,  80 

Graves  v.  "Wash.  Mar.  Ins.  Co.         573 
Great  Falls  Mut.  F.  Ins.   Co.   v. 

Harvey  687 

Great  Western  Ins.  Co.  v.  Staa- 

den  569 

Green  v.  Holway  23 

Gregg  V.  Wells  614 

Grevemeyer  v.  Southern  Mut.  Ins. 

Co.  88 

Griffin  v.  Rannay  23 

Griswold  v.  Waddington       32,  33,  417 
Grosvenor  v.   Atlantic  Mut.  Ins. 

Co.  245,  461 

Grove  V.  Bastard  712 

Guinane   v.   Hope    Mut.   L.   Ins. 

Co.  190 


H. 


Hackney    v.    Alleghany    County 

Mut.  Ins.  Co.  133,  136,  153,  687 

Haff  V.  Mar.  Ins.  Co.  579 

Haigh  V.  De  la  Cour  27 


XVI 


TABLE  OF  CASES. 


Ilale  r.  Mechanics'  Mut.  Ins.  Co.    152, 
449,  466,  625 
V.  Union  Milt.  L.  Ins.  Co.        612 
Haley  v.  Dorcliestcr  Mut.  Ins.  Co. 

217,  221,  538 

Halford  r.  Kynier  97,  98 

Hall  V.  Nasli.  and  Chat.  R.  R.  Co.   556 

V.  Peoples'  Mut.  F.  Ins.  Co.    202, 

210,  285,  286,  592 

Ilallock  V.  Com.  Ins.  Co.        42,  52,  56, 

61,  136,  433,  484,  709 

I'.  Jaudin  23 

Hamilton  v.  Lvcoming  Mut.  Ins. 

Co.  15,  17,  45,  55 

V.  Meudes  113 

V.  Mut.  L.  Ins.  Co.     35,  423 

Hamilton  Mut.  Ins.  Co.  v.  Hobart    687 

Hammond  v.   Am.  Mut.  L.  Ins. 

Co.  415 

Hanger  v.  Abbott  38,  417,  422 

Harding  v.  Carter  722 

V.  Townshend  557 

Hardy  v.  Un.  Mut.  F.  Ins.  Co.        217, 

285,  439 

Harman  v.  Kingston  418 

Harper  v.  Albany  Mut.  Ins.  Co.      257 

V.  City  Ins.  Co.      188,  257,  505 

V.  Clark  23 

V.  Pliamix  Lis.  Co.  387 

Harris  v.  Columbian  Mut.  Ins.  Co. 

259,  709 

V.  Eagle  Ins.  Co.  29 

V.  N.  Y.  Mut.  Ins.  Co.  181 

V.  Ohio  Ins.  Co.  438 

V.  Phoenix  Ins.  Co.  572 

V.  Prot.  Ins.  Co.  536,  579 

V.  Travellers'  Ins.  Co.  635 

V.  York  Mut.  Ins.  Co.  489 

Harrison  v.  City  F.  Ins.  Co.      140,  270 

V.  McCarkey  470 

Hart  V.  Achilles  685 

V.  Western  R.  R.  Co.         88,  554 

Hartford  F.  Ins.  Co.  v.  Ross  305 

Hartford  Live  Stock  Ins.  Co.  v. 

Matthews  581,  682,  717 

Hartford  Prot.  Ins.  Co.  v.  Harmer  95, 

575,  719 

Hartman  v.  Keystone  Ins.  Co.        204, 

225,  340,  720 

Haskins  v.  Hamilton  Mut.  Ins.  Co. 

532,  725 
Hastie  v.  De  Peyster  9,  10 

Hathaway    v.   Trenton    Mut.   L. 

Ins.  Co.  404 

Hathorne  v.  Germania  Ins.  Co.  717 
Haverhill  Ins.  Co.  t;.  Prescott  690,  718 
Hawes  v.  N.  E.  Ins.  Co.  720 

Hawkes   v.  Dodge   County  Mut. 

Ins.  Co.  272,  317 

Hay  ward  v.  Fulcher  727 

V.  Nat.  Ins.  Co.  450 

V.  N.  E.  Mut.  Ins.  Co.      317 

V.  N.  W.  Ins.  Co.  258 


Hazard  v.  Franklin  Mut.  F.  Ins. 

Co.  290,  690 

Head  v.  Prov.  Ins.  Co.  25 

Healy  v.  Imperial  F.  Ins.  Co.  129 

Heath  v.  Franklin  Lis.  Co.       569,  572 
Heaton  v.  Manhattan  F.  Ins.  Co.    300, 
434,611 
Hebdon  v.  West  106,  107,  542 

lieiman  v.  Pha;nix  Mut.  L.  Ins.  Co.    57 
Ilelme  v.  Phila.  L.  Ins.  Co.     413,  434, 

721 
Henderson  v.  Western  Mar.  and 

F.  Ins.  Co.  495,  531 

Hennessy,  Ex  parte  139 

Henniker  v.  Brit.  Am.  Ins.  Co.        244 
Henning  v.  U.  S.  Ins.  Co.  15,  21 

Henson  v.  Blackwell  113 

Herckenrath  v.  Am.  Mut.  Ins.  Co.     11 
Herkimer  v.  Rice  80 

Herkimer  County  Mut.  Ins.  Co.  v. 

Fuller  699 

Herrick  v.  Union  Mut.  F.  Ins.  Co. 

201,  270 
Herron  v.  Peoria  Mar.  and  F.  Ins. 

Co.  725 

Hersey  v.  Merrimack  County  Mut. 

Ins.  Co.  453 

Hibberd  v.  People  267 

Hibbert  v.  Pigon  161 

Hickey  v.  Anchor  Ins.  Co.  584 

Hicks  V.  Newport  R.  R.  Co.  558 

Hide  V.  Bruce  187 

Hill  V.  Cumberland  Valley  Mut. 

Prot.  Ins.  Co.  291 

V.  Lafayette  Ins.  Co.  217 

Hillier  v.  Alleghany  Ins.  Co.    492,  731 
Hillyard  v.  Mut.  Ben.  L.  Ins.  Co. 

545,  588 

Hinken  v.  Mut.  Ben.  L.  Ins.  Co.      575 

Hitchcock  V.  N.  W.  Ins.  Co.     291,  464 

V.  Rollo  7,  30 

V.  Sawyer  28 

Hobbs  et  al.  v.  Memphis  Ins.  Co.  303, 

304,  305 

Hobby  V.  Dana  232 

Hobson  V.  Wellington  Dist.   Ins. 

Co.  268,  298 

Hodges  V.  Tenn.  Mar.  and  F.  Ins. 

Co.  298 

Hodgkins  v.  Montgomery  County 

Mut.  Ins.  Co.  145,  580 

Hodsdon  v.  Guardian  L.  Ins.  Co.    138, 

418,  434,  612 

Hoffman  v.  iEtna  F.  Ins.  Co.  182,  304, 

494,  531,  579 

V.  Banks  718 

V.  Travellers'  Ins.  Co.      667 

V.  Western  F.  and  Mar. 

Ins.  Co.       531,  580,  721 

Hogle  V.  Guardian  L.  Ins.  Co.        109, 

215,  221,  229,  323 

Holbrook  v.  Am.  Ins.  Co.        297,  298, 

447,  729 


TABLE  OF  CASES. 


XVll 


Holmes  v.  Boughton  39G 

V.  Cliarlestown    Mut.    F. 

Ins.  Co.    27, 140,  218, 520, 

528,  710 

Home  Ins.  Co.  v.  Heck  717 

V.  Stanchfield  716 

V.  Thompson  535 

Home  Mut.  F.  Ins.  Co.  v.  Hausleiu  289, 

461 
Hone  V.  Mut.  Saf.  Ins.  Co.  10,  189 

Hood  V.  Manliattan  F.  Ins.  Co.        520 
Hookset  I'.  Concord  R.  11.  Co.  88 

Hooper  v.  Ace.  Death  Ins.  Co.        644 
V.  Hudson  R.  Ins.  Co.  95, 

291,  464,  469 
Hope  Ins.  Co.  v.  Brolasky  315 

V.  Weed  686 

Hope  Mut.  L.  Ins.  Co.  v.  Perkins     687 
Horn  V.  Amicable  Mut.  L.  Ins.  Co.  215 
V.  Anglo-Australian  and  Uni- 
versal L.  Ins.  Co.  381 
Horton  v.  Equitable  L.  Ins.  Co.      202, 
329,  332 
V.  Sayer  599 
Horwitz  V.  Eq.  Mut.  Ins.  Co.     147,  450 
House  of  Lords  Cases                        425 
Hough  V.  City  F.  Ins.  Co.       132,  270, 

314 

V.  Beople's  Ins.  Co.      446,  447, 

521,  527,  530,  536,  540,  558 

Houghton  V.  Manufrs.  Mut.  F.  Ins. 

Co.  163,  164,  171,  208,  209,  213, 

232,  276 

Hovey  v.  Am.  Mut.  Ins.  Co.  272 

Howard  v.  Albany  Ins.  Co.         92,  95, 

305 
V.  Kentucky  and   Louis- 
ville Mut.  Ins.  Co.  243, 592 
Howard  F.  and  Mar.  Ins.  Co.  v. 

Corniick  162,  186,  246,  263,  724 

Howard  F.  Ins.  Co.  v.  Norwich        515 

Howard  Ins.  Co.  v.  Bruner      144,  145, 

147,  154,  294,  319 

V.  Scribner  536 

Howell  V.  Bait.  Eq.  Soc.  245 

V.  Gordon  37 

V.  Knickerbocker  L.  Ins. 

Co.  402,  413,  424 

Howland  v.  Cuykendell  686 

V.  Edmunds  686 

Howson  V.  Hancock  711 

Hoxsie  V.  Prov.  Mut.  F.  Ins.  Co.    454, 

461,  611 

Hoyt  V.  Mut.  Benefit  L.  Ins.  Co.  57, 67 

V.  X.  Y.  L.  Ins.  Co.         101,  105 

Hubbard   et  al.  v.  Hartford   Ins. 

Co.  311,  440 

Huckins  v.  People's  Mut.  Ins.  Co. 

495,  528 

Huckman  v.  Fernie     123,  225,  226,  335 

Hughes  V.  City  F.  Ins.  Co.  201 

V.  Mut.   F.    Ins.    Co.    of 

Newcastle  468, 594 


Huguenin  v.  Bailey  204,  228, 

Ilugus  V.  Strickler 

Humphrey  v.  Arabin  113, 

Hunell  V.  BuUard 

Hunt  V.  Hudson  R.  F.  Ins.  Co. 

Hunter  v.  Cobb 

Huntley  v.  Merrill 

V.  Perry 
Hurlburt  v.  Carter  700, 

Hutchins  v.  Cleveland  Mut.  Ins. 
Co. 
V.  Western  Ins.  Co. 
Hutchinson  v.  Nat.  Loan  Ins.  Co. 
322, 
V.  Western  Ins.  Co. 
Hutton  V.  Beacon  Ins.  Co. 

V.  Waterloo  L.  Ins.  Co. 


Hyatt  V.  Wait 
Hyde  v.  Goodenow 

V.  Lynde 
Hygum  V.  TEtna  Ins.  Co. 
Hynds    v.    Schenectady 
Mut.  Ins.  Co. 


328, 


County 
261, 


341 

23 

559 

124 

725 

23 

68 

691 

729 

317 
450 
212, 
324 
437 
450 
225, 
336 
689 
68 
690 
542 

262 


Illinois  Mut.  F.  Ins.  Co.  v.  Stanton  146, 
306,  467,  469,  686 
Illinois  Mut.  Ins.  Co.  v.  Marseilles 

Mfg.  Co.  724 

Illinois  Mut.  Ins.  Co.  v.  O'Neil        448 
Independent    Mut.    Ins.    Co.    v. 

Agnew  491 

Indiana  Mut.  F.  Ins.  Co.  v.  Coquel- 

lard  294,  690 

Indiana  Mut.  F.  Ins.  Co.  v.  Rout- 
ledge  593 
Indiana    Mut.    Ins.   Co.    v.    Con- 
nor 690 
Inland  Ins.    Co.   v.   Stauffer          449, 

566 

Inman  v.  Western  F.  Ins.  Co.  565 

Lisurance  Co.  v.  Connor  572,  687 

V.  Chase  80,  193 

V.  Johnson     52,  60,  127 

V.  Seitz  724 

V.  Stockbower  612,  689 

V.  Tweed  502 

V.  UpdegrafE  526 

V.  Webster  59 

Insurance  Co.  of  North  America 

V.  McDowell  492 

Insurance  Co.  of  Pennsylvania  v. 

Smith  722 

Iowa  State  Mut.  Ins.  Co.  v.  Pros- 

ser  688 

Irving  V.  Excelsior  F.  Ins.  Co.        310, 

314,  581 

Isaacs  V.  Royal  Ins.  Co.  484 

Isett  V.  American  L.  Ins.  Co.  371 


xriii 


TABLE   OP   CASES. 


Jackson  v.  Farmers'  Mut.  F.  Ins. 

Co.  317,  318,  439,  546 

V.  Foster  383 

V.  Mass.  Mut.  F.  Ins.  Co.  294, 

439,  691 

V.  Van  Slyke  703 

Jacobs  V.  Eagle  ^lut.  F.  Ins.  Co.     317 

V.  Equitable  Ins.  Co.     439,  448 

Jecker  v.  Montgomery  ■  417 

Jefferson  Ins.  Co.  v.  Cotheal   164,  171, 

257,  719 

Jenkins  v.  Quincy  Mut.  F.  Ins. 

Co.  149,  312 

Jennings    v.    Chenango    County 

Mut.  Ins.  Co.  145,  162,  232,  285 

Jessel  V.  Williamsburg  Ins.  Co.       544 
Johnson  v.  Berkshire  Mut.  F.  Ins. 

Co.  498 

Johnston  v.  West  of  Scotland  Ins. 

Co.  497 

Jolly's  Administrator  v.  Bait.  Eq. 

Soc.  218,  237,  239,  495 

Jones  V.  Consolidated  Investment 

and  Ins.  Co.  384,  480 

V.  Dana  133 

V.  Me.  Mut.  Ins.  Co.  448 

V.  Provincial  Ins.  Co.    212,  824, 

716 

V.  Sisson  701 

V.  Smith  718 

Jones  et  al.  v.  Keene  482 

Joyce  r.  Me.  Ins.  Co.  166,  243,  268,  719 

Judkins  v.  Union  Mut.  Ins.  Co.       585 


K. 


Kane  v.  Com.  Ins.  Co. 
Keeler  v.  Niagara  Ins.  Co 


28 
145,  193, 
305,  467 

Keeley  v.  Ins.  Co.  526 

Keenan  v.  Dubuque  Mut.  F.  Ins.  Co.  612 

V.  Mo.  State  Mut.  Ins.  Co.  132 

Keith  V.  Quincy  Mut.  F.  Ins  Co.     272 

Keller  v.  Merchants'  Ins.  Co.  80 

Kelley  v.  Com.  Ins.  Co.  20,  67 

V.  Troy  F.  Ins.  Co.       132,  145, 

699 

V.  Worcester  Mut.  F.  Ins. 

Co.  256,  266 

Kelsey  v.  Universal  L.  Ins.  Co.      215, 

226,  227,  228 

Kennebec  Co.  v.  Augusta  Ins.  and 

Banking  Co.  21,  1.55,  159 

Kennedy  v.  St.  Lawrence  County 

Mut.  Ins.  Co.  145,  217,  246 

Kennedy  v.  N.  Y.  Life  Ins.  Co.        117 
Kennison   i'.   Merrimack   County 

Mut.  Ins.  Co.  492 

Kent  V.  Bird  24,  74 

Kentucky  Mut.  Ins.  Co.  u.  Jenks  62, 709 


Ken.  and  Lou.  Mut.  Ins.  Co.  i*. 

Southard  163,  165,  170, 

Kenyon  v.  Berthou 
Kerman  v.  Howard  . 

Kern  v.  South  St.  Louis  Mut.  F. 

Ins.  Co. 
Kernoclian   v.  N.  Y.   Bowery  F. 

Ins.  Co.  115,  229,  526,  560, 


Kershaw  v.  Kelsey 
Ketclmm  v.  Prot.  Ins. 


Co. 


Hamjlton    Mut. 


38, 
546, 
584, 
Ins. 
149 


Kibbe 
Co. 

Kibbe  et  als.  v.  Travellers'  Ins.  Co. 
Kill  V.  Hollister 
Killips  V.  Putnam  F.  Ins.  Co. 
liimball  v.  jEtna  Ins.  Co.        192, 
204, 
V.  Hamilton  Ins.  Co.  580, 
V.  Howard  F.  Ins.  Co. 

448,  451, 
V.  Springfield  F.  and  Mar. 
Ins.  Co. 
King  V.  Mut.  Ins.  Co. 
V.  Preston 
V.  State  Mut.  F.  Ins.  Co.  74, 

Kingsley  et  al.  v.  N.  E.  Mut.  F. 
Ins.  Co.   161,  163,  168,  246,  544, 
Kip  V.  Mut.  F.  Ins.  Co. 
Knickerbocker  L.  Ins.  Co.  v.  Weitz 
Knox  V.  Turner  8, 

Koelges  r.  Guardian  L.  Ins.  Co. 
Kohne  v.  Ins.  Co.  of  N.  A. 
Koonts  V.  Hannibal  Sec.  Ass. 
Kulen  Kemp  v.  Vignes 
Kuntz  V.  Niagara  Dist.  F.  Ins.  Co. 
Kyuer  v.  Kyner 


720 
162 
475 

719 

618 
417 
571, 
725 

,315 
611 
694 
564 

202, 
270 
619 

301, 
566 

192 
705 
559 
115, 
559 

565 
559 
475 
547 
126 
43 
199 
2 
245 
556 


Lackey  v.  Ga.  Home  Ins.  Co.  439 

Lamar  Ins.  Co.  v.  McGlashan  530 

Lambkin  v.  Western  Ins.  Co.  590 

Lane  v.  Me.  Mut.  F.  Ins.  Co.       93,  95, 
291,  298,  803,  724 
Langdale  v.  Mason  489 

Langdon  v.  N.  Y.  Equitable  Ins. 

Co.  202,  247 

Langhurst  v.  Star  Lis.  Co.  710 

Larabee  v.  Wilson  237 

Latham  v.  Smith  23 

Laurent  v.  Chatham  F.  Ins.  Co.  27,  28, 

81,  525 
L'Automedon  v.  Isot  673 

Law  V.  Lon.  Indisputable  Life  Pol- 
icy Co.  8,  114 
Lawless  v.  Tenn.  Mar.  and  F.  Ins. 

Co.  265 

Lawrence  v.  Holyoke  Ins.  Co.         461 

V.  McCready  731 

V.  Nelson  731 


TABLE   OP   CASES. 


XIX 


Lawrence  v.  Ocean  Ins.  Co.  579 

V.  St.  Mark's  F.  Ins.  Co.     83 
Lazarus  v.  Com.  Ins.  Co.  293,  460 

Leadbetter  v.  yEtna  Ins.  Co.  570 

Leathers  v.  Com.  Ins.  Co.  34,  312 

Leavitt  v.  Western  Mar.  and  F. 

Ins.  Co.  445 

Lee  V.  Howard  F.  Ins.  Co.       149,  238, 
253,  255,  262,  302,  454,  626 
Leeds  v.  Cheatliam  6 

Leggett  V.  ^tna  Ins.  Co.  187,  245,  257, 
259,  263 
Lemon  v.   Phoenix   Mut.  L.  Ins. 

Co.  482 

Leonard  v.  Eagle  L.  and  H.  Ins. 

Co.  117 

V.  Washburn  714 

Leonarda  v.  Phoenix  Ins.  Co.       79,  81, 

524 
Lerow  v.  Williams  86 

Leroy  v.  Market  Ins.  Co.  194 

Levy  V.  Baillie  581 

Lewis  V.  Monmouth  Mut.  F.  Ins. 

Co.  567,  572,  618 

V.  Rucker  27 

V.  Springiield  F.  and  Mar. 
Ins.  Co.  491,  497 

Liberty  Hall  Ass.  v.  Housatonic 

Mut.  F.  Ins.  Co.  173,  612 

License  Tax  Cases  23 

Liddle  v.  Market  Ins.  Co.  132,  200,  452 
Lightbody  v.  N.  A.  Ins.  Co.  18,  42,  62, 
130,  484 
Lindeneau  v.  Desborough  124,  211, 
215,  218,  226,  324 
Lindsey  v.  Union  Mut.  F.  Ins.  Co.  167, 

244 
Linford  v.  Provincial  Horse  and 

Cattle  Ins.  Co.  140 

Liscom  V.  Boston  Mut.  F.  Ins.  Co.  445, 

524 

Locke  V.  N.  A.  F.  Ins.  Co.  194 

Lockyer  v.  Offley  424 

Loehner  v.  Home  Mut.  F.  Ins.  Co.  139, 

199,  266,  302,  316 

London  Ins.  Co.  v.  Sainsbury  549 

London  R.  R.  Co.  v.  Glynn  527 

Long  V.  Allen  180 

V.  Penn.  Ins.  Co.  731 

Longhurst  v.  Conway  F.  Ins.  Co.  167, 

281,  288,  315,  317,  319, 

571 

V.  Star  Ins.  Co.  88,  589 

Longmaid  et  ux.  v.  Holliday  552 

Longman  v.  Grand  Junction  Canal 

Co.  556 

Long  Pond  Ins.  Co.  v.  Houghton     699 
Loomis  I'.  Shaw  79 

Loomis,  Adm'r  v.  Eagle  L.  and  H. 

Ins.  Co.  101,  117 

Lord  V.  Dall     72,  96,  98,  101,  109,  117 

Loring  v.  Manufacturers'  Ins.  Co.  245, 

461,  545 


Lothrop  V.  Greenfield  Stock  and 

Mut.  F.  Ins.  Co.  706 

Loud  V.  Citizens'  Mut.  Ins.  Co.       178, 

234 
Louisiana  Mut.  Ins.  Co.  v.  New 

Orleans  Ins.  Co.  207 

Loundsbury  v.  Prot.  Ins.  Co.  257,  265, 

569 
Lovejoy  v.  Augusta  Mut.  F,  Ins. 

Co.  199,  801 

Lowell  V.  Middlesex  Mut.  Ins.  Co. 

317,  545 
Lowndes  v.  Stamford  695 

Lucas  V.  Jefferson  Ins.  Co.  12,  536 
Luce  V.  Dorchester  Ins.  Co.  30,  271 
Lucena  v.  Crawford  1,  73,  75,  78,  110 
Luciani  v.  Am.  F.  Ins.  Co.       18,  24, 

200 
Ludwig  V.  Jersey  City  Ins.  Co.  201 
Luling  V.  Atlantic  Mut.  Ins.  Co.     630, 

715 
Lycoming  County  Mut.  Ins.  Co.  v. 

Mitchell  27 

Lycoming  County  Mut.  Ins.  Co.  v. 

Schollenberger  127,  147 

Lycoming  County  Mut.  Ins.  Co.  v. 

Schreffler  646 

Lycoming  County  Mut.  Ins.  Co.  v. 

Updegraff  579 

Lyman  v.  State  Mut.  F.  Ins.  Co.      71, 

234,  244,  720 

Lynch  v.  Dalzell  6,  92,  457 

V.  Dunsford  123 

V.  Morse  23 

Lynchburg  Hose  F.  Ins.    Co.   v. 

Knox  37,  424,  588 

Lynn  v.  Burgoyne  68,  1-59,  690 

Lyon  V.  Commercial  Ins.  Co.  217,  225, 

268 


M. 


Macarty  v.  Com.  Ins.  Co.  84 

Mackie  v.  European  Ins.  Co.  61 

Macomber  v.  Cambridge  Mut.  F. 

Ins.  Co!"  296 

V.  Howard  F.  Ins.  Co.   251, 

262 

Mactier  v.  Frith  45,  60 

Mahar  v.  Mut.  Ins.  Co.  313 

Maine     Mut.    Mar.    Ins.    Co.    v. 

Neal  701 

Malleable  Iron  Works  v.  Phoenix 

Ins.  Co.  122 

Mallory  v.  Travellers'  Ins.  Co.       212, 
215,  229,  371,  384,  519,  634 
Manby  v.  Gorham  L.  Ins.  Co.  604 

Manhattan  F.  Ins.  Co.  v.  Stein         619 
Manhattan  Ins.  Co.  v.  Webster        91, 

131 
Manhattan  L.  Ins.  Co.  v.  Warwick  36, 

37,  423 


XX 


TABLE   OF   CASES. 


Mann  v.  Herkimer  County  Mut. 

Ins.  Co.  546 

Marbleliead  Mut.  F.   Ins.   Co.   v. 

Underw.HMl  150,  700 

Marbleliead  Mut.  Ins.  Co.  v.  Hay- 
ward  700 
Mnrcliesseau  v.  !Merch.  Ins.  Co.       580 
Marion  v.  (ireat  Kep.  Ins.  Co.          580 
Markey  v.  Mut.  Ben.  L.  Ins.  Co.      58, 

126 
Marks  >\  Hamilton  87 

Marquis  of  Winchester's  Case         379 
Marsden  v.  City  and  County  Ins. 

Co.  566 

Marshall  v.  Columbia  Mut.   Ins. 

Co.  145,  312 

I'.  Emperor  L.  Ins.  Co.    725 
Martin  y.  International  Ass-.  Soc.  of 

London  36,  412 

V.    Penobscot    Mut.    Ins. 

Co.  592 

V.  Travellers'  Ins.  Co.  628 

Maryland  F.  Ins.  Co.  v.  Whitford  207, 

493 

Mason  v.  Franklin  Ins.  Co.  520 

V.  Harvey  569 

V.  iSainsbury  544 

Masters  v.  Madison  County  Mut. 

Ins.  Co.  142,  145,  220,  286,  291,  317 
Mathews  v.  Queen  City  Ins.  Co.  544 
Mathewson  v.  AVestern  Ins.  Co.  526 
May  V.  Buckeye  Mut.  Ins.  Co.  145 
Mayall  v.  Mitford  187,  276,  286 

Maynard  v.  Johnson  23 

V.  Rhodes    123,  225,  226,  336 
Mayor  of  New  York  v.  Hamilton 

Mut.  Ins.  Co.  234,  2-34,  261,  588 

Mayor,  ice,  of  New  York  v.  Brook- 
lyn F.  Ins.  Co.  83,  84,  202 
Mayor,  &c.,  of  New  York  v.  Ex- 
change F.  Ins.  Co.  84 
McAllister,  Adm'x  v.  N.  E.  Mut. 

L.  Ins.  Co.  69,  408 

McAnnally   v.   Somerset    County 

Mut.  Ins.  Co.  271 

McBride  v.  Kep.  F.  Ins.  Co.     220,  609 

McCarty  v.  Com.  Ins.  Co.  289 

McConnell  v.  Uel.  Ins.  Co.  717 

McCord  V.  Noyes  470 

McCraig  v.  Quaker  City  Ins.  Co.     425 

McCuUock  V.  Eagle  Ins.  Co.  17,  44,  51 

V.  Indiana  Mut.  F.  Ins. 

Co.  294,  690 

McDonnel  v.  Carr  431 

McEvers  v.  Lamoine  153 

V.  Lawrence  665 

McEwen  v.  Montgomery  County 

Mut.  Ins.  Co.  156,  448 

McGivney  u.  Thaaiix  F.  Ins.  Co.        86 
McGoveni  v.  llocsback  23 

Mclntire  v.  Norwicli  F.  Ins.  Co.       295 
V.  I'reston  686 

McKee  t;.  rhounix  Ins.  Co.  103,  531,  711 


I  McLaren  v.  Hartford  F.  Ins.  Co.     290, 

296 
McLaughlin  v.  Wash.  County  Ins. 

Co.  579 

McMahon  v.  Portsmouth  F.  Ins. 

Co.  446 

McMasters  v.  West  Chester  County 

Mut.  Ins.  Co.  572 

Mead  v.  Davidson  48 

V.  N.  W.  Ins.  Co.     252,  265,  288 
Meadowcraft  v.  Standard  F.  Ins. 

Co.  144 

Mecke  v.  N.  Y.  L.  Ins.  Co.  712 

Mellen  v.  Eagle  L.  and  H.  Ins.  Co.  618 

V.  Hamilton  F.  Ins.  Co.       157, 

449,  468 

Menzies  v.  N.  Brit.  Ins.  Co.  524 

Merchants'  Ins.  Co.  v.  Clapp  711 

V.  Edmond        182 

V.  Masarge       559 

Merchants'  and  Manuf.  Ins.  Co.  v. 

Curran  611 

Merchants'  and  Manuf.  Ins.  Co.  v. 
Wash.  Mut.  Ins.  Co.     210,  217,  260, 

726 
Merriam    v.   Middlesex    Mut.    F. 

Ins.  Co.  238,  720 

Merrick  v.  Prov.  Ins.  Co.  259 

V.  Germania  F.  Ins.  Co.  12 
Merrill  v.  N.  E.  Mut.  L.  Ins.  Co.  471 
Merry  v.  Prince  9 

Mershon  i'.  Nat.  Ins.  Co.  547 

Michael  v.  Mut.  Ins.  Co.  of  Nash- 
ville 145,  432 
Mickey  v.  Burlington  Ins.  Co.  280, 
493,  590 
Mildmay  v.  Folgham  6 
Miles  V.  Conn.  Mut.  L.  Ins.  Co.      211, 

.  215 
Millaudon  v.  Atlantic  Ins.  Co.  595 

V.  Orleans  Ins.  Co.  501,  511 
Miller  v.  Brooklyn  L.  Ins.  Co.         434 
V.  Eagle  L.  and  H.  Ins.  Co.      7, 
101,  105,  106,  107,  579 
V.  Morrow  23 

V.  Mut.  Benefit  L.  Ins.  Co.   145, 
148,  171,  193,  194,  195,  204, 
332,  519,  609,  720 
V.  Phoenix  Ins.  Co.  146 

Milligan  v.  Equitable  Ins.  Co.  86 

Miltenberger  v.  Bcercom  84,  559 

Miner  ;;.  Phoenix  Ins.  Co.  138,  146,  609 
V.  Tagert  28 

Mississippi  Ins.  Co.  v.  Taft  701 

Mississippi   Mut.  Ins.   Co.   v.  In- 
gram 624 
Mitchell  V.  Home  Ins.  Co.            76,  83 
V.   Lycoming    Mut.    Ins. 

Co.  95,  158,  439,  687 

V.  Mut.   L.   Ins.    Co.    of 

N.  Y.  33,  399 

V.  Union  L.  lus.  Co.    98,  101. 

523 


TABLE   OF   CASES. 


XXI 


Moadinger  v.  Mech.  F.  Ins.  Co.      520, 

580 
Mobile  Mar.  Dock  v.  Mut.  Ins.  Co.  19 
Moehring  i\  Mitchell  475 

Moliero  r.  Penn.  F.  Ins.  Co.     155,  288 
Monk  V.  Union  Mut.  L.  Ins.  Co.     225, 
335,  336 
Monmouth   Mut.   F.   Ins.   Co.    v. 

Lovell  699 

Montague  ".  Tidcombe  676 

Montreal  Ins.  Co.  r.  McGillivray       66 
Moore  v.  Prot.  Ins.  Co.      257,  258,  580 
V.  Woolsey      108,  382,  383,  480 
Morel  V.  Miss.  Val.  L.  Ins.  Co.       494, 

661 
Morgan  r.  Mather  22 

Morrell  v.  Irving  F.  Ins.  Co.     525,  535 
V.    Trenton   Mut.    L.  and 

F.  Ins.  Co.  104,  105 

Morrison  v.  Muspratt        204,  225,  226 

V.  Tenn.  Mar.  and  F.  Ins. 

Co.  95,  298,  310 

Motley  V  Manfrs.  Ins.  Co.        115,  545 

Mound  City  Mut.  F.  Ins.  Co.  v. 

Curran  66 

Mount  et  al.  v.  Waite  72 

Mount  Vernon  Maniif.  Co.  v.  Sum- 
mit County  Mut.  F.  Ins.  Co.         296 
Mowry  v.  Home  Ins.  Co.  75,  328 

V.  Todd  459 

Mulrey  v.  Shawmut  Mut.  F.  Ins. 

Co:  66,  1.50 

Mulry    V.    Mohawk    Valley    Ins. 

Co.  720 

Murdock  v.  Chenango  County  Mut. 

Ins.  Co.  163,  235,  305 

Murphy  v.  Harris  225,  339 

V.  Mut.  Ben.  L.  Ins.  Co.     722 

Mussey  v.  Atlas  Mut.  Ins.  Co.         445 

Mutual  Benefit  Ins.  Co.  v.  Ruse      428, 

721 
Mutual  Benefit  L.  Ins.  Co.  v.  Davis  687 
Mutual    Benefit    L.    Ins.    Co.    v. 

French  408,  412 

Mutual  Benefit  L.  Ins.  Co.  v.  Hol- 

terhoff  329 

Mutual  Benefit  L.  Ins.  Co.  v.  Jar- 
vis  409,  692 
Mutual  Benefit  L.  Ins.  Co.  v.  Rob- 
ertson 210 
Mutual    Benefit    L.    Ins.    Co.   v. 

Wise  197 

Mutual  F.  Ins.  Co.  v.  Stanton  146 

Mutual  Ins.  Co.  v.  Deale  179,  193, 

194,  313 

V.  McGillevray  15 

V.  Malion  711 

Mutual  L.  Ins.  Co.  v.  Wager    117,  717 

Mutual  L.  Ins.  Co.  of  New  York 

V.  Terry  373 

Mutual  Prot.  Ins.  Co.  v.  Hamilton  480 
Mutual  Safety  Ins.  Co.  v.  Hone        11, 

542 


Myers  v.  Keystone  Mut.  L.  Ins. 

Co.  55,  56,  60,  67,  156,  433 

Myers  v.  Knickerbrocker  L.  Ins. 

Co.  i718 

Mygatt  V.  N.  Y.  Prot.  Ins.  Co.         685 


N. 


Nash  V.  Un.  Mut.  Ins.  Co.  691 

Nat.  F.  Ins.   Co.  v.   Crane     450,  467, 

710 
Nat.  Guar.  Ins.  Co.  v.  Freeman  680 
Nat.  Mut.  F.  Ins.  Co.  v.  Purcell  718 
Nave  V.  Home  Mut.  Ins.  Co.  497,  518 
Neal  V.  Molineux  479 

Neely  v.  Onondaga  County  Mut. 

Ins.  Co.  689 

Neptune  Ins.  Co.  v.  Dorsey  556 

Neville  v.  Mer.  and  Man.  Ins.  Co.     53, 

710 
Nevins  v.  Rockingham  F.  Ins.  Co.''593, 

"731 
Newby  v.  Reed  12 

Newcastle    F.    Ins.    Co.   v.   Mac- 

morran  et  al.  145,  161 

New  England  F.  and  Mar.  Ins.  Co. 

V.  Robinson  61 

New  England  F.  and  Mar.  Ins.  Co. 
V.  Schettler        65,  95,  130,  137,  157, 

440 
New  England  F.  and  Mar.  Ins.  Co. 

V.  Wetmore  et  al.     82,  200,  233,  461 
New    England   Mut.    Ins.    Co.   v. 

Belknap  687 

New   England    Mut.   Ins.    Co.    v. 

Butler^  687 

New   England    Mut.   Ins.    Co.   v. 

De  Wolf  15,  466 

New  England  Mut.  L.  Ins.  Co.  v. 

Hasbrook  432 

Newhall  v.  Union  Mut.  F.  Ins.  Co.  318 
New  Hampshire  Mut.  F.  Ins.  Co. 

V.  Rand  691 

New  Hampsliire  Mut.  F.  Ins.  Co. 

V.  Walker  724 

Newman  v.  Cazalet  180 

New    York   Bow.   F.  Ins.   Co.  v. 

New  York  F.  Ins.  Co.        11,  91,  218 
New  York  Central  Ins.  Co.  v.  Nat. 
Protection  Ins.  Co.        125, 136,  412, 
433,  725 
New  York  Eq.  Ins.  Co.  v.  Lang- 
don  258,  261 
New  York  F.  Ins.  Co.  v.  Delavan    534 
New  York  F.  and  Mar.  Ins.  Co.  v, 

Wetmore  .    265 

New  York  Ice  Co.  v.  N.  W.  Ins. 

Co.  710 

New  York  Ins.  Co.  v.  Flack    323,  470, 

481 

New  York  L.  Ins.  Co.  v.  Clopton      34, 

35,  37,  412,  418,  423 


XXll 


TABLE   OP   CASES. 


New  York  JIar.  Ins.  Co.  v.  Prot. 

Ins.  Co.  10,  11 

New  York  Tran«.  Ins.  Co.  v.  W. 

Mass.  Ins.  Co.  614 

New  York  Union  Mut.  Ins.  Co.  v. 

Jolinson  5.5,  150 

Niagara  F.  Ins.  Co.  i-.  De  GraflF  266, 492 
Niblo  V.  N.  A.  Ins.  Co.  79,  81,  310,  524 
Nicliols  r.  Fayette   Mut.  F.  Ins. 

Co.  29,  316,  438,  612 

Nicolet  V.  Ins.  Co.  530 

NicoU  I'.  Am.  Ins.  Co.  123,  190 

Nightingale  r.  State  Mut.  L.  Ins. 

Co.  403,  603,  715 

Nimick  v.  Mut.  Ben.  L.  Ins.  Co.  367 
Nivens  v.  Rockingham  Ins.  Co.      530, 

545 
Noonan  v.  Hartford  F.  Ins.  Co.  570 
Norcross  v.  FrankHn  Ins.  Co.  291,  292 
North   American    F.   Ins.   Co.   i". 

Burroughs  628,  668 

North  American   F.   Ins.    Co.   v. 

Tin-oop  199,  218,  219,  607 

Nortli  Berwick  Co.  v.  New  Eag. 

F.  and  Mar.  Ins.  Co.      126,  138,  235, 

276,  612 

North  British  Ins.  Co.  v.  Hallet       481 

V.  Lloyd        676 

V.  Stewart    543 

Northup  V.  Miss.  Val.  Ins.  Co.         450 

Northrup  v.  R.  Pass.  Ins.  Co.  647 

North  Western  Ins.  Co.  v.  Phoenix 

Oil  and  Candle  Co.  584 

Norton  v.  Phoenix  L.  Ins.  Co.  432- 

V.  Rensselaer  and  Saratoga 
Ins.  Co.  579 

Norwich  and  New  York  Transp. 

Co.  V.  Western  Mass.  Ins.  Co.     573, 

619 
Notman  v.  Anchor  Ins.  Co.  404 

Noyes  v.  Wash.  County  Mut.  Ins. 

Co.  574,  618 

Nute  V.  Hamilton  Mut.  Ins.  Co.       592 


0. 

Oakman  v.   Dorchester  Mut.   F. 

Ins.  Co.  91 

Obermeyer  v.  Globe  Mut.  Ins.  Co.  95, 
204,  438 
Ocean  Ins.  Co.  i-.  Carrington  54 

V.  PoUeys  267 

O'Connor  v.  Towne  485 

Odlin  V.  Ins.  Co.  of  Penn.  421 

Ogden  V.  East  R.  Ins.  Co.  536 

Ohio  JVIut.   Ins.   Co.   v.   Marietta 

Woollen  Factory  685 

Oldman  r.  Bewick  27 

Olliver  r.  Coin.  Mut.  Mar.  Ins.  Co.  710 
O'Neill  V.  Bufiido  F.  Ins.  Co.  177,  201, 
260,  262,  268,  572 
Oriental  Bank  v.  Fremont  Ins.  Co.  530 


Orrell  v.  Hampden  F.  Ins.  Co.  297,  298 
Overton  v.  St.  Louis  M.  L.  Ins.  Co.  391 


P. 


Pacific  Mut.  Ins.  Co.  v.  Gure  699 

Packard  v.  Agawam  Mut.  Ins.  Co.  317 
Paddleford  v.  Prov.  M.  F.  Ins.  Co.  245 
Palm  V.  Medina  Ins.  Co.  16,  51,  59,  67 
Palmer  v.  Merrill  470,  479,  483 

V.  Warren  Ins.  Co.  184 

Park  V.  Phoenix  Ins.  Co.  438,  580 

Parker  v.  Bridgeport  Ins   Co.  272 

V.  Eagle  Ins.  Co.  535 

Parks  V.  Gen.  Mut.  Ins.  Co.  521 

Parsons  v.  Bignold  710 

Partridge  v.  Pha?uix  Mut.  L.  Ins. 

Co.  718 

Patch  V.  PhoBnix  Mut.  Ins.  Co.  162 
Patrick  v.  Farmers'  Ins.  Co.  566 

Patten    v.   Merch.    and   Farmers' 

Mut.  F.  Ins.  Co.  145,  316 

Pawson  V.  Barnevelt  163 

V.  Watson  161,  163 

Payne  v.  Cave  44,  45 

Peabody  v.  Wash.  County   Mut. 

Ins.  Co.  546 

Peacock  v.  N.  Y.  L.  Ins.  Co.  322 

Peck  V.  New  London  County  Mut. 

Ins.  Co.  131,  141, 14.5,  156,  310,  450 
Peddie  v.  Quebec  F.  Ins.  Co.  '  523 
Pelbrow  v.  Atmospheric  R.  R.  Co.  26 
Pendar  v.  Am.  Mut.  Ins.  Co.  449 

Penley  v.  People's  Ins.  Co.  589 

Penn.  Ins.  Co.  v.  Gottsman  317 

Pentz  V.  JEtnn  Ins.  Co.  489 

People  V.  Bartlett  421 

V.  Beigler  460 

People's    Eq.    Mut.    Ins.    Co.  v. 

Arthur  700 

People's  Eq.  Mut.  Ins.  Co.,  Matter 

of  70 

People's  Ins.  Co.  v.  Spencer  132,  155, 
158,  452 
V.  Strahle  556 

People's  Mut.  F.  Ins.  Co.  v.  Allen  703 
People's  Mut.  Ins.  Co.  v.  Westcott  699 
Peoria    Mar.  and   F.  Ins.  Co.   v. 

Frost  556 

Peoria  Mar.   and   F.   Ins.   Co.  v. 

Hall  130,  131,  145,  587 

Peoria   Mar.  and  F.  Ins.    Co.  v. 

Lewis  12,  179,  187,  521,  565 

Peoria  Mar.  and  F.  Ins.  Co.  v.  Per- 
kins 288 
Peoria   Mar.  and  F.   Ins.    Co.   v. 

Whitehill  571,  574 

Peoria  Mar.   and   F.    Ins.    Co.   v. 

Wilson  529 

Percival  v.  Maine  Mut.  Ins.  Co.      272 

Perkins  v.  AVashington  Ins.  Co.        18, 

59,  67,  137,  709 


TABLE   OF   CASES. 


xxni 


Perley  v.  Eastern  R.  R.  Co.  89,  562 
Perrins  v.  Mar.  and   Gen.  Trav. 

Ins.  Co.  224,  340 

Perry  v.  Merchants'  Ins.  Co.  468 

V.  Newcastle  Dist.  Mut.  F. 

Ins.  Co.  15,  710 

V.  Prov.  Ins.  Co.      487,  543,  672 
Perry  County  Ins.  Co.  v.  Stewart   145, 
246,  280,  291 
Pervear  v.  Commonwealth  23 

Pesson  1-.  Atlantic  Mut.  Ins.  Co.  710 
Peterson  v.  Miss.  Valley  Ins.  Co.  234 
Phelps  v.  Gerhard  F.  Ins.  Co.  80,  464 
Philadelphia  F.  and  L.  Ins.  Co.  v. 

Mills  271 

Philadelphia  L.  Ins.  Co.  v.  Am.  L. 

Ins.  Co.  485 

Philbrook  v.  N.  E.  Mut.  Ins.  Co.    439, 
443,  451,  688 
Philips  V.  King's  County  Mut.  Ins. 

Co.  312 

V.  Knox  County  Mut.  Ins. 

Co.  85 

V.  Merrimack  ^lut.  F.  Ins. 
Co.  460,  466,  528,  544 

Phillips  V.  Eastwood  113 

Phoenix  Ins.  Co.  v.  Gurnie  710 

V.  Hamilton  92 

V.  Hoffheimer        710 
V.  Lawrence  140, 199, 
265,  290,  292,  297, 
303,  725 
V.  McLoon  29 

r.  Taylor  257,  258, 
261 
Phoenix  L.  Ins.  Co.  v.  Sheridan  411 
Phoenix  JIut.  L.  Ins.  Co.  of  Hart- 
ford V.  Bailey  117 
Pickard  v.  Sears  613 
Pierce  v.  Nashua  F.  Ins.  Co.  304,  460 
Piggot  V.  Eastern  Counties  R.  R. 

Co.  5.56 

Pim  V.  Reid  232,  247 

Pimm  V.  Lewis  217 

Pindar  v.  King's  County  F.  Ins. 

Co.  251 

V.  Resolute  F.  Ins.  Co.        2-50 
Pinkham  v.  Morang  312 

Pino  V.  Merchants'  Mut.  Ins.  Co.       65 
Pitt  V.  Berkshire  L.  Ins.  Co.    407,  412, 
432,  722 
Pleasants  v.  Maryland  Ins.  Co.  28 

Plessinger  v.  Dupee  23 

Plumb  I'.   Cattaraugus  Mut.  Ins. 

Co.  132,  139,  144,  145,  288,  605 

Plympton  v.  Farmers'  Mut.  F.  Ins. 

Co.  559 

Polglass  V.  Oliver  412 

Pollard  V.  Somerset  Mut.  F.  Ins. 

Co.  294,  461 

Pomeroy  v.  Manhattan  L.  Ins.  Co. 

475,  483 
Pontifex  v.  Bignold  715 


Portage  County  Mut.  Ins.  Co.  v. 

Stukey  593 

Portage  Coimty  Mut.  Ins.  Co.  v. 

West  584 

Post  V.  MXna.  Ins.  Co.  21,  30,  126, 

136,  156,  572 

V.  Hampshire  M.  F.  Ins.  Co.  30, 528 

Potter  V.  Ontarid  and  Liv.  Mut. 

Ins.  Co.  184,  451 

Potts  V.  Bell  418 

Power  V.  Ocean  Ins.  Co.  95,  291 

Powers  V.  City  F.  Ins.  Co.  197 

Pratt  V.  Atlantic  and  St.  Lawrence 

R.  R.  Co.  88 

V.  Travellers'  Ins.  Co.  667 

V.  N.  Y.  Central  Ins.  Co.  __   459 

Preiger  v.  Exchange  Ins.  Co.  275,  276 

Prentice  v.  Achorn  348 

Price  V.  Phoenix  Mut.  L.  Ins.  Co. 

172,  194,  196,  216,  335 
Prichett  v.  Ins.  Co.  of  N.  A.  74 

Priest  et  als.  v.  Citizens'  Mut.  F. 

Ins.  Co.  153,618 

Prince  of  Wales  Ins.  Co.  v.  Palmer  716 
Pritehard  v.  Mer.  and  Tradesmen's 

Mut.  L.  Ins.  Co.  425 

Prize  Cases  34 

Propeller    Monticello    v.    Gilbert 

Morrison  558 

Prot.  Ins.  Co.  v.  iEtna  Ins.  Co.       585 

V.  Hall         88,  150,  453 

V.  Harmer        145,  178, 

193,  262 

V.  Pherson  570 

V.  Wilson  546 

Prov.  L.  Ins.  Co.  v.  Baum  565,  671,  673 

Providence  L.  Ins.  and  Investment 

Co.  V.  Martin  494,  666 

Provident  L.  Ins.  Co.  of  Chicago 

V.  Fennell  341,  432,  668,  722 

Prows  V.  Ohio  Val.  Ins.  Co.  460 

PuUen  V.  Glover  24 

Pupke  V.  Resolute  F.  Ins.  Co.  461 

Putnam  v.  Mercantile  Ins.  Co.  79 

Pym  V.  Great  Northern  R.  R.  Co.   558 


Q. 

Quebec  F.  Ins.  Co.  v.  St.  Louis       5-54 
Quin  V.  Nat.  Ins.  Co.  720 


R. 

Raber  v.  Jones  708 

Rafael  v.  Nashville  Mar.  and  F. 

Ins.  Co.  520 

Rafferty  v.  New  Brunswick  F.  Ins. 

Co.  202,  248,  261,  266 

Raimes  v.  Knightly  24 

Rainsford  v.  Royal  Ins.  Co.  403 

Ramsay  Woollen  Cloth  Manuf.  Co. 

V.  Mut.  F.  Ins.  Co.  726 


XXIV 


TABLE   OF   CASES. 


Ramsay  et  al.  v.  Mut.  F.  Ins.  Co.     301, 

439 
Ranney  v.  Mut.  Ben.  L.  Ins.  Co.  333 
Rathbun  v.  City  F.  Ins.  Co.  252,  G18 
Rawlins  v.  Desborovigh  123,  226 

Rawls  I'.  Am.  Mut.  L.  Ins.  Co.       103, 
104,  109, 117,  118,  123,  202,  215,  226, 
228,  720 
Real  Estate  Mut.  F.  Ins.  Co.  v. 

Eoessle  63,  66 

Reed  v.  Ind.  Ins.  Co.  726 

V.  Royal  Ex.  Ins.  Co.  382 

Reeves  t".  White  596 

Reichard  v.  Manhattan  L.  Ins.  Co. 

202,  329,  592 

Reid  V.  Gore  235 

Rex  V.  Ins.  Companies       93,  115,  145, 

303,  318,  526 

Reynolds  v.  Ace.  Ins.  Co.  641 

V.  Com.  F.  Ins.  Co.       253, 

612 

V.  Mut.  F.  Ins.  Co.  691 

V.  State  I\Iut.  Ins.  Co.      31-5, 

317 

Eheinhardt  v.  Alleghany  Count}' 

Mut.  Ins.  Co.  700 

Rhodes    v.   Railway   Passengers* 

Ins.  Co.  21,  647,  673,  709 

Rice  et  al.  v.  Tower  and  Trs.    294,  297, 

300 

Richards  v.  Prot.  Ins.  Co.  249 

Richardson  v.  Maine  Ins.  Co.  143, 

301,  316 

V.  SutTolk  Ins.  Co.         594 

Richmondville  v.  Home  Mut.  Ins. 

Co.  5.38 

Riddlesbarger  v.  Hartford  Ins.  Co.  584 

Ripley  v.  iEtna  F.  Ins.  Co.      160,  161, 

178,  189,  275,  584 

Rising  Sun  Ins.  Co.  v.  Slaughter 

439,  718 
Rison  V.  "Wilkinson  476 

Rix  V.  Mut.  Ins.  Co.  530,  504 

Roach  V.  N.  Y.  and  Erie  Ins.  Co.     584 
Robert  v.  N.  E.  Mut.  L.  Ins.  Co. 

407,  409,  722 
Roberts  v.  Chenango  County  Mut. 

Ins.  Co.  163 

Robertson  v.  French         181,  184,  185, 

451 
Robinson  v.  International  L.  Ass. 

Soc.  of  London  36,  136,  412 

Robinson  v.  Mercer  County  Mut. 

F.  Ins.  Co.      157,  187,  243,  245,  247, 

266,  495 

Robinson  v.  N.  Y.  Ins.  Co.  80 

V.  Tobin  25 

Rockford  Ins.  Co.  v.  Nelson    309,  620, 

723 
Rockingham  Mut.  F.  Ins.  Co.  v. 

Bosher  549,  556 

Rockwell  I'.  Hartford  F.  Lis.  Co.      20 
Roebuck  v.  Uammerton  24 


Rollins  i:  Columbian  Mut.  F.  Ins. 

Co.  294, 545 

Root  V.  Cincinnati  Ins.  Co.  438 

Roper  V.  Lendon  569,  594 

Rose  r.  Med.  Ins.  and  Gen.  L.  Ins. 

Soc.  53,  200 

V.  Star  Ins.  Co.  123,  322 

Ross  V.  Bradshawe  321,  323 

Rossiter  v.  Trafalgar  Ins.  Co.  125 

Roth  V.  City  Ins.  Co.  133,  145 

Rouniage  v.   Mechanics'   F.   Ins. 

Co.  157,  564,  570 

Routh  V.  Thompson  79 

Routledge  v.  Burrell  26 

V.  Grant  45 

Rowley  v.  Empire  Ins.  Co.      14-5,  148, 

157,  452,  606 

Ruppert  V.  Union  Mut.  Ins.  Co.       477 

Ruse  V.  Mut.  Benefit  L.  Ins.  Co.    74, 

75,  110,  429,  484 

Russell  V.  De  Grand  711 

Ryan  v.  N.  Y.  Central  R.  R.  Co.     555, 

562,  563 


Saddler's  Co.  v.  Badcock        6,  74,  81, 

92,  468 
Safford  v.  Wyckoff  15 

Salmon  v.  Richardson  714 

Salnis  r.  Rutgers  F.  Ins.  Co.  710 

Salter  v.  Bush  415 

Salvin  v.  James  22,  430 

Sanborn  v.  Firemen's  Ins.  Co.     16,  20 
Sanders  v.  Hillsborough  Ins.  Co.     528, 

592 

Sands  v.  Hill  69,  687 

V.  N.  Y.  L.  Ins.  Co.         37,  412, 

415 

V.  Sanders  700 

V.  Smart  703 

V.  St.  John  686 

Sandys  v.  Hodgson  614 

Sanford  v.  Mech.  Mut.  F.  Ins.  Co.    493 

V.  Trust  F.  Ins.  Co.         17,  56 

Satterthwaite  v.   Mut.   Ben.  Ins. 

Co.  217 

Savage  v.  Howard  Ins.  Co.  300 

V.  Medbury  685,  699 

V.  O'Neil  396 

Sawyer  v.  U.  S.  Casualty  Co.  644 

Sayles  v.  N.  W.  Ins.  Co.  161,  164, 

179,  285,  286 

Sayres  v.  Hartford  F.  Ins.  Co.  82 

Scales  V.  Scanlan  161,  178 

Scammon  v.  Kimball  731 

Schaible  v.  Wash.  L.  Ins.  Co.  722 

Schenck  v.  Mercer  County  Mut. 

Ins.  Co.    156,  157,  439,  448,  566,  719 
Schmidt  v.  Peoria  Mar.  and  F.  Ins. 

Co.  233,  248 

Schneider  v.  Prov.  L.  Ins.  Co.        494, 

662 


TABLE   OF   CASES. 


XXV 


Schroeder  v.  Kingston  Ins.  Co.        589 
Schwartz  v.  Germaoia  Ins.  Co.       404, 

414 

Scott  V.  Avery  594 

V.  Home  Ins.  Co.  721 

V.  Phanix  Ins.  Co.  570,  594 

V.  Quebec  Ins.  Co.  280 

Scripture  i-.  Lowell  Mut.  F.  Ins. 

Co.  448,  498,  611 

Seamen's  Fr.  Soc.  v.  Hopper  379 

Secor  V.  Daiton  473 

Security  F.  Ins.  Co.  v.  Ken.  Mar. 

and  F.  Ins.  Co.  21 

Security  Ins.  Co.  v.  Farrel  526 

V.  Fay  607 

Selvage  v.  ^Etna  L.  Ins.  Co.  581 

Semmes  v.  City  F.  Ins.  Co.  36,  39 

V.  Hartford  Ins.  Co.   422,  588 
Sexton    V.   Montgomery    County 

Mut.  Ins.  Co.  145,  156,  246,  573 

Shaughnessy   v.   Rensselaer    Ins. 

Co.  700 

Shaw  V.  Home  L.  Ins.  Co.  718 

V.  Hobberds      232,  247,  260,  493 
V.  St.  Lawrence  County  Mut. 
Ins.  Co.  312,  453 

Shawe  V.  Feltou  27 

Shawmut  Mut.  F.  Ins.  Co.  v.  Ste- 
vens 133,  139,  217 
Shearman  v.  Niagara  F.  Ins.  Co.     464 
Sheldon  v.  Atlandc  F.  and  Mar. 

Ins.  Co.  432,  434,  Oil,  722 
V.  Conn.     Mut.    L.    Ins. 

Co.        136,  152,  433,  709 
V.  Hartford  F.  Ins.  Co.     164, 
275 
Shepherd  v.  Union  Mut.  F.  Ins. 

Co.  178,  245,  294 

ShiUing  V.  Ace.  Death  Ins.  Co.        328 
Shotwell  V.  Jefferson  Ins.  Co.  292 

Shultz  V.  Pacific  Ins.  Co.  721 

Sibbald  1-.  Hill  204,  206,  335 

Silleni  V.  Thornton    163,  232,  247,  2«1 
Simeral  v.  Dubuque  Mut.  F.  Ins. 

Co.  457 

Simon  v.  Boydell  24 

Simpson  v.  Ace.  Death  Ins.  Co.      427 

V.  Fenn.  F.  Ins  Co.  451 

Sinclair  v.   Mar.   and    Pass.   Ins. 

Co.  642 

Singleton  v.  Boone  County  Ins. 

Co.  528 

Siter  V.  Morrs  527 

Slim  V.  Croucher  716 

Sloat  V.  Royal  Ins.  Co.        12,  438,  446 

Smith  t'.  Ace.  Ins.  Co.  635 

V.  jEtaa.  L.  Ins.  Co.       123,  225, 

323,  341 

V.  Bowditch  Ins.  Co.        86,  312 

V.  Cash  Mut.  F.  Ins.  Co.        154 

V.  Cologan  124 

V.  Columbia  Ins.  Co.  318 

V.  Empu-e  Ins.  Co.  123, 199,  316 


Smith  V.  Haverhill  Mut.  F.  Ins. 

Co.  153,  568,  574 

V.  Insurance  Co.  132,  149 

V.  Lascelles  124 

V.  Mechanics'  and  Traders' 

Mut.  F.  Ins.  Co.      202,  248 
V.  Monmouth  Mut.  F.  Ins. 

Co.  294,  460 

V.  Odlin  18 

V.  Price  124 

V.  Saratoga     County   JIut. 

Ins.  Co.  465,  468,  689 

V.  Whitbeck  410 

Snyder  v.  Farmers'  Ins.  and  Loan 

Co.  163,  171 

Sohier  v.  Hartford  Ins.  Co.  488 

SoUcitors'  and  General  L.  Ins.  Co. 

V.  Lamb  384 

Solvency  IMut.  Guar.  Ins.  Co.  v. 

Froane  680 

Solvency  Mut.  Guar.  Ins.  Co.  v. 

York  676 

Somers  v.  Atheneum  F.  Ins.  Co.     145 
South  AustraUan  Ins.  Co.  v.  Ran- 

daU  522 

Southard  v.  Railway  Passengers' 

Ass.  Co.  178,  629 

Southcombe  v.  Merriman  328 

Southerland  v.  Pratt  81 

Soye  V.  Merchants'  Ins.  Co.  270 

Sparrow  v.  Mut.  Ben.  L.  Ins.  Co.  447, 

609 
Spitzer  v.  St.  Mark's  Ins.  Co.  66 

Springfield  F.  and  Mar.  Ins.  Co. 

V.  Brown  307,  561 

Spring  Garden  Ins.  Co.  v.  Scott      150 
Spring  Garden   Mut.   Ins.   Co.  v. 

Evans  569,  574,  619 

SpruiU  V.  N.  C.  Mut.  L.  Ins.  Co.     3«6, 

396,  490 

St.  John  V.  Am.  Mut.  L.  Ins.  Co.       7, 

110,116,  117,482,501,502 

St.    Lawrence    Mut.   Ins.   Co.   v. 

Paige  699 

St.  Louis  Ins.  Co.  v.  Kyle  565 

St.   Louis    Mut.    F.    Ins.    Co.    v. 

Broeckler  691 

St.  Louis  Mut.  Ins.  Co.  v.  Glas- 
gow 493 
St.    Louis    Mut.    L.   Ins.    Co.   v. 

Graves  367,  385 

St.  Louis  Mut.  L.  Ins.  Co.  v.  Ken- 
nedy 58 
Stacy  V.  Franklin  F.  Ins.  Co.     12,  439, 

448 
Stackpole  v.  Simon  322 

Stanley  v.  Western  Ins.  Co.    491,  502, 

512 
Stannard  v.  Am.  Pop.  L.  Ins.  Co.  287, 

339 
Stark   County  Mut.   Ins.   Co.   v. 

Hurd  449 

Start  V.  F.  Ins.  Co.  of  New  Haven  710 


XXVI 


TABLE  OP   CASES. 


State  Mut.  F.  Ins.  Co.  v.  Eoberts  245, 
461,  405 
Steamboat  v.  Relief  Ins.  Co.  251 

Stebbins  v.  Globe  Ins.  Co.       171,  188, 
202,  243,  263 
Steele  v.  Franklin  Ins.  Co.  558 

Steinback  t».  Fenning  90 

Sterling  v.  Merch.  Mut.  Ins.  Co.     691, 

726 

Stetson  V.  Mass.  Mut.  F.  Ins.  Co.  237, 

244,  281 

Stettiner  v.  Granite  Ins.  Co.  240 

Stevens  v.  Baird  614 

V.  Plia3nix  Ins.  Co.  719 

V.  Warren  108,  109,  481 

Stevenson  v.  Snow  4 

Stillwell  V.  Staples  527,  559 

Stimpson   v.  Monmouth   Mut.  F. 

Ins.  Co.  546,  566 

Stobart  v.  Drjden  228 

Stockdale  v.  Dunlop  81,  90 

Stokes  V.  Cox  167,  232,  282 

Stone  V.  United   States   Casualty 

Co.  163,  667 

Storer  v.  Elliot  F.  Ins.  Co.  448 

Stormont  v.  Waterloo  L.  and  Cas- 
ualty Ins.  Co.  368 
Stors  V.  Wadley  699 
Stout  V.  City  F.  Ins.  Co.  88,  162, 
270,  460,  584 
Street  v.  Rigby  601 
Stringham    v.    St.   Nicholas   Ins. 

Co.  132 

Strong  V.  Manufacturers'  Ins.  Co.      7, 

81,  194,  297,  300,  310,  525 

Suffolk  F.  Ins.  Co.  v.  Boy  den         115, 

559 
Sugden  v.  Farmers'  Ins.  and  Loan 

Co.  164 

Sullivan  i;.  Mass.  Mut.  L.  Ins.  Co.  711 
Sun  Fire  Office  v.  Wright  79,  523 

Sunderland  Mar.  Ins.  Co.  v.  Kear- 
ney 724 
Supple  V.  Cann                          138,  612 
Susquehanna  Ins.  Co.  v.  Perrine    154, 

285 
Sussex  County  Mut.  F.  Ins.  Co.  v. 
Woodruff         82,  310,  313,  526,  560, 
709,  722 
Sutherland  v.  Pratt  81 

V.  Soc.   of    Sun    Fire 
Office  532 

Suydam  v.  Columbus  Ins.  Co.         710 
Swan  V.  Snow  475 

Swampscott  Mach.  Ins.  Co.  v.  Par- 
tridge 731 
Sweeny  v.  Franklin  Ins.  Co.  85 
V.  Promoter  L.  Ins.  Co.       612 
Swete  V.  Fairlie                   123,  210,  226 
Swick  V.  Home  L.  Ins.  Co.                329 
Swift  V.  Vt.  Mut.  F.  Ins.  Co.            315 
Sykes  i'.  Perry  County  Mut.  Ins. 
Co,                                          157,  452 


T. 


Talamon  v.  Home  Ins.  Co.  491 

Tallman  v.  Atlantic  F.  and  Mar. 

Ins.  Co.  92,  292,  297,  304 

Tarleton  v.  Stainforth  431 

Tate  V.  Citizens'  Mut.  Ins.  Co.  140,  158 

Tayloe  v.  Merchants'  F.  Ins.  Co.     45, 

51,  136,  412,  566 

Taylor  v.  ^tna  L.  Ins.  Co.     404,  569, 

671,  720 

V.  Lowell  95 

V.  Roger  Williams  Ins.  Co.  571 

Tebbetts  v.  Hamilton  Mut.  Ins. 

Co.  285,  715 

Terry  v.  L.  Ins.  Co.  372,  384 

Tesson  v.  Atlantic  Mut.  Ins.  Co.     194 
Thayer  v.  Middlesex  Mut.  Ins.  Co.  18, 

51,52 
Theobald  v.  R.  R.  Pass.  Ins.  Co.    642, 

664 
Thomas  v.  Achilles  704 

V.  Wliallon  699 

Thompson  v.  Am.  F.  L.  and  Sav. 

Ins.  Co.  478 

V.  Cliarnock  594 

V.  Montreal  Ins.  Co.        491 

V.  St.  Louis  Ins.  Co.      434, 

450 

Thornton  v.  Enterprise  Ins.  Co.      526 

V.  Knight  716 

Thurtell  v.  Beaumont  721 

Tidswell  v.  Ankerstein  90 

Tiernay  v.  Ethrington  181 

Tillou  V.  Kingston  Mut.  F.  Ins. 

Co.  304, 461 

Times  F.  Ins.  Co.  v.  Hawke  635 

Tittmore    v.   Vt.    Mut.    F.    Ins. 

Co.  298 

Tobey  v.  Chipman  23 

Tolman  v.  Manufacturers'  Ins.  Co.  629, 

545 
Tongue  v.  Nutwell  81,  559 

Tooley  v.  R.  R.  Pass.  Ins.  Co.         580 
Topping  V.  Bickford  466 

Touteng  v.  Hubbard  422 

Towle  V.  Nat.  Guard.  Ins.  Co.   91,  679 
Towne  v.  Fitchburg  Ins.  Co.  171, 

194,  316 
Townsend  v.  N.  W.  Ins.  Co.  234 

Traders'  Ins.  Co.  v.  Robert  461 

Traders'  Mut.  F.  Ins.  Co.  v.  Stone  687 
Trail  v.  Booring  200,  716 

Trask  v.  State  F.  and  Mar.  Ins.  Co.   665 
Treadway  v.  Hamilton  Mut.  Ins. 

Co.  312,  317 

Tredwen  v.  Holman  595 

Trench  v.  Chenango  County  Mut. 

Ins.  Co.  16G,  1G8,  199,  246,  285 

Trenton  Mut.  L.  and  F.  Ins.  Co. 

V.  Johnson  7,  75,  105,  117 

Trew  V.  R.  R.  Pass.  Ins.  Co.  631 

Trott  V.  City  Ins.  Co.  695 


TABLE   OP   CASES. 


xxvu 


Troy  F.  Ins.  Co.  v.  Carpenter 


260, 


Trull  V.  Roxbury  Mut.  Ins.  Co 
Trumbull  v.  Portage  Mut.  F.  Ins. 

Co. 
Trustees  of  First  Bap.  Church  in 

Brooklyn  v.   Brooklyn  F.   Ins. 

Co.  15,  16,  20, 

Tuckerman  v.  Bigler 
Turley  ;;.  N.  A.  F.  Ins.  Co.      181, 

Turner  v.  Stetts  527, 

Tuttle  V.  Robinson  317,  612, 

Twitchell  v.  Commonwealth 
Tyler  v.  JEtna  F.  Ins.  Co.         85, 


126, 
722 

529 

291 


Tyrie  v,  Fletcher 


413 
689 
570, 
6J8 
558 
689 
23 
193, 
310 
711 


U. 


Underbill  v.  Agawam  Mut.  Ins. 
Co.  207,  280,  523,  618 

Union  Ins.  Co.  v.  Hoge  685 

Union  L.  F.  and  Mar.  Ins.  Co.  v. 
Foote  505 

Union  Mut.  Ins.  Co.  v.  Commer- 
cial Mut.  Ins.  Co.  18,  709 

Union  Mut.   Ins.  Co.  v.  Wilkin- 
son 127,  146,  156,  183,  607 

United     States    Express    Co.    v. 
Haines  23 

Upton  V.  Hansbrough  728 

Utica  Ins.  Co.  v.  Am.  Mut.  Ins. 

Co.  "         584 

y.  Toledo  Ins.  Co.  125 


Valton   V.   Nat.  Loan  Fund  Ins. 
Co.  104,  109,  117,  205,  215,  229, 

33.3,  48y 
Van  Bories  v.  United  L.  F.  and 

Mar.  Ins.  Co.  450,  452 

Van  Deuzen  v.  Charter  Oak  Ins. 

Co.  464 

Van  Twyl  v.  West  Chester  F.  Ins. 

Co.  710 

Van    Valkenburg    v.    Lexington 

Ins.  Co.  71 

Van  Zandt  v.  Mut.  Ben.  L.  Ins. 

Co.  371 

Vance  v.  Foster  625,  533 

Viale  f.  Geuessee  Mut.  F.  Ins.  Co.  689 
Viele  I'.  Germania  Ins.  Co.      145,  450, 

621 
Vogel  y.  People's  Mut.  F.  Ins.  Co.   261, 

311 
Vos  V.  Robinson  577 

Vose  V.  Eagle  L.  and  Health  Ins. 

Co.  211,  216,  326 

i;.  Hamilton  Mut.  Ins.  Co.      446 


w. 

Wadsworth  v.  Davis  690 

Wainwriglit  v.  Bland         105,  109, 191 

Walden  v.  La.  Ins.  Co.  219 

Walker  i'.  Met.  Ins.  Co.  16,  21,  67 

Wall  V.  East  River  Mut.  Ins.  Co.     261 

V.  Home  Ins.  Co.  136,  406 

V.  Howard  Ins.  Co.  164,  188,  258 

Wallace  v.  Insurance  Co.  28,  531 

V.  Tellfair  124 

Wallingtord  v.  Home  Mut.  F.  and 

Mar.  Ins.  Co.  53,  57 

Walroth  v.  St.  Lawrence  County 

Mut.  Ins.  Co.  312 

Walsh  V.  iEtua  L.  Ins.  Co.  450 

V.  Wash.  Mar.  and  F.  Ins. 
Co.  569 

Walton  V.  La.  St.  Mar.  and  F.  Ins. 

Co.  445 

Walworth  v.  Tubb  349 

Want  V.  Blunt  431 

Ward  V.  Smith  37 

Warner  v.  Peoria  Mar.  and  F.  Ins. 

Co.  451,  576 

Warren  v.  Davenport  F.  Ins.  Co.    76, 

85 
V.  Indemnity  Ins.  Co.  527 

V.  Peoria  Mar.  and  F.  Ins. 
Co.  155 

Wash.  County  Mut.   Ins.   Co.  v. 

Davies  718 

Wash.  County    Mut.    Ins.    Co.  v. 

Hastings  718 

Wash.  Lis.  Co.  v.  Davidson     445,  452 
V.  Hovey  227 

Wash.  Ins.  Co.  v.  Merchants'  and 

:\Ianuf.  :Mut.  Ins".  Co.  253,  259 

Wash.  Ins.  Co.  v.  Wilson         382,  721 
Wash.  L.  Ins.  Co.  v.  Haney     176,  204, 

722 
Watchorn  v.  Langford  520 

Waters   v.  Merchants'    Louisville 

Ins.  Co.         493,  498,  511 
V.  Monarch  F.  and  L.  Ins. 

Co.  80,  527 

Watson  V.  Bratton  6 

V.  Mainwaring     321,  322,  332 

Wajman  v.  Torreyson  23 

Weaver  v.  Ward  351,  362 

Webb  V.  Xat.  Ins.  Co.  520 

V.  Prot.  Ins.  Co.  492 

V.  R.  W.  and  O.  R.  R.  Co.     494, 

655 

Webber  v.  E.  R.  R.  Co.  720 

Weeks  i-.  Hall  485 

Welland  Canal  v.  Hathaway  614 

Wellcome   v.   People's  Eq.   Mut. 

F.  Ins.  Co.  569 

Welts  V.  Conn.  Mut.  L.  Ins.  Co.      397 

West  V.  Reid  479 

West  Branch  Ins.  Co.  v.  Helfen- 

steiu  291,  298,  468,  566 


XXVlll 


TABLE   OF   CASES. 


Western  Farmers'  Mut.  Ins.  Co. 

V.  Miller  243,  2G3,  495 

Western    v.   Genessee  Mut.    Ins. 

Co.  52,  08,  484,  707 

Western  Mass.  Ins.  Co.  v.  Diifley    21, 

22 

V.  Riker     294 

Westfall  V.  Hudson  R.  F.  Ins.  Co.     Itjl, 

108,  183,  252 

Westlake  v.   St.  Lawrence  Mut. 

Ins.  Co.  507,  572,  019 

Wheeling  Inf.  Co.  v.  Morrison         400 

Wheelton  v.  Ilardisty       124,  101,  107, 

220,  429 

White  V.  Brit.  Emp.  Mut.  L.  Ins. 


Co. 

308 

V.  Brown 

6,559 

V.  Havens 

685 

V.  Madison 

80,  124 

V.  Mut.  F.  Ins.  Co. 

285,  383, 

520 

V.  Ross 

705 

lill  V.  Shickle 

23 

Wiiitehurst  v.  Fayetteville   Mut. 

Ins.  Co.  491 

V.   N.   C.   Mut.    Ins. 

Co.  565 

Whitmarsh  v.  Charter  Oak  F.  Ins. 

Co.  255,  262 

Whitney  v.  Ind.  Mut.  Ins.  Co.     .        7 
Whittaker  v.  Farmers'  Union  Ins. 

Co.  01,  137,  484,  709 

Wightman  v  West.  Mar.  and  F. 

Ins.  Co.  721 

Wilbur  V.  Bowditch  Mut.  Ins.  Co. 

313,  317,  453 

V.  N.   E.   Mut.    Fire  Ins. 

Co.  455 

Wilkinson  v.  Coverdale,  124 

Willey  V.  Robinson  23 

William  Bagely,  The  38 

Williams  v.  Babcock  700 

V.  Cheney  718 

V.  Columbian  Mut.  Ins. 

Co.  592 

V.  N.  E.  Mut.  F.  Ins.  Co. 

260,  493,  529 
V.  Roger  Williams    Ins. 


Co. 

314 

V.  Smith 

31 

V.  y  t.  Mut.  Ins.  Co. 

584 

Williams  et  al.  v.  Pew 

133 

Willis  V.  Boston  Ins.  Co. 

630 

V.  reo])le 

379 

V.  Poole 

321 

Wilson  V.  Conway    Mut.   F.    Ins. 

Co.         143,  149,  150, 

108, 

171, 183,  194 

710 

V.  Mtnfi  Ins.  Co. 

584 

V.  Genessee  Mut.  Ins.  Co. 

157,  304, 

407 

V.  Hampden  F.  Ins.  Co. 

173, 

183, 

196 

Wilson  V.  Herkimer  County  Mut. 

Ins.  Co.  246 

V.  Hill     2,  5,  73,  289,  293,  459, 
408,  476 
V.  Trumbull  County  Mut. 

Ins.  Co.  689 

Winders  v.  Lord  Tredegar  407 

Wing  V.  Harvey    •  138,  435,  612 

Wise  V.  Mut.  Ben.  L.  Ins.  Co.  195,  212 
Witherell  v.  Mar.  Ins.  Co.         101,  491, 
,  612 

Wolf  V.  Howard  Ins.  Co.  525 

Wolfe  V.  Homer  421 

V.  Security  F.  Ins.  Co.   804,  464 
Wood  V.  Dwarris  429 

V.  Hartford  F.  Ins.  Co.  248,  281 
V.  Pha'nix  Mut.  L.  Ins.  Co.  478 
V.  Poughkeepsie  Ins.  Co.       434 
V.  Rutland  and  Addison  Mut. 
F.  Ins.  Co.   22,  93,  300,  527, 
546 
Woodbury  Savings  Bank  v.  Char- 
ter Oak  Ins.  Co.       25,  130, 142,  147, 
447,  584,  711 
Woodfin  V.  Ashville  Mut.  Ins.  Co.    410 
Woods  V.  Atlantic  Mut.  Ins.  Co.      288 
V.  Edwards  421 

Worcester  Bank  v.   Hartford  F. 

Ins.  Co.  449 

Workman  v.  Ins.  Co.  520 

AVorks  V.  Farmers'  Mut.  Ins.  Co.  610 
Worsley  v.  Wood  26,  578 

Worthington  v.  Bearse  95,  291,  299 
Wray  v.  Man.  Prov.  Ins.  Co.  225,  332 
Wustum  V.  City  F.  Ins.  Co.  270 

Wyraan  v.  People's  Equity   Ins. 
Co.  313,  316,  565 


X. 


Xenos  V.  Markham  42 

V.  Wickham  62 


Yates  V.  Whyte  554 

Yeaton  v.  Fry  24 
York   County   Mut.   Ins.    Co.    v. 

Turner  690 

Young  V.  Eagle  F.  Ins.  Co.  290 

V.  Irving  27 

V.  Mut.  L.  Ins.  Co.  of  N.Y.  614 

V.  Wash.  County  Mut.  Ins. 

Co.  243 


Z. 


Zummers  v.  U.  S.  Ins.  An.   and 
Tr.  Co.  33 


INSURANCE. 

FIRE,    LIFE,    ACCIDENT,    &c. 


CHAPTER    I. 

OF  THE  NATURE  OF  THE  CONTRACT. 

§  1.  Definition. —  Insurance  is  a  contract  whereby  one,  for  a 
consideration,  undertakes  to  compensate  another  if  lie  shall 
suffer  loss.  Such,  in  its  most  general  terms,  is  the  definition  of 
the  contract  which  is  to  constitute  the  subject  of  the  following 
chapters.  It  is  substantially  the  definition  given  long  ago  by 
Roccus,  and  is  recommended  alike  by  its  brevity,  its  logic, 
and  its  comprehensiveness,  —  qualities  upon  which  subsequent 
writers  have  scarcely  been  able  to  improve.  "  Assecuratio," 
says  that  early  writer,  "  est  contractus  quo  quis  aliense  rei 
periculum  in  se  suscepit,  obligando  se,  sub  certo  pretio,  ad 
earn  compensandam,  si  ilia  perierit."  ^  Neither  the  times  and 
amounts  of  payments  by  the  insured,  nor  the  modes  of  esti- 
mating or  securing  the  payment  of  the  sum  to  be  paid  by  the 
insurer,  affect  the  question  whether  the  agreement  between 
them  is  a  contract  of  insurance.  All  that  is  requisite  to  con- 
stitute such  a  contract  is  the  payment  of  the  consideration  by 
the  one,  and  the  promise  of  the  other  to  pay  the  amount  agreed 

1  De  Assecur.  not.  1.  See  also  Bynkershoeck's  Laws  of  War,  Du  Pon. 
ceau's  ed.  164.  "  Insurance  is  a  contract  by  which  the  one  party,  in  considera- 
tion of  a  price  paid  to  him,  adequate  to  the  risk,  becomes  security  to  the  other, 
that  he  sliall  not  suffer  loss,  prejudice,  or  damage  by  the  happening  of  the  perils 
specified  to  certain  things  which  may  be  exposed  to  them."  Per  ^Ir.  Justice 
Lawrence,  in  Lucena  f.  Crawford,  2  Bos.  &  Pul.  New  Rep.  300,  after  citing  the 
definitions  of  Valin,  Roccus,  and  others. 

1 


2  insurance:  fire,  life,  accident,  etc. 

upon  in  tlie  contract,  or  to  be  determined  upon  investigation, 
of  loss  to  the  person  entitled  to  claim  it,  upon  the  happening 
of  the  contingency  contemplated  in  the  contract.^ 

§  2.  Contract  of  Indemnity.  —  It  had  its  origin  in  the  neces- 
sities of  commerce  ;  it  has  kept  pace  with  its  progress,  ex- 
panded to  meet  its  rising  wants  and  to  cover  its  ever-widening 
fields,  and  under  the  guidance  of  the  spirit  of  modern  enter- 
prise, tempered  by  a  prudent  forecast,  it  has  from  time  to  time, 
with  wonderful  facility,  adapted  itself  to  the  new  interests  of 
an  advancing  civilization.  It  is  applicable  to  every  form  of 
possible  loss.  "Wherever  danger  is  apprehended  or  protection 
required,  it  holds  out  its  fostering  hand,  and  promises  indem- 
nity. This  is  the  fundamental  principle  which  lies  at  the  basis 
of  the  contract,  and  it  can  never,  without  violence  to  its  es- 
sence and  spirit,  justly  be  made  by  the  assured  a  source  of 
profit ;  its  sole  purpose  being  to  guaranty  against  loss  or  dam- 
age.2  "  Though  based  upon  self-interest,"  says  De  Morgan,^ 
"  yet  it  is  the  most  enlightened  and  benevolent  form  which  the 
projects  of  self-interest  ever  took.  It  is,  in  fact,  in  a  limited 
sense  and  a  practicable  method,  the  agreement  of  a  commu- 
nity to  consider  the  goods  of  its  individual  members  as  com- 
mon. It  is  an  agreement  that  those  whose  fortune  it  shall  be 
to  have  more  than  average  success  shall  resign  the  overplus  in 
favor  of  those  who  have  less.  And  though  it  has  as  yet  been 
applied  only  to  the  reparation  of  the  evils  arising  from  storm, 
fire,  premature  death,  disease,  and  old  age,  yet  there  is  no 

1  Commonwealth  v.  Wetherbee,  105  Mass.  149. 

2  Wilson  V.  Hill,  3  Met.  (Mass.)  66;  Kulen  Kemp  v.  Vignes,  1  T.  R. 
304,  per  Duller,  J.;  Franklin  Fire  Ins.  Co.  v.  Hamil,  6  Gill  (Md.),  87  ;  post,  §  7. 
L'assurance,  nous  I'avons  dit,  a  pour  object  de  rcparer  une  perte  soufferte 
par  I'assure',  jamais  de  lui  procurer  un  bene'fice.  Alauzet,  Traite  General  des 
Assurances,  1  par.  108.  II  est  de  I'essence  du  contract  d'assurance  de  ne  garan- 
tir  que  les  pertes  soutfertes  et  les  depens^s  faites  ;  et,  sauf  conventions  contraires, 
il  est  de  sa  nature  de  les  garantir  toutes.  Ibid.,  par.  112.  On  ne  pent  faire 
assurer  que  ce  qu'on  court  risque  de  perdre ;  l'assurance  ne  doit  jamais  pouvoir 
donner  un  benefice  a  I'assure.  Ce  principe,  que  nous  avons  dej'a  eu  I'occasion 
d'etablir,  doit  etre  maintenu  avec  le  plus  extreme  sc've'rite.  Ibid.,  par.  146.  Asse- 
curatus  non  qua;rit  lucrum,  sed  agit  ne  in  danino  sit.  Straccha,  de  Assecura- 
tionibus,  pt.  20,  No.  4 ;  Pardessus,  Cours  de  Droit  Commercial,  I,  §  589,  4. 

'  An  Essay  on  Probabilities,  and  on  their  Application  to  Life  Contingencies 
and  Insurance  OflSces.     Pref.  p.  xv. 


OP  THE  NATURE  OF  THE  CONTRACT.  3 

placing  a  limit  to  the  extensions  which  its  application  might 
receive,  if  the  public  were  fully  aware  of  its  principles  and  of 
the  safety  with  which  they  may  be  put  in  practice." 

§  3.  Amongst  the  early  writers  the  peculiar  nature  of  this 
contract  has  been  the  subject  of  much  discussion.  The  Italian 
doctors,  in  particular,  have  been  fruitful  in  dissertations  bet- 
ter adapted,  says  Boulay-Paty,^  to  fatigue  the  mind  than  to 
throw  light  upon  the  subject.  With  them  insurance  is  now  a 
nudum  pactum,  and  now  a  contractus  innominaius ;  now  a 
wager  and  now  a  stipulation,  a  security,  a  sale,  a  letting  to 
hire,  a  partnership,  a  mandate,  and  the  like  ;  and  their  several 
conflicting  claims  can  only  be  settled  by  a  deep  plunge  into 
the  theory  of  the  Roman  law  upon  the  subject  of  these  several 
pacts,  where  we  might  perhaps  lose  ourselves  in  the  subtleties 
of  interpretation.  But  these  different  characters  have  been 
attributed  to  it  according  to  the  point  of  view  occupied  by 
each  different  writer,  and  with  reference  to  some  special  appli- 
cation to  a  particular  subject-matter,  rather  than  in  accordance 
with  considerations  drawn  from  the  nature  of  the  contract 
itself.  But  it  is  a  contract  governed  by  the  same  principles 
which  govern  other  contracts.^  Like  all  other  contracts  it 
must  have  its  reciprocal  consent,  and  a  consideration  therefor. 
"  The  consent  of  the  contracting  parties  in  all  things  which 
constitute  the  substance  of  the  contract,"  says  Pothier,^  "  is 
of  the  essence  of  the  contract  of  insurance  as  of  all  other 
contracts."  It  is,  however,  a  contract  peculiar  to  itself,  and 
distinct  from  all  others  in  the  nature  of  things,^  requiring  for 
its  proper  elucidation  to  be  interpreted  in  the  light  of  the  cir- 
cumstances in  the  midst  of  which  it  has  grown  up,  and  with 
a  just  appreciation  of  the  purposes  which  it  is  designed  to 
effect.  Such,  in  point  of  fact,  is  the  modern  view  of  the  con- 
tract under  the  influence  of  which  our  judicial  tribunals  have 
expounded  and  enforced  the  law. 

§  4.  A  Couditionai  Contract. —  It  is,  moreover,  a  Conditional 

^  Cours  de  Droit  Commercial  et  Maritime,  tome  ii.  p.  3. 

-i  Cornfoot  v.  Fowke,  2  M.  &  W.  878. 

3  Traite  de  Cent.  d'Ass.  No.  87. 

*  Emerigon,  Traite  des  Assurances,  c.  1,  §  2. 


4  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

contract ;  for  when  no  risk  attaches  no  premium  is  to  be  paid, 
or,  if  paid,  must,  in  the  absence  of  fraud,  be  returned  to  the 
assured.!  i„  poji^t  of  fact,  the  contract  is  to  pay  the  premium 
on  condition  that  the  risk  is  run,  and  the  refunding  a  premium 
is  of  frequent  occurrence  in  maritime  insurance ;  and  that, 
too,  in  cases  where  it  is  entirely  optional  with  the  assured 
whether  the  property  insured  shall  be  put  at  hazard  or  not,  as 
when  the  ship  is  never  despatched  by  the  owner  on  the  pro- 
jected voyage.  The  language  of  Lord  Mansfield  in  Tyrie  v. 
Fletcher,  above  cited,  is  explicit.  "  When  the  risk  has  not 
been  run,  whether  its  not  having  been  run  was  owing  to  the 
fault,  pleasure,  or  will  of  the  insured,  or  to  any  other  cause, 
the  premium  shall  be  returned."  And  this  principle  is  alike 
applicable  to  all  policies  of  insurance.  The  language  of  the 
continental  writers,  generally,  is  in  accordance  with  this  doc- 
trine. It  would  seem,  therefore,  says  Alauzet,^  that  the 
engagement  of  the  assured  is  not  absolute,  but  conditional, 
like  that  of  the  insurer ;  that  of  tlie  latter  depending  upon 
the  condition  that  an  accident  happen,  and  that  of  the  former 
upon  the  condition  that  the  subject-matter  of  insurance  be  put 
at  risk.  The  Italian  writers,  however,  maintain  with  great 
unanimity,  that  when  once  the  contract  has  been  signed,  the 
premium  is  absolutely  due  to  the  insurer,  and  is  irrevocable ; 
and,  reasoning  according  to  the  analogies  of  the  contract  of 
sale,  which  will  not  permit  the  purchaser  to  recant  at  pleasure, 
and  demand  back  the  purchase-money,  ask,  with  some  signifi- 
cance, why  the  insurer  should  be  made  the  victim  of  an  act 
to  which  he  is  a  total  stranger,  for  which  he  is  in  no  way  re- 
sponsible, and  to  which  the  assured  himself  is  in  no  way  com- 
pelled.2  But  this  strictness  of  interpretation  has  not  obtained 
in  other  and  more  mercantile  communities,  where  the  doctrines 
of  insurance  have  been  developed  under  the  influence  of  a 
liberal  purpose,  so  far  as  consistent  with  general  principles,  to 
foster  the  spirit  of  commercial  enterprise.     In  such  commu- 

1  Stevenson  v.  Snow,  3  Burr.  1437 ;  Tyrie  v.  Fletcher,  Cowp.  668 ;  Pothier, 
Du  Cont.  d'Ass.  4 ;  Pardessus,  Droit  Commercial,  596,  3 ;  2  Marsh.  663. 

2  Traite  Gen.  des  Assurances,  179. 

3  Alauzet,  ubi  supra. 


OP   THE   NATURE   OF   THE   CONTRACT.  6 

nities  the  law  is  jealous  of  any  hindrance  in  the  way  of  the 
complete  abandonment  of  an  adventure  which  may  have  been 
determined  upon  and  insured,  but  which,  subsequent  informa- 
tion may  show,  would  be  imprudent  or  disastrous ;  and  it 
takes  care  that  the  fact  of  having  paid  the  premiums  shall 
have  no  influence  upon  the  deliberation  whether  to  proceed 
or  abandon. 

§  5.  An  Aleatory  Contract.  —  It  is  also  what  the  French 
writers  term  an  aleatory  ^  contract,  or  one  in  which  the  equiv- 
alent consists  in  the  chances  for  gain  or  loss,  to  the  respective 
parties,  depending  upon  an  uncertain  event,  in  contradistinc- 
tion from  a  commutative  contract,  in  which  the  thing  given  or 
act  done  by  one  party  is  regarded  as  the  exact  equivalent  of  the 
money  paid  or  act  done  by  the  other.^  Each  party  runs  his 
risks.  The  insurer  will  gain  the  premium  if  no  loss  happen ; 
and  will  be  obliged  to  make  reparation  if  it  do.  On  the  other 
hand,  the  insured  will,  in  the  former  case,  have  paid  his  pre- 
mium to  no  purpose ;  while  in  the  latter,  he  will  be  indemni- 
fied for  his  loss  by  the  insurer.^ 

§  6.  A  Personal  Contract.  —  It  is  also  a  personal  contract. 
And  wliether  the  subject-matter  of  insurance  be  a  ship  or  a 
building  or  a  life,  or  whatever  else  it  may  be,  although  in 
popular  language  it  may  be  called  an  insurance  upon  the  ship 
or  building  or  life,  or  some  other  thing,  yet  it  is  strictly 
an  agreement  with  some  person  interested  in  the  preserva- 
tion of  the  subject-matter,  to  pay  him  a  sum  which  shall 
amount  to  an  indemnity,  or  a  certain  sum  agreed  upon  as  an 
indemnity,  in  case  his  interest  in  the  subject-matter  shall  suffer 
diminution  of  value,  from  certain  specified  causes,  or  in  cer- 
tain specified  contingencies.*  It  is  a  mere  special  agreement 
with  a  party  seeking  to  secure  himself  against  apprehended 
loss  on  account  of  his  interest  in  a  particular  subject-matter, 
and  not  at  all  incidental  to  or  transferable  with  the  subject- 

1  From  alea,  a  die,  dice,  or  throw  of  the  dice ;  a  word  for  which  our  adjec- 
tives, "  gaming  "  and  "  hazardous,"  are  not  exact  equivalents. 
■i  Code  Civil,  1104. 

'  Rogron,  Code  de  Commerce  Explique',  Title  x.  ;  Des  Ass.  Int. 
*  Wilson  V.  Hill,  3  Met.  (Mass.)  66;  Disbrow  v.  Jones,  Harr.  (Mich.)  Ch.  48. 


6  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

matter.^  The  contract  of  insurance  does  not  run  with  the  sub- 
ject-matter of  insurance,  unless  by  special  stipulations,  wholly 
foreign  to  itself,  either  interpolated  in  the  contract  itself,  or 
in  addition  thereto.  Satisfaction  is  to  be  made  to  the  person 
insured  for  the  loss  he  may  have  sustained  ;  for  it  cannot 
properly  be  called  insuring  the  thing,  since  there  is  no  possi- 
bility of  doing  it,  and  therefore  must  mean  insuring  the  per- 
son from  damage.2  And  it  is  because  of  this  personality  of 
the  contract  that  it  has  been  held  that  if  a  mortgagee  in  pos- 
session for  condition  broken  insure  his  interest  in  the  premises 
without  any  agreement  therefor  between  him  and  the  mort- 
gagor, and  a  loss  happens  for  which  the  mortgagee  is  indem- 
nified by  the  insurers,  the  mortgagor,  on  a  bill  to  redeem  and 
for  an  account,  is  not  entitled  to  have  the  amount  paid  to  the 
mortgagee  deducted  from  the  amount  of  his  charges  for  re- 
pairs.^ 

§  7.  Of  the  Nature  of  the  Contract.  —  A  distinction  has  some- 
times been  taken  between  marine  and  other  insurances,  and 
life  insurance,  on  the  ground  that  while  the  former  have  for 
their  object  to  indemnify  for  loss,  the  latter  is  an  absolute  en- 
gagement to  pay  a  fixed  sum  on  the  happening  of  a  certain 
event,  without  reference  to  any  damage  in  fact,  suffered  by 
the  insured  in  consequence.^  But  this  distinction  is  super- 
ficial, and  rests  rather  upon  the  mode  of  determining  the 
amount  of  indemnity,  than  upon  any  di£Ference  in  principle. 
There  is  the  same  difference,  having  reference  to  the  question 
of  indemnity,  between  valued  and  open  policies  in  both  fire 
and  marine  insurance,  that  there  is  between  an  open  policy 
in  either  and  a  policy  of  life  insurance.  In  open  policies 
the  question  of  the  amount  of  the  indemnity  is  left  to  be  de- 

1  Carpenter  v.  Providence  Wash.  Ins.  Co.,  16  Pet.  (U.  S.)  495. 

2  Saddlers  Company  v.  Badcock,  2  Atk.  554 ;  Lynch  v.  Dalzell,  3  Bro.  Par. 
Cas.  497. 

3  White  V.  Brown,  2  Cush.  (Mass.)  412;  Gushing  v.  Thompson,  4  Red.  (Me.) 
496.  See  also  Leeds  v.  Cheatham,  1  Sim.  146 ;  Mildmay  v.  Folgham,  3  Ves. 
472 ;  Watson  v.  Bratton,  in  Eq.  1830,  cited  by  Elhs,  Fire  and  Life  Insurance 
and  Annuities,  155. 

*  Babbage's  "  Comparative  View  of  the  Various  Institutions  for  the  Assur- 
ance of  Lives,"  p.  154 ;  Dalby  v.  India  and  London  Life  Assurance  Co.,  15  C. 
B.  3G5  ;  8.  c.  28  Eng.  L.  &  Eq.  312. 


OF  THE  NATURE  OF  THE  CONTRACT.  7 

termined  when  the  contingency  upon  which  it  becomes  due 
shall  have  happened,  while  in  valued  policies  and  policies  on 
lives  the  value  of  the  interest  which  the  insured  seeks  to  pro- 
tect is  agreed  upon  by  the  parties  and  inserted  in  the  policy, 
and  so  the  amount  of  indemnity  which  shall  become  due  on 
the  happening  of  the  given  contingency  is  predetermined. 
The  purpose  in  all  cases  is  alike,  —  indemnity  for  tlie  loss  of 
a  valuable  interest.  That  in  some  cases  the  value  is  fixed 
with  great  precision,  while  in  others  it  is  of  such  a  speculative 
character  as  to  admit  of  the  greatest  latitude  of  estimate,  not 
to  say  of  conjecture,  does  not  make  it  the  less  a  valuable 
interest.  There  must  be  this  interest  to  support  the  contract. 
This  is  essential.  What  it  shall  be,  provided  it  be  vahujble, 
and  how  its  value  shall  be  arrived  at,  are  simply  incidental 
questions ;  and  however  they  may  be  answered,  do  not  change 
the  nature  of  the  contract  from  one  of  indemnity  based  upon 
an  interest  to  be  protected,  to  a  mere  wager  based  upon  no 
interest  whatever.  The  analogies  between  life  and  marine 
policies  have  been  matters  of  frequent  judicial  observation. ^ 
When  it  is  said  tliat  fire,  life,  and  other  insurances,  where 
valued  policies  obtain,  are  contracts  of  indemnity,  it  is  simply 
intended  that  to  support  them  the  insured  must  have  some 
interest  in  the  thing  insured.  The  amount  of  this  interest, 
and  the  amount  to  be  paid  in  case  of  loss,  may  be  fixed  by 
arbitrary  agreement,  even  before  the  loss,  according  to  the 
modern  practice,  if  not  strictly  according  to  the  ancient  doc- 
trine, of  insurance.^ 

§  8.  In  a  comparatively  recent  case,  after  much  considera- 
tion, it  was  said  that  the  contract  commonly  called  life  insur- 
ance when  properly  considered  is  a  mere  contract  to  pay  a 
certain  sum  of  money  on  the  death  of  a  person  in  considera- 

^  See  post,  chapter  on  Insurable  Interest. 

2  Whitney  v.  Ind.  Mat.  Ins.  Co.,  15  Ind.  297  ;  Strong  v.  Manufacturers'  Ins. 
Co.,  10  Pick.  (Mass.)  44;  Borden  v.  Hincrham  Mut.  Fire  Ins.  Co.,  18  Pick. 
(Mass.)  523;  Miller  v.  Eagle  Life  and  Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y.  C. 
P.),  268;  Loomis  Adra.  v.  Eagle  Life  and  Health  Ins.  Co.,  6  Gray  (Mass.),  396  ; 
Bevin  v.  Connecticut  Mut.  Life  Ins.  Co.,  23  Conn.  244 ;  Trenton  Mut.  Life  and 
Fire  Ins.  Co.  i'.  Johnson,  4  Zabr.  (N.  J.)  577  ;  St.  John  v.  Am.  Mut.  Life  Ins. 
Co.,  13  N.  Y.  31. 


8  insurance:  fire,  life,  accident,  etc. 

tion  of  the  due  payment  of  a  certain  annuity  for  his  life,  the 
amount  of  the  annuity  being  calculated  in  the  first  instance 
according  to  the  probable  duration  of  the  life,  and,  when  once 
fixed,  it  is  constant  and  invariable.  Tlie  stipulated  amount  of 
annuity  is  to  be  uniformly  paid  on  one  side,  and  the  sum  to 
be  paid  in  the  event  of  death  is  always  (except  when  bounties 
have  been  paid  by  prosperous  offices)  the  same  on  the  other. 
This  species  of  insurance  in  no  way  resembles  a  contract  of 
indemnity,  and  in  this  respect  differs  from  policies  against 
fire  and  against  marine  risks,  which  are  both  properly  con- 
tracts of  indemnity,  —  the  insurer  engaging  to  make  good, 
within  certain  limited  amounts,  the  losses  sustained  by  the 
assured  in  their  buildings,  ships,  and  effects.  In  life  insur- 
ance the  loss  is  sure  to  come,  when  the  insurance  is  for  the 
whole  life.  In  marine  and  fire  insurance  the  loss  may  not 
happen  within  the  time  covered  by  the  insurance,  as  is  the 
case  under  a  simple  life  policy  for  a  limited  time.  The  case 
of  Godsall  V.  Baldero,^  as  to  so  much  of  the  decision  as  held 
that  there  must  be  an  insurable  interest  at  the  time  of  the 
death,  was  declared  to  have  been  decided  upon  a  mistaken  anal- 
ogy between  life  insurance  and  marine  insurance. ^  And  where 
a  policy  is  effected  by  a  creditor  on  the  life  of  his  debtor,  in 
pursuance  of  a  contract  with  his  debtor,  who,  however,  is  no 
party  to  the  policy,  but  supplies  the  money  to  pay  the  pre- 
miums, in  such  case,  said  Stuart,  V.  C,  referring  to  the  case 
of  Dalby  v.  India  and  London  Life  Assurance  Company ,2  al- 
though it  may  be  true  that  the  contract  is  not  one  of  indem- 
nity as  between  the  parties  to  the  policy,  it  is,  nevertheless, 
one  as  between  the  debtor  and  creditor.  So  that  after  the 
debt  is  discharged,  and  the  creditor's  interest  has  ceased,  the 
debtor  is  entitled  to  any  advantages  derivable  from  the  policy.* 
The  case  of  Dalby  v.  India  and  London  Assurance  Company,^ 

1  9  East,  72. 

2  Dalby  v.  India  and  London  Life  Assurance  Co.,  15  C.  B.  (6  J.  Scott)  364, 
determined  in  the  Exchequer  Chamber.  And  see  also  Law  v.  London  Indis- 
putable Life  Policy  Co.,  1  Kay  &  Johns.  223. 

3  15  C.  B.  (G  J.  Scott). 

*  Knox  V.  Turner,  21  L.  T.  n.  s.  701;  s.  c.  9  Law  Rep.  Ch.  155. 
5   Ubi  supra. 


OF  THE  NATURE  OP  THE  CONTRACT.  9 

turned  upon  the  question  not  whether  there  should  be  an  insur- 
able interest,  which  was  admitted,  but  whether  that  interest 
should  subsist  as  well  at  the  time  of  the  death  as  at  the  time 
of  entering  into  the  contract.  That  a  valuable  interest,  for 
the  loss  of  which  indemnity  might  be  claimed,  must  exist  at 
some  time,  as  the  support  of  the  policy,  was  conceded.  This 
case  will  be  further  considered  when  we  come  to  speak  of 
insurable  interest. 

§  9.  Reinsurance.  —  Reinsurance  is  merely  insurance  applied 
in  a  special  way  and  to  cover  in  whole  or  in  part  a  particular 
risk  already  assumed.  When  an  insurer  finds  it  prudent  or 
convenient  to  protect  himself  from  loss  by  reason  of  any  lia- 
bility he  has  assumed  under  a  policy,  he  may  contract  with 
another  to  relieve  him  from  that  liability,  and  take  it  upon 
himself.  This  is  to  reinsure  ;  and  by  the  contract  the  reinsurer, 
except  as  to  the  matter  of  premium,  which  may  be  more  or 
less  than  that  paid  on  the  original  policy,  as  the  parties  may 
agree,  undertakes  with  reference  to  the  first  insurer  what  the 
first  insurer  undertakes  with  reference  to  the  insured,  and 
subject  to  like  rights,  duties,  and  obligations. 

§  10.  Reinsurance  is  prohibited  in  England  by  statute  19  Geo. 
II.  c.  371 ;  but  this  prohibition  is  peculiar  to  England,  and  was 
made  not  from  any  objection  to  the  practice  when  confined  to 
its  legitimate  purpose,^ — to  save  the  party  procuring  the  rein- 
surance from  the  consequences  of  an  imprudent  contract, — 
but  from  the  fact  that  it  came  to  be  perverted  into  a  mode  of 
speculating  in  the  rise  and  fall  of  premiums,  and  might,  there- 
fore, be  made  a  cover  for  wager  policies.^  But  by  the  law 
and  practice  of  every  country  except  England  the  underwriter 
may  have  the  entire  sum  he  has  insured  reinsured  to  him  by 
some  other  underwriter.  It  is  a  common  practice  in  this 
country.^ 

§  11.  It  is  a  contract  of  indemnity  to  the  reinsured,  and 
binds  the  reinsurer  to  pay  to  the  reinsured  the  loss  sustained 

1  Arnould  Ins.  1,  290 ;  Andree  v.  Fletcher,  2  T.  R.  161. 

2  Arnould  Ins.,  ubi  supra. 

»  Phil.  Ins.  c.  3,  §  13;  Merry  v.  Prince,  2  Mass.  176;  Hastie  v.  De  Peyster, 
3  Caines,  190. 


10  insurance:  fire,  life,  accident,  etc. 

ia  respect  to  the  subject  insured,  to  the  extent  for  which  he  is 
reinsurer.!  The  reinsured,  in  order  to  recover  against  the  in- 
surer, must  prove  his  risk  or  interest  in  the  subject-matter, 
the  fact  and  amount  of  loss,  in  the  same  manner  as  the  original 
insured  must  have  proved  them  against  him ;  -  and  the  rein- 
surer is  entitled  to  make  the  same  defence  to  an  action  brought 
against  him  on  the  second  policy  as  the  original  insurer  might 
have  done  on  the  first  policy.^  It  is  not  necessary  for  the  rein- 
sured to  pay  the  loss  to  the  first  insured  before  proceeding 
against  the  reinsurer,  nor  is  the  liability  of  the  latter  affected 
by  the  insolvency  of  the  reinsured,  or  his  inability  to  fulfil  his 
own  contract  with  the  original  insured.*  Nor  is  it  competent, 
unless  so  agreed,  to  limit  the  liability  on  a  contract  of  reinsur- 
ance by  proof  of  a  usage  in  the  place  where  the  contract  is 
mode,  by  which  the  reinsurer  pays  the  same  proportion  of  the 
entire  loss  sustained  by  the  original  insured  that  the  sum 
reinsured  bears  to  the  first  insurance  written  by  the  reinsured.^ 
Where  the  reinsurer  has  notice  from  the  reinsured  that  a  suit 
has  been  commenced  against  the  latter,  and  that  the  former 
will  be  looked  to  for  the  costs  and  expenses  of  defence,  and  no 
objection  is  made  by  the  reinsurer,  and  the  reinsured  has  just 
grounds  for  contesting  the  claim,  the  reinsurer  will  be  holden 
to  pay  to  tlie  reinsured  the  costs  and  expenses  of  such  defence 
in  addition  to  the  actual  loss.  But  costs  and  expenses,  wantonly 
and  unnecessarily  so  incurred,  when  there  is  no  reasonable 
ground  of  defence,  and  when  there  is  no  express  or  implied 
sanction  of  the  defence  by  the  reinsurer,  cannot  be  recovered 
by  the  reinsured.^  And  a  party  obtaining  a  policy  of  rein- 
surance is  bound  to  communicate  all  facts  within  his  knowl- 
edge, with  reference  to  the  character  of  the  original  insured, 
material  to  the  risk ;  and  if  he  neglect  to  do  so,  whether  from 

1  Hone  V.  Mut.  Saf.  Ins.  Co.,  1  Sand.  Superior  Ct.  Rep.  (N.  Y.)  137. 

2  3  Kent,  Cora.  279. 

3  New  York  Mar.  Ins.  Co.  v.  Prot.  Ins.  Co.,  1  Story,  C.  C.  R.  458 ;  Eagle 
Ins.  Co.  V.  Lafayette  Ins.  Co.,  9  Ind.  443. 

*  Hone  V.  Mut.  Saf.  Ins.  Co.,  1  Sand.  Superior  Ct.  Rep,  (N.  Y.)  137. 

*  Ibid.    And  see  8.  c.  affirmed,  2  Comst.  (N.  Y.)  235. 

6  New  York  State  Mar.  Ins.  Co.  v.  Prot.  Ins.  Co.,  1  Story,   C.  C.  R.  458 ; 
Hastie  v.  De  Peyster,  3  Caines  (N.  Y.),  190. 


OF  THE  NATURE  OF  THE  CONTRACT.  11 

design  or  misapprehension  of  their  materiality,  the  policy  of 
reinsurance  will  be  void.^  The  notice  of  loss  from  the  original 
insured  to  the  reinsured,  if  sufficient,  and  it  be  immediately 
forwarded  to  the  reinsurer,  will  be  sufficient  notice  to  the 
latter.2 

§  12.  "  The  original  contract,"  says  Emerigon,  "  subsists 
precisely  as  it  was  made,  without  renewal  or  alteration.  The 
reinsurance  is  absolutely  foreign  to  the  first  insured,  with 
whom  the  reinsurer  contracts  no  sort  of  obligation.  The  risks 
which  the  insurer  has  assumed  constitute  between  him  and 
the  reinsurer  the  subject-matter  of  the  contract  of  reinsurance, 
which  is  a  new  contract,  totally  distinct  from  the  first.^  It 
cannot,  therefore,  be  made  with  the  party  first  insured,  for 
this  would  be  a  simple  rescission  of  the  contract ;  nor  does  the 
latter  by  it  acquire  any  rights  against  the  reinsurer,  in  case  of 
the  insolvency  of  the  reinsured,  or  any  claim  upon  the  money 
to  be  paid  to  the  latter.*  If  the  insurer  be  not  liable,  he  can- 
not recover  of  the  reinsurer,  for  the  reason  that  the  insurer 
has  no  insurable  interest,  and  can  suffer  no  loss,  where  there 
is  no  liability.^  Where  in  a  policy  of  insurance  there  is  a 
stipulation  that  the  reinsurer  is  to  be  liable  only  for  his  pro- 
portion of  the  loss,  if  tliere  shall  be  other  insurance ;  other 
insurance  means,  other  insurance  of  a  like  kind,  that  is,  other 
reinsurance.^ 

§13.  Double  Insurance.  —  When  two  or  more  policies  are 
taken  out  upon  the  same  interest,  it  is  called  double  insurance. 
Policies  usually  contain  a  clause  that  in  case  of  other  insur- 
ance, that  is,  double  insurance,  the  several  insurers  shall  be 
liable,  each  to  such  a  proportion  of  the  loss  as  the  several 

1  New  York  Bow.  F.  Ins.  Co.  v.  New  York  Fire  Ins.  Co.,  17  Wendell  (N.  Y.), 
359. 

2  Ibid. 

3  Emerigon,  Traite  des  Assurances,  c.  8,  §  14 ;  Herckenrath  v.  Am.  Mut. 
Ins.  Co.,  3  Barb.  (N.  Y.)  Ch.  63. 

*  Alauzet,  Traite  General  des  Assurances,  152. 

5  Eagle  Ins.  Co.  i'.  Lafayette  Ins.  Co.,  9  Ind.  443 ;  New  York  Mar.  Ins.  Co.  v. 
Prot.  Ins.  Co.,  1  Story,  C.  C.  R.  458 ;  Carpenter  v.  Providence  Ins.  Co.,  16  Pet. 
(U.  S.)  495;  Del.  Ins.  Co.  v.  Quaker  City  Ins.  Co.,  3  Grant's  Cases  (Penu.),  71. 

6  Mut.  Saf.  Ins.  Co.  v.  Hone,  2  Comst.  (N.  Y.)  235. 


12  insurance:  fire,  life,  accident,  etc. 

amounts  insured  bear  to  each  other.  This  prevents  the  re- 
covery of  more  than  the  wliole  loss  by  the  insured.  And  if 
there  were  no  such  provision,  since  the  insured  is  only  entitled 
to  an  indemnity,  he  can  recover  no  more  than  this,  however 
much  may  be  the  amount.  He  may,  however,  resort  to  any 
one  of  the  insurers  to  recover  his  whole  loss  ;  and  in  tliat  case, 
the  insurer  paying  the  loss  will  have  claims  over  against  the 
other  insurers  for  their  respective  proportions,  the  several 
concurrent  insurers  being  regarded  as  identical  in  interest. ^ 
This  question  of  double  insurance  will  be  further  and  more 
particularly  considered  when  we  come  to  speak  hereafter  of 
conditions  witii  reference  to  other  insurance. 

1  Gordon  v.  London  Assurance  Co.,  1  Burr.  492;  Lucas  v.  Jefferson  Ins.  Co., 
6  Cow.  (N.  Y.)  635;  Stacy  v.  Franklin  Fire  Ins.  Co.,  2  W.  &  S.  (Penn.)  506; 
Newby  v.  Reed,  1  W.  Black.  416 ;  Peoria  Marine  &  Fire  Ins.  Co.  v.  Lewis,  18 
111.  553  ;  Baltimore  Fire  Ins.  Co.  v.  Lovey,  20  Md.  20 ;  Sloot  v.  Royal  Ins.  Co.,  49 
Penn.  St.  14 ;  Merrick  v.  Germania  Fire  Ins,  Co.,  54  Penn.  St.  277. 


FORM   OF   THE    CONTRACT   AND   THE   PARTIES   THERETO.         13 


CHAPTER   11. 

OF  THE  FORM  OP  THE  CONTRACT  AND  THE  PARTIES  THERETO. 

§  14.  Contract  may  be  by  Parol.  —  However  great  may  be  the 
inconvenience  to  the  parties,  and  however  injudicious  it  may- 
be to  leave  the  terms  of  the  contract  to  the  uncertainties  of  even 
the  most  accurate  and  retentive  memory,  it  seems,  neverthe- 
less, that  a  contract  of  insurance,  the  terms  of  which  are  not 
in  writing,  is  sufficient  to  bind  the  parties,  when  there  is  no 
statute  law  to  the  contrary. 

A  recent  learned  writer,^  indeed,  doubts  whether  an  action 
upon  a  contract  merely  oral  would  be  now  sustained,  since  the 
usage  of  written  contracts  has  become  so  ancient  and  so  uni- 
versal that  it  may  be  considered  to  have  acquired  the  force 
of  law.  And  this  view  seems  to  have  been  adopted  to  its  full 
extent  in  a  late  case  in  the  Supreme  Court  of  Ohio.^  In  this 
case  the  court  holds  the  following  language  by  Reed,  J.  : 
"  Insurance  is  a  branch  of  the  law-merchant,  and  its  nature 
and  principles  spring  from  commercial  usage,  to  which  we 
are  to  look  for  the  forms  and  modes  in  which  it  is  reduced 
to  practical  action,  in  cases  not  determined  by  positive  de- 
cisions or  the  rules  of  municipal  law.  The  form  of  giving 
effect  to  the  indemnity  is  by  a  written  instrument,  containing  the 
consideration,  terms,  and  stipulations  of  the  contract  of  in- 
demnity between  the  underwriter  and  insured,  called  a  policy. 
It  is  universal  commercial  usage,  that  this  policy  shall  be  in 
writing,  and  there  is  no  exception  to  it  in  positive  decision  or 
municipal  regulation.  Such  a  thing  as  a  verbal  policy  is*"un- 
known  to  the  law  of  insurance.  All  the  books  upon  the  sub- 
ject, and  decisions,  unite  in  declaring  that  the  policy  must  be 
in  writing.     And  in  every  instance  where  the  municipal  law 

1  1  Duer,  Ins.  60. 

2  Cockerell  v.  Cincinnati  Mut.  Ins.  Co.,  16  Ohio,  148. 


/■ 


14  insurance:  fire,  life,  accident,  etc. 

has  created  and  empowered  corporations  to  enter  upon  the 
business  of  insurance,  it  has  required  that  the  contract  of  in- 
surance, or  the  policy,  should  be  in  writing,  and  signed  by  the 
parties  to  be  bound.  It  is  so  in  the  act  incorporating  the  in- 
surance company  now  in  question.  To  hold  that  there  could 
be  such  a  thing  as  a  verbal  policy  would  be  contrary  to  all 
commercial  usage,  and  the  authority  of  all  the  books  and  de- 
cisions, and  in  this  case  would  be  in  opposition  to  the  spirit 
and  express  requirements  of  the  act  of  our  legislature  creating 
the  company."  "  But  without  the  act,  we  should  hold  that  a 
policy  of  insurance  upon  the  principle  of  general  usage  must 
be  in  writing,  as  supported  and  declared  by  universal  adjudi- 
cation." 

In  this  case  a  policy  had  been  issued  and  had  become  void 
by  a  sale  of  the  property.  The  real  question  at  issue  was, 
whether  a  parol  agreement  would  revive  it.  If  by  the  last 
clause  of  the  opinion  just  referred  to  it  is  intended  that  the 
contract  to  insure  must  be  in  writing,  as  declared  by  universal 
adjudication,  it  will  be  seen  hereafter  that  the  statement  can- 
not be  accepted  as  a  correct  one.  Nor  will  the  intimation  of 
the  court,  that  a  non-compliance  with  the  statutory  requisitions 
as  to  the  mode  of  making  the  contract  is  fatal  to  its  validity, 
be  found  to  be  supported  by  the  majority  of  the  adjudged  cases 
or  the  weight  of  authority. 

It  is  doubtless  generally  true  that  a  corporation  cannot  by 
its  own  act  enlarge  its  own  capacities,  powers,  or  rights ;  but 
it  would  be  strange  to  say  that  it  cannot  thus  voluntarily  incur 
liabilities.  If  a  corporation  by  a  corporate  act  appoints  an 
agent  under  any  name  or  title  whatever,  for  the  purpose  of 
making,  in  its  own  behalf,  any  contract  which  it  has  a  right 
to  make,  can  the  corporation  itself  impeach  such  a  contract, 
made  in  its  name  by  that  agent,  by  alleging  its  own  want  of 
power  to  make  such  an  appointment,  or  to  contract  by  such  an 
agent  ?     Such  a  doctrine  is  in  violation  of  all  principle. ^ 

§  15.  Even  an  express  provision  in  the  act  of  incorporation 
that  policies  subscribed  by  the  president  and  countersigned  by 

I  Bulkley  v.  The  Derby  Fishing  Co.,  2  Conn.  254.  And  see  also  Fuller  v. 
Boston  Mut.  Fire  Ins.  Co.,  4  Met.  (Mass.)  206. 


FORM  OF  THE  CONTRACT  AND  THE  PARTIES  THERETO.    15 

the  secretary,  or  however  else,  shall  be  binding  on  the  corpo- 
ration, merely  specifies  one  sufficient  mode  of  making  the  con- 
tract, and  affords  no  just  inference  that  this  mode  is  exclusive 
of  others,  or  that  contracts  not  in  writing  are  invalid.^ 

§  16.  The  ancient  stringency  of  the  common  law  required 
that  corporations  should  execute  their  contracts  under  their 
corporate  seal,  and  held  that  they  could  only  thus  contract. 
But  this  doctrine  is  now  exploded.^  And  the  language  of  the 
statutory  provisions  referred  to  would  seem  to  intend  rather 
to  give  to  the  modern  doctrine  the  force  of  legislative  sanction, 
than  to  preclude  such  corporation  from  the  right  to  contract 
under  the  corporate  seal,  if  they  please,  or  to  designate  any 
particular  mode  which  alone  shall  be  binding  upon  them. 
The  insured  is  also  relieved  from  the  necessity  of  proving 
affirmatively  that  the  particular  officers  are  clothed  with  power 
which  authorizes  them  to  contract  for  the  corporation.^ 

§  17.  And  such,  no  doubt,  is  the  spirit  of  the  later  English 

1  Trustees  of  First  Baptist  Church  in  Brooklyn  v.  Brooklj'n  Fire  Ins.  Co., 
19  N.  Y.  (5  Smith)  305;  Constant  t-.  The  Alleghany  Ins.  Co.,  3  Wallace  (U.  S. 
C.  C),  313;  s.  c.  Am.  Law.  Reg.  n.  s.  1, 116.  See  also  New  England  Mut.  Ins. 
Co.  V.  De  Wolf,  8  Pick.  (Mass.)  62;  City  of  Davenport  v.  Peoria  Marine  and 
Fire  Ins.  Co.,  17  Iowa,  276.  That  the  current  of  foreign  authorities  is  in  the 
same  direction,  see  post,  §§  20,  21.  In  Lower  Canada,  however,  it  has  been  held 
that  the  mode  specified  in  the  charter  is  exclusive.  Mutual  Ins.  Co.  v.  McGille- 
vray,  9  Lower  Canada,  488,  reversing  s.  c.  8  Lower  Canada,  401 ;  while  in 
Upper  Canada  it  was  held,  that  although  under  a  clause  in  the  charter  which 
provided,  "Any  policy  signed  by  the  president  and  countersigned  by  the  secre- 
tary, but  not  otherwise,  shall  be  deemed  valid  and  binding  on  the  company," 
a  policy  issued  without  the  signature  of  the  company  was  invalid,  and  the 
company  would  not  be  liable  in  a  suit  upon  such  a  policy,  yet  they  could  be  com- 
pelled to  execute  a  valid  policy  as  of  the  date  when  this  invalid  policy  was 
issued.  Perry  v.  Newcastle  IJist.  Mut.  Fire  Ins.  Co.,  8  Upper  Canada,  Q.  B. 
363.  In  Henning  v.  United  States  Ins.  Co.,  47  Mo.  430,  it  was  held  that  a 
company  whose  (;harter  provides  that  "  all  the  conditions  of  policies  issued  by 
said  company  shall  be  printed  or  written  on  the  face  thereof,"  and  whose  by- 
laws provide  that  "  the  president  shall  sign  all  policies  or  other  contracts  by 
which  the  company  are  bound;  "  and  also  that,  "every  proposal  for  insurance 
shall  be  by  written  application,  signed  by  the  applicant  or  his  agent,"  could  not 
make  an  original  and  binding  contract  by  parol.     See  also  post,  §  23  et  seq. 

''■  2  Kent's  Com.  28S  ;  Bank  of  Columbia  v.  Patterson,  7  Cranch,  299  ;  Hamil- 
ton V.  Lycoming  Mut.  Ins.  Co.,  5  Barr  (Penn.),  339;  s.  c.  10  Law  Reporter, 
448 ;  Copper  Miners  v.  Fox,  3  Eng.  Law  &  Eq.  Rep.  420. 

3  Safford  v.  WyckoflF,  4  HUl,  446,  Walworth,  Ch. 


16  insurance:   fire,  life,  accident,  etc. 

cases.  In  Prince  of  Wales  Life  and  Educational  Assurance 
Company  v.  Harding,^  which  was  a  case  where  the  charter 
provided  that  the  seal  of  the  company  should  not  be  affixed 
to  policies  except  by  the  written  order  of  three  directors,  and 
a  policy  was  issued  under  seal  but  without  any  order  of  the 
directors;  such  a  policy  was,  however,  held  to  be  valid  and 
binding  upon  the  company,  for  reasons  substantially  the 
same  as  those  given  in  the  American  decisions.  The  object  of 
the  legislature  was  said  to  be,  for  the  better  protection  of  the 
stockholders,  to  impose  upon  the  directors  the  duty  towards 
them  of  observing  certain  formalities.  If  they  failed  in  that 
duty  they  would  be  liable  for  their  negligence  to  the  stock- 
holders, but  the  absence  of  the  prescribed  formality  would  not 
render  the  contract  void  as  against  the  company.^ 

§  18.  But  corporations  are  not  the  only  underwriters.  Pri- 
vate individuals  may  insure  ;  and  if  a  party,  for  a  good  consid- 
eration, should  take  upon  himself  the  risk  of  theft,  upon  a 
quantity  of  specie  in  its  passage  from  one  port  to  another,  and 
it  should  be  stolen,  a  court  of  justice  would  doubtless  hesitate 
long  before  it  would  sustain  the  defendant's  refusal  to  indem- 
nify, on  the  ground  that  the  contract  was  merely  oral,  against 
the  irresistible  equity  of  the  plaintiff's  claim.  Usage,  it  is 
said,  requires  it.  But  aside  from  the  fact  that  usage  may  be 
waived  by  the  consent  of  parties,  its  requisitions  cannot  be  said 
to  be  so  inexorable  as  virtually  to  import  a  new  clause  into  the 
Statute  of  Frauds.^ 

§  19.  It  is  not  denied,  however,  that  by  the  principles  of 
the  common  law  a  verbal  agreement  would  be  sufficient,  and 
it  seems  difficult  to  see  why  a  party,  in  the  absence  of  any 
statutory  regulations  to  the  contrary,  may  not  be  heard  in  a 

1  1  E.  B.  &  E.  183. 

-  See  also  Collett  v.  Morrison,  9  Hare,  162. 

3  Even  the  Supreme  Court  of  Ohio,  altliough  it  has  several  times  referred  to 
the  case  of  Cockerell  v.  Cincinnati  Mut.  Ins.  Co.,  16  Ohio,  148,  with  apparent 
approval,  has,  in  a  later  case  (Palmer  v.  Medina  Ins.  Co.,  20  Ohio,  521)),  appar- 
ently taken  it  for  granted  that  a  contract  to  insure  need  not  be  in  writing.  A 
contract  for  insurance  for  a  year,  or  from  year  to  year,  is  not  within  the  Statute 
of  Frauds.  Walker  v.  Metropolitan  Ins.  Co.,  56  Me.  471 ;  Trustees  of  First 
Baptist  Church  in  Brooklyn  v.  Brooklyn  Fire  Ins.  Co.,  19  N.  Y.  (5  Smith)  308; 
Sanborn  v.  Fireman's  Ins.  Co.,  16  Gray  (Mass.)  448. 


FORM  OF  THE  CONTRACT  AND  THE  PARTIES  THERETO.     17 

court  which  administers  the  law  to  whicli  he  appeals,  and  which 
can  find  nothing  in  its  principles  adverse  to  his  claim.  It  was 
accordingly  said,  in  McCullock  v.  The  Eagle  Insurance  Com- 
pany,i  to  be  certain  that  if  a  contract  be  made,  the  mere  want 
of  a  policy  will  not  prevent  the  plaintiff  from  recovering.  And 
more  recently,  Mr.  Chancellor  Walworth,  after  remarking  that 
the  Stamp  Laws  in  England,  and  the  respective  Codes  of  France 
and  Spain  require  that  the  contract  be  in  writing,  observes,-  that 
the  assertion  of  Millar,^  that  the  importance  of  the  contract 
of  insurance,  and  the  singularity  of  those  obligations  which  it 
is  intended  to  create,  have  in  all  commercial  countries  rendered 
a  deed  in  writing  essential  to  its  validity,  is  unsupported  by 
authority,  and  adds:  "I  have  not  been  able  to  find  any  thing  N 
in  the  common  law  of  England  rendering  it  absolutely  neces- 
sary that  contracts  for  insurance  should  be  in  writing,  although 
the  custom  has  been,  so  far  as  I  can  ascertain,  to  have  some 
written  evidence  of  the  agreement  to  insure.  A  policy  of  in- 
surance necessarily  imports  a  written  contract,  as  the  name  of 
the  instrument,  derived  from  the  Italian,  implies.  I  am  not 
prepared  to  say,  however,  that  in  this  State  there  may  not  be 
a  valid  parol  agreement,  founded  upon  a  good  consideration, 
to  execute  a  written  policy  of  insurance,  which  a  court  of 
equity  may  enforce,  although  there  is  no  written  evidence  what- 
ever of  the  agreement,  or  of  any  of  its  stipulations  or  condi- 
tions." >^.^ 
§  20.  In  a  still  later  case,*  the  question  again  arose,  and  ^ 
was  decided  in  favor  of  the  validity  of  a  parol  agreement  for  a 
policy,  citing  and  approving  on  this  point  the  case  of  McCul- 
lock V.  The  Eagle  Insurance  Company.  It  was  also  said  in  the 
same  case  by  Chief  Justice  Gibson,  that,  a  few  years  previous, 
an  action  on  an  agreement  for  a  policy  against  fire  was  tried 
before  him,  and  a  recovery  had,  without  objection  on  the 
ground  that  it  was  a  parol  contract,  though  the  counsel  re- 

1  1  Pick.  (Mass.)  278. 

•2  Sandford  v.  Trust  Fire  Ins.  Co.,  11  Paige,  547. 
3  Ins.  30. 

*  Hamilton  v.  Lycoming  Mut.  Ins.   Co.,  5  Barr  (Penn.),  339;  s.  c.  10  Law 
Reporter,  4'J8. 

2 


18  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

tained  by  the  corporation  were  amongst  the  soundest  lawyers 
at  the  Philadelphia  bar.^  Nor  even  in  France,  although  the 
Code  de  Commerce  requires  that  the  contract  be  reduced  to 
writing,  would  a  verbal  agreement  be  ipso  facto  null  and  void. 
Any  written  evidence  that  an  agreement  has  been  made,  will 
let  in  the  plaintitf  to  show  what  the  contract  is  ;  and  even  this 
is  not  necessary  unless  the  defendant  deny  that  there  ever  was 
any  agreement  of  any  kind.^  And  if  he  do  deny,  the  better 
opinion  is  that  he  may  be  put  upon  iiis  oath  ;^-  which,  however, 
Emerigon  does  not  admit.* 

§  21.  "  Writing  cannot  be  regarded,"  says  Alauzet,^  "  as 
necessary  to  the  validity  of  the  contract  of  insurance." 
"  This  form,"  says  Pothier,  "  is  absolutely  foreign  to  the 
substance  of  the  contract."  And  Merlin  afterwards  lield  it 
to  be  clear  that  writing  was  only  necessary  to  establish  the 
existence  of  the  contract  against  those  who  would  deny  it. 
The  law,  in  truth,  cannot  cliange  the  essence  of  a  contract 
which  it  has  not  created,  and  which  exists  independently  of  it, 
because  it  is  of  the  law  of  nations.  But  it  is  entirely  compe- 
tent to  our  law  to  regulate  the  conditions  necessary  to  the 
proof  of  the  contract ;  and  under  this  relation  it  becomes  a 
contract  subject  thereto.  To  say,  however,  that  insurance 
itself  shall  have  no  existence  except  under  these  conditions, 

1  See  also  Perkins  v.  Washington  Ins.  Co.,  4  Cowen,  646  ;  Lightbody  v.  N. 
A.  Ins.  Co.,  23  Wend.  18  ;  Smith  v.  Odlin,  4  Yeates,  468  ;  Thayer  v.  Middlesex 
Mut.  Ins.  Co.,  10  Pick.  (Mass.)  326;  Luciani  v.  Am.  Fire  Ins.  Co.,  2  Whar. 
(Penn.)  167;  Union  Mut.  Ins.  Co.  v.  Commercial  Mut.  Ins.  Co.,  2  Curtis  (U.  S. 
C.  C),  524 ;  s.  c.  19  Howard  (U.  S.),  318,  affirmed. 

2  llogron,  Code  de  Commerce  Explique',  art.  332,  note ;  Alauzet,  Traite'  Ge'n. 
des  Assurances,  181,  401,  who  cites  Pothier,  Merlin,  and  others. 

3  Ibid. 

*  Traite  des  Assurances,  c.  2,  §  1.  In  Holland  the  doctrines  of  fire,  marine, 
and  other  insurance  have  been  incorporated  into  the  Commercial  Code.  The 
twelfth  article  of  title  9,  the  257th  of  the  Code,  is  as  follows  :  The  contract  of 
insurance  subsists  as  soon  as  the  agreement  has  been  determined  between  the 
parties,  and  the  reciprocal  rights  and  obligations  of  the  insurers  and  the  insured 
commence  from  that  moment,  even  before  the  signature  of  the  policy.  The 
contract  imports  the  obligation  of  the  insurers  to  sign  the  pohcy  within  the  time 
agreed  upon  and  deliver  it  to  the  insured.  Rogron,  Code  de  Commerce  Ex- 
plique, p.  245.  Le  Guidon,  art.  11,  c.  1,  speaks  of  parol  agreements  to  insure, 
and  prohibits  them. 
5  Ubi  supra. 


FORM   OP   THE    CONTRACT   AND   THE   PARTIES   THERETO.  19 

and  that  one  of  the  parties  may  admit  all  the  allegations  of 
the  other  and  yet  refuse  to  comply  with  the  terms  of  the  con- 
tract because  it  is  not  in  writing,  would  be  to  establish  an 
abuse,  against  truth  and  the  nature  of  things.  The  Code  de 
Commerce  is  far  from  containing  any  such  provision  ;  and 
always  when  it  has  made  any  requirement  on  pain  of  nullity, 
it  lias  expressly  said  so.  It  is  well  known  what  chaos  has 
been  introduced  into  another  branch  of  the  law,  by  the  techni- 
cal distinction  between  forms  which  are  substantial  and  those 
which  are  not;  between  those  prescribed  on  pain  of  nullity 
and  those  which  are  only  directory.  Nothing  of  the  like 
exists  in  commercial  law.  If  the  Code  does  not  pronounce 
nullity  expressly,  clearly,  and  in  a  peremptory  manner,  it  can- 
not be  invoked.  In  such  cases  equivalents  may  be  substituted 
for  its  prescriptions." 

§  22.  It  was  said,  in  The  Trustees  of  the  First  Baptist  Society 
in  Brooklyn  v.  Brooklyn  Fire  Insurance  Company,  that  an 
agreement  that  an  existing  policy  for  a  year  should  be  in  exist- 
ence from  year  to  year  after  its  expiration,  may  be  by  parol, 
and  yet  be  valid,  as  the  reasons  which  require  policies  to  be 
in  writing  do  not  apply  to  such  an  agreement.^  What  these 
reasons  are,  do  not  appear  in  the  opinion  of  the  court,  and  it 
may  well  be  doubted  if  any  distinction  like  that  so  intimated 
does  in  fact  exist.  The  cases  already  cited  are  strictly  cases 
of  agreements  looking  to  the  issue  of  a  policy  ;  and  most  of 
the  terms  of  the  several  agreements  are  in  some  form  in  writ- 
ing. But  the  case  of  the  Mol)ile  Marine  Dock  and  Mutual  In- 
surance Company,^  was  less  embarrassed  by  written  evidence 
of  any  kind.  In  this  case  there  was  a  simple  memorandum 
in  figures,^  alleged  to  be  in  the  handwriting  of  the  secretary 
of  the  insurance  company,  and  the  offer  was,  to  show  by  this 
and  oral  evidence  that  a  contract  of  insurance  against  fire  was 
made  between  the  parties.    The  insurers  objected  that  both  the 

1  18  Barb.  (N.  Y.)  69. 
*  This  memorandum  was  as  follows  :  — 
"  5250     .     .     7  d'ys     .     . 
4650     .     .     2    „ 
9900.  3-16  to  N.  O. 


•i 

31 

Ala. 

711. 

1- 
1- 

-8 
-20 

6.56 
2.32 
18^6'- 

-$27.44.' 

20  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

memorandum  and  the  oral  evidence  were  inadmissible,  on  the 
ground  that  it  was  not  competent  by  parol  evidence  to  establish 
a  contract  of  insurance.  But  the  court  held  that  an  oral  agree- 
ment for  insurance  against  loss  on  goods  by  fire  was  valid. 
And  the  New  York  Court  of  Appeals,^  although  the  case  before 
it  was  rather  one  of  the  renewal  of  a  contract,  the  terms  of  which 
were  fixed  in  writing,  than  the  making  of  a  new  one,  has  re- 
cently broadly  asserted,  that,  "  to  deny  that  parol  agreements 
to  insure  are  valid,  would  be  simply  to  affirm  the  incapacity 
of  parties  to  contract,  when  no  such  incapacity  exists  according 
to  any  known  rule  of  reason  or  of  law."  The  distinction  above 
referred  to,  suggested  by  the  court  below,  in  tbe  same  case, 
seems  to  have  been  disregarded.  And  such  parol  agreement 
takes  effect  forthwith,  although  entered  into  contemporane- 
ously with  an  agreement  by  the  insurers  to  deliver,  and  the 
insured  to  accept  and  pay  for,  as  a  substitute  therefor,  a  policy 
in  writing  in  tlie  usual  form,  and  remains  in  force  till  the  de- 
livery or  tender  of  such  policy.  And  until  then  the  condition 
usually  inserted  in  such  policies,  making  prepayment  of  the 
premium  necessary  to  the  validity  of  tiie  contract,  has  no 
operation  by  implication. ^  And  a  mere  demand  of  the  pre- 
mium, without  a  tender  of  the  policy,  will  not  relieve  the  in- 
surers from  responsibility  under  such  parol  agreement.^  And 
under  it  the  insured  may  recover,  although  he  may  have  re- 
ceived a  policy,  in  pursuance  of  the  agreement,  if  by  its  terms 
such  policy  becomes  valid  only  on  being  countersigned  by 
the  agent,  and  in  fact  has  not  been  so  countersigned.^ 
And  tbe  rule  of  damages  is  the  same  as  under  a  written 
policy.^ 

§  23.  In  the  case  of  Sanborn  et  al.  v.  Firemen's  Insurance 
Company,^  the  point  was  again  distinctly  made  that  the  con- 
tract of  insurance  is  required  to  be  in  writing,  and  that  a  suit 
at  law  is  not  maintainable  on  an  oral  agreement,  and  was 

1  Trustees  of  the  First  Baptist  Church  v.  Brooklyn  Fire  Ins.  Co.,  19  N.  Y. 
305. 

2  Kelley  v.  Commonwealth  Ins.  Co.,  10  Bosw.  (N.  Y.)  82. 

3  Ibid.  4  Ibid. 

6  Rockwell  I'.  Hartford  Fire  Ins.  Co.,  4  Abb.  Pr.  Rep.  (N.  Y.)  179. 
6  16  Gray  (Mass.),  448,  decided  in  1860,  but  not  published  till  1871. 


FORM    OF    THE    CONTRACT    AND    THE    PARTIES    THERETO.  21 

elaborately  considered,  and  all  the  authorities  reviewed,  and 
the  conclusion  to  which  the  court  arrived  was,  that  no  prin- 
ciple of  the  common  law  requires  that  this  contract,  any  more 
than  any  other  simple  contract  made  by  competent  persons 
upon  a  sufficient  consideration,  should  be  evidenced  by  a  writ- 
ing. And  in  this  case  the  oral  agreement  was  upheld,  although 
the  charter  of  the  defendant  company  provided  tliat  they  should 
have  a  right  to  make  contracts  by  the  signature  of  the  presi- 
dent for  the  time  being,  or  by  the  signatures  of  such  other 
persons  and  in  such  form  and  with  such  ceremonies  of  authen- 
tication as  they  may  by  their  rules  and  by-laws  direct,  the 
court  regarding  this  provision  of  their  charter  as  merely  ena- 
bling, and  not  restrictive  -of  the  general  power  to  effect  con- 
tracts in  any  other  lawful  and  convenient  mode,  —  a  view 
which  must  now  be  considered  as  the  well-settled  doctrine  by 
the  nearly  universal  concurrence  of  the  authorities.  Tiie  dis- 
tinction between  a  contract  to  insure  or  to  issue  a  policy  of 
insurance  and  the  policy  itself,  is  obvious,  and  constantly  recog- 
nized by  the  courts.  The  former  may  be  by  parol  or  in  any 
form.  The  latter  may  be  regulated  and  controlled  by  statutes 
or  by  the  by-laws  of  the  company  issuing  it.^ 

§  24.  The  certificate  of  the  secretary  of  an  insurance  com- 
pany given  to  a  policy-holder,  setting  forth  the  consent  of  the 
directors  that  the  policy  already  issued  shall  cover  property 
not  originally  embraced  by  the  policy,  is  evidence  of  a  con- 

1  Rhodes  v.  Railway  Passengers  Ins.  Co.,  5  Lansing  (X.  Y.),  71;  Walker  v. 
Metropolitan  Ins.  Co.,  56  Me.  471;  Post  v.  JEtnn  Ins.  Co.,  43  Barb.  (N.  Y.) 
351 ;  Kennebec  Co.  v.  Augusta  Ins.  and  Banking  Co.,  6  Gray  (Mass.),  204  ;  Bax- 
ter V.  Massasoit  Ins.  Co.,  13  Allen  (Mass.),  320;  Audubon  v.  Excelsior  Ins.  Co., 
27  N.  Y.  216 ;  Western  Massachusetts  Ins.  Co.  v.  Duffey,  2  Kan.  347 ;  Commer- 
cial Mut.  Mar.  Ins.  Co.  v.  Union  Mat.  Ins.  Co.,  2  Curtis  (U.  S.  C.  C),  524  ;  s.  c. 
aflBrraed  in  the  United  States  Supreme  Court,  19  How.  318 ;  Security  Fire  Ins. 
Co.  I'.  Kentucky  Mar.  and  Fire  Ins.  Co.,  7  Bush  (Ky.),  81.  In  Missouri,  in  the 
case  of  Henning  v.  United  States  Ins.  Co.,  decided  as  late  as  March,  1871,  the 
court,  while  apparently  inclined,  after  a  review  of  the  authorities,  to  yield 
the  point  that  a  parol  contract  is  valid,  there  being  nothing  in  the  charter  rela- 
tive to  the  mode  of  contract,  still  held  that  when  the  act  of  incorporation  re- 
quires that  the  president  shall  sign  all  policies,  and  that  all  proposals  for  insurance 
shall  be  by  written  application,  signed  by  the  applicant  or  his  agent,  the  sjiecified 
mode  of  contract  is  the  only  competent  one. 


22  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

tract  of  insurance  upon  the  property  mentioned  in  the  cer- 
tificate.^ 

And  for  reasons  ah-eady  stated  in  considering  the  question 
of  the  validity  of  parol  contracts  of  insurance,  there  seems  to 
be  no  doubt  that  a  verbal  agreement  to  extend  the  terms  of 
an  existing  policy,  so  that  it  shall  cover  property  not  originally 
within  the  scope  of  the  contract,  would  be  valid.^ 

§  25.  Whether  it  would  not  be  too  much  to  say  that,  in 
England,  a  parol  agreement  for  insurance  would  be  void,  may 
at  least  be  doubted.^  In  Morgan  v.  Mather,*  it  was  indeed 
held,  that  a  contract  of  insurance,  not  in  writing,  would  be 
void  as  an  evasion  of  the  stamp-duty.  But  cases  may  be  easily 
conceived  where  no  such  evasion  is  intended ;  as,  for  instance, 
a  verbal  agreement  upon  the  terms,  and  a  loss  before  the  terms 
agreed  upon  are  committed  to  writing,  with  a  refusal  on  the 
part  of  the  insurer  to  execute  and  deliver  the  policy.  The 
stamp  laws,  moreover,  do  not  go  to  the  validity  of  the  contract. 
They  do  not  require  any  description  of  contract  to  be  reduced 
to 'writing  for  the  purpose  of  being  stamped ;  they  simply  pro- 
vide that  when  expressed  in  writing,  this  paper  parchment, 
or  vellum,  upon  which  the  contract  is  written,  shall  not  be  re- 
ceived in  evidence,  or  have  any  legal  force  or  validity,  unless 
a  stamp  of  a  specific  value  and  amount  has  been  affixed  to 
it.^  But  it  may  happen,  in  a  variety  of  cases,  that  the  trans- 
action is  such  that  it  may  be  proved  by  other  evidence  than 
the  written  instrument ;  and  the  objections  arising  from  the 
stamp  acts  may  be  avoided  by  a  resort  to  another  species  of 
proof.^  The  doubt  expressed  in  Western  Massachusetts  Insur- 
ance Company  v.  Duffey,'  as  to  whether  the  stamp  act  does 
not  require  that  the  contract  be  in  writing,  seems  not  to  be 
well-founded.     It  may  be  here  stated  that  the  State  courts  do 

1  Goodall  V.  New  England  Fire  Ins.  Co.,  5  Foster  (N.  H.),  169. 

■'!  Wood  V.  Rutland  and  Addison  Mut.  Fire  Ins.  Co.,  31  Vt.  (2  Shaw)  552. 

*  Salvin  v.  James,  6  East,  571. 

*  2  Ves.  Jr.  18. 

*  Addison  on  Contracts,  119. 

«  Comyn  on  Cont.  pt.  1,  c.  3,  p.  45 ;  Phillips  on  Evidence,  c.  9 ;  Chitty  on 
Cont.  115. 
^  2  Kan.  347. 


FORM  OF  THE  CONTRACT  AND  THE  PARTIES  THERETO.     23 

not  recognize  the  constitutional  right  of  the  general  govern- 
ment to  determine  the  rules  of  evidence  by  which  the  former 
shall  be  governed,  and  hold,  pretty  uniformly,  that  the  law  of 
Congress  declaring  that  no  instrument  shall  be  admitted  or 
used  as  evidence  in  any  court  without  being  duly  stamped 
applies  only  to  the  courts  of  the  United  States.^  Whether  it  is 
within  the  power  of  Congress  to  declare  unstamped  contracts 
wholly  void  is  a  question  of  some  doubt.  That  it  is  not  has 
been  declared  in  Illinois  ^  and  in  Kentucky .^  But  it  is  doubt- 
ful if  this  will  become  the  settled  view  of  the  law  upon  mature 
consideration.^  It  is  also  very  generally  held  that  under  Uni- 
ted States  Statutes,  1864,  c.  173,  §  163,  and  1865,  c.  78,  only 
those  unstamped  instruments  can  be  said  to  be  void  where 
the  stamp  bas  been  omitted  with  intent  to  defraud  the  rev- 
enue.^ And  such  is  the  law  under  the  statute  of  1866,  c. 
184,  §  9.6 

§  26.  The  laxity  and  informality  of  a  policy  of  insurance 
have  been  frequently  the  subject  of  judicial  animadversion. 
"  Coiirts  of  law,"  said  Mr.  Justice  Buller,'  "  have  always  con- 
sidered  a  policy  of  insurance  as  an   absurd  and  incoherent 

1  Carpenter  v.  Snelling,  97  Mass.  452;  Hitchcock  v.  Sawyer,  39  Vt.  412; 
Dudley  v.  Wells,  55  Me.  145  ;  McGovern  v.  Hoesback,  53  Penn.  St.  177 ;  Griflin 
V.  Rannay,  35  Conn.  289 ;  Craig  v.  Uimmick,  47  111.  308 ;  Bunker  v.  Green,  48 
111.  243;  United  States  Express  Co.  v.  Haines,  ib.  248  ;  Twitcliell  v.  Common- 
wealth, 7  Wall.  (U.  S.)  321  ;  Green  v.  Hohvay,  101  Mass.  243.  In  Edeck  v. 
Eanuer,  2  Johns.  (N.  Y.)  423;  and  Plessinger  r.  Dupee,  25  Ind.  419,  where  un- 
stariiped  instruments  were  excluded,  the  question  of  constitutional  competency 
was  not  raised. 

2  Latham  v.  Smith,  45  111.  29. 

3  Hunter  v.  Cobb,  1  Bush  (Ky.),  239. 

*  License  Tax  Cases,  5  Wall.  (U.  S.)  462;  Pervear  v.  Commonwealth,  ib. 
475 ;  Green  v.  Holway,  101  Mass.  243. 

8  Tobey  v.  Chipman,  13  Allen  (Mass.),  123;  Willey  v.  Robinson,  ib.  128; 
Govern  v.  Littlefield,  ib.  127  ;  Lynch  v.  Morse,  97  Mass.  458 ;  Whitehill  v. 
■  Shickle,  43  Mo.  537 ;  Hallock  v.  Jaudin,  34  Cal.  167  ;  Harper  v.  Clark,  17  Ohio 
St.  190.  See  also  cases  in  Maine,  Vermont,  and  Pennsylvania,  before  cited  in 
this  section.  Contra,  Hugus  v.  Strickler,  19  Iowa ;  Miller  v.  Morrow,  3  Coldw. 
(Tenn.)  587  ;  Maynard  v.  Johnson,  2  Nevada,  16  ;  Wayraan  v.  Torrej'son,  4  ib. 
124  ;  which  hold  that  unstamped  instruments,  without  such  intent,  are  void. 

6  Green  v.  Holwaj%  101  Mass.  243.  This  case  contains  a  valuable  summary 
of  the  stamp  laws,  and  of  the  adjudications  thereon.  , 

7  Brough  V.  AVhitmore,  4  T.  R.  206. 


24  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

instrument."  "  Policies  of  insurance,"  said  Chief  Justice  Mar- 
shall,^ "  are  generally  tlie  most  informal  instruments  wliich 
are  brought  into  courts  of  justice."  But  length  of  time  and 
a  multitude  of  judicial  decisions,  embracing  almost  every  im- 
portant word  in  the  ancient  though  inaccurate  form,  have  at 
length  so  settled  the  force  and  meaning  of  its  different  parts, 
that  any  serious  attempt  to  alter  or  reconstruct  with  reference 
to  greater  certainty  or  symmetry  would  doubtless  lead  to  new 
doubts  and  new  litigation,  and  should  be  admitted  only  after 
the  most  careful  consideration.^  Lord  Mansfield  said  he  did 
not  recollect  an  addition  which  had  not  created  doubts  upon 
its  construction ;  and  in  this  country,  it  would  seem  that 
attempts  to  reform  have  been  attended  with  no  better  success.^ 
§  27.  The  Form  Unessential.  —  No  particular  form,  however, 
is  absolutely  necessary.  A  policy  may  be  in  the  form  of  a 
bond,  or  in  any  other  form,  provided  its  scope  and  meaning 
import  an  insurance.*  Policies  are  sometimes  executed  both  in 
this  country  and  in  England,  under  seal,  though  this  practice 
is  chiefly  confined  to  companies  of  long  standing,  which  can 
trace  their  existence  back  to  the  time  when  it  was  held  tiiat 
corporations  could  only  contract  in  that  manner.  But  policies 
are  now  common  in  England  signed  by  three  of  the  directors 
of  the  company,  and  with  us  it  is  the  very  general  practice  to 
provide,  in  acts  of  incorporation,  that  policies  signed  by  the 
president  and  countersigned  by  the  secretary,  shall  be  binding. 
In  fact  any  person  may  engage  in  the  business  of  insurance, 
and  his  contracts  relative  thereto,  whether  in  writing,  or,  as  we 
have  just  seen,  by  parol,  will  be  valid.  It  is  well,  however, 
though  perhaps  not  necessary,  when  policies  are  under  seal, 
and  contracts  by  the  parties  thereto  are  made  to  vary  or 
continue  the  original  contract,  that  these  also  should  be 
under  seal,  whether  indorsed  upon  the  back  of  the  policy  or 
not.^ 

1  Yeaton  v.  Fry,  5  Cranch,  335. 

2  Per  Ld.  Mansfield,  Simon  v.  Boydell,  Doug.  268. 
2  Pliillips  on  Insurance,  vol.  i.  c.  1,  §  2. 

*  Kent  V.  Bird,  Cowp.  583  ;  Pullen  v.  Glover,  12  East,  124;  Roebuck  v.  Ham- 
merton,  Cowp.  737. 

6  Raimes  v.  Knightly,  Skinner,  5-4;   Luciani  v.  Am.  Mut.  Pire   Ins.  Co., 


FORM    OF    THE    CONTRACT    AND    THE    PARTIES    THERETO.  25 

A  modern  policy  of  fire  insurance,  it  has  been  well  said,  is 
a  very  complicated  contract.  Before  executing  almost  any 
other  instrument  of  equal  perplexity,  the  parties  would  deem 
it  necessary  to  take  the  advice  of  counsel.  Questions  fre- 
quently arise  as  to  the  proper  construction  of  the  terms  used, 
which  divide  the  opinions  of  the  most  learned  jurists.^  And  it 
may  be  added  that  the  indifference,  not  to  say  culpable  negli- 
gence, of  too  confiding  applicants,  who  often  enter  into  con- 
tracts of  this  kind  as  they  would  into  no  others,  without  being 
aware,  except  in  the  most  general  way,  of  their  terms  and  con- 
ditions, has  produced,  and  is  producing,  the  most  serious  dis- 
appointments in  the  shape  of  litigation,  always  expensive  and 
vexatious,  and  not  unfrequently  fruitless  and  disastrous.  Yet 
such  disappointments  are  but  the  natural  results  of  a  want 
of  care  and  foresight;  and  by'tlie  exercise  of  these  they  may 
be,  to  a  very  great  extent,  avoided. 

§  28.  Policies  have  sometimes  been  so  loosely  worded  as 
to  leave  it  doubtful  whether  tlie  obligatory  clause  imported  a 
promise.  In  Alchorne  v.  Saville,^  a  question  arose  whether 
a  clause  in  the  policy  declaring  that  "  the  trustees  and  direc- 
tors of  the  company  whose  names  are  hereunto  subscribed, 
do  order,  direct,  and  appoint  the  directors  of  the  time  being 
of  the  said  company  to  raise  and  pay,"  &c.,  was  sufficient 
upon  which  to  found  an  action  of  covenant ;  and  it  was  held 
that  the  words  imported  merely  an  order  to  pay,  by  which 
neither  the  parties  who  executed  the  policy,  nor  those  to 
whom  it  was  directed,  were  bound.  Where,  however,  it  was 
declared  by  the  policy,  that,  in  case  of  loss,  the  society  was  to 
pay,  and  it  was  further  stipulated  and  declared  that  the  direc- 
tors should  not  be  liable  except  under  the  articles  establishing 
the  society,  one  of  which  was  that  losses  were  to  be  made  good 
within  ninety  days,  the  court  refused  the  defendant's  motion 
to  arrest  judgment  on  the  ground  that  there  was  no  agree- 
ment, and  held  that  the  action  would  lie.^ 

2  Whar.  (Penn.)  167 ;  Head  v.  Prov.  Ins.  Co.,  2  Cranch,  127  ;  Robinson  v.  Tobln, 
1  Stark.  336. 

1  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517. 

2  2  Morse,  202. 

8  Andrewes  v.  Ellison,  6  Moore,  199. 


26  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

A  covenant  to  pay  a  certain  amount,  in  case  of  loss  or 
damage,  out  of  the  money  raised  by  the  first  instahuents,  or 
calls  on  shares  in  the  company,  is  a  simple  covenant  to  pay, 
not  limited  or  qualified  by  the  condition  precedent  that  there 
should  be  funds  in  hand  arising  from  calls  or  shares  sufficient 
for  that  purpose.  The  liability  of  the  company  does  not  at  all 
depend  upon  the  question  from  what  source  the  funds  to  dis- 
charge it  are  to  come,  or  on  the  question  whether  or  not  there 
are  any  funds.^ 

§  29.  But  although  it  may  now  be  considered  as  settled  that 
a  verbal  agreement  would  be  valid,  and  that  the  particular 
form  of  the  contract  is  of  secondary  importance,  yet  it  is 
the  almost  universal  practice  to  embody  the  terms  of  the  con- 
tract in  a  written  instrument  called  a  Policy.^  This  should 
contain  the  names  of  the  contracting  parties ;  of  the  insurer, 
who  signs  or  underwrites  the  policy,  and  hence  is  frequently 
termed  the  undcrivriter,  whereby  he  obligates  himself,  in  con- 
sideration of  a  certain  sum,  called  the  premium^  to  him  paid 
by  the  other  party,  to  take  upon  himself  the  hazard,  called  the 
risk,  and  to  make  good  to  him  the  particular  loss  he  may  sus- 
tain ;  and  of  the  insured,  who  pays  the  premium  to  secure  this 
indemnity  against  loss.  It  should  also  contain  the  precise  time 
from  which  the  risk  commences  and  at  which  it  terminates ;  a 
description  of  the  property,  or  life,  or  other  subject-matter  of 
insurance  ;  the  conditions  to  which  the  contract  is  subject ;  the 
limitations  upon  the  risk ;  and,  in  short,  all  such  facts  and 
data  about  which  disputes  may  arise,  not  susceptible  of  settle- 
ment by  resort  to  the  general  principles  which  govern  the  con- 
tract. In  practice  the  description  of  the  subject-matter,  except 
in  a  general  way,  and  the  conditions,  are  not  usually  incor- 
porated into  the  body  of  the  policy  proper.  The  former  is 
contained  in  a  separate  paper  termed  the  application  or  declara- 
tion, deposited  with  the  underwriter  l)y  the  party  applying  for 
insurance,  while  the  latter  are  indorsed  upon  the  back  of  the 
policy.  Tliey  are  both,  however,  made  component  parts  of 
the   policy  by   reference,^  and    constitute   its   most  essential 

1  Pelbrow  v.  Atmospheric  Eailway  Co.,  5  C.  B.  440. 

'^  For  form  see  Appendix. 

3  Worsley  v.  Wood  (in  error),  6  T.  R.  710;  Routledge  v.  Burrell,  1  H.  B. 


FORM  OF  THE  CONTRACT  AND  THE  PARTIES  THERETO.     27 

features,  requiring  the  especial  consideration  of  the  party 
seeking  protection.  It  is  not  unusual  to  insert  in  the  policy  a 
special  clause  called  the  memorandum^  exempting  the  insurer, 
either  wholly  or  partially,  from  liability  for  loss  or  damage  to 
certain  specified  articles,  or  ou  account  of  certain  specified 
causes,  or  containing  some  particular  condition,  limitation,  or 
exemption  not  contained  in  the  usual  form,  and  which  arises 
out  of  the  circumstances  of  the  particular  case. 

§  30.  Policies  are  divided  into  valued  and  open,  wager  and 
interest^  time  and  voyage.  A  valued  policy  is  one  in  which  the 
sum  to  be  paid  as  an  indemnity  in  case  of  loss  is  fixed  by  the 
terms  of  the  contract ;  an  open  policy  is  one  in  which  the  sum 
so  to  be  paid  is  not  fixed,  but  is  left  open  to  be  proved  by  the 
claimant  in  case  of  loss,  or  to  be  determined  by  the  parties, 
and  tlie  determination  is  called  the  adjustment  of  the  loss.  The 
difference  between  a  valued  and  open  policy,  in  point  of  form, 
is  this,  that  the  blank  which  is  intended  to  be  filled  up  by  the 
sum  at  which  the  parties  agree  to  fix  the  value  of  the  property 
insured,  and  the  amount  of  damages  to  be  recovered  in  case 
of  loss,  as  between  themselves,  is  filled  up  in  the  former,  while 
it  is  not  filled  in  the  latter,  or,  at  least,  is  not  stated  as  an  agreed 
valuation,  or  sum  to  be  recovered  in  case  of  loss.  The  differ- 
ence between  them  in  point  of  effect  is,  that  under  an  open 
policy,  in  case  of  loss,  the  insured  must  prove  the  true  value 
of  the  property  insured,  while  under  a  valued  policy  he  need 
never  do  so,  the  sum  agreed  upon  being  taken  as  conclusive, 
unless  in  cases  of  fraud,  or  of  such  excessive  overvaluation  as 
to  raise  a  presumption  of  fraud. ^     And  the  overvaluation,  in 

254 ;  Oldman  v.  Bewicke,  2  II.  B.  577  ;  Holmes  v.  Charlestown  Mut.  Fire  Ins. 
Co.,  10  Met.  (Mass.)  211. 

1  Haigh  V.  De  la  Cour,  3  Camp.  319 ;  Arnould  on  Ins.  1,  304  ;  Alsop  xk  Com. 
Ins.  Co.,  1  Sumner,  451  ;  Feise  v.  Aquilar,  3  Taunt.  506  ;  Carson  v.  Marine  Ins. 
Co.,  2  Wash.  C.  C.  468  ;  Lewis  v.  Kucker,  2  Burr.  1167  ;  Sliawe  v.  Felton,  2 
East,  109  ;  Forbes  v.  Aspinall,  13  East,  326  ;  Holmes  v.  Cliarlestown  Mut.  Fire 
Ins.  Co.,  10  Met.  (Mass.)  211 ;  Young  v.  Irving,  9  Scott,  N.  R.  752;  Coolidge  v. 
Gloucester  Mut.  Ins.  Co.,  15  Mass.  341  ;  Lycoming  County  Mut.  Ins.  Co.  v.  Mitch- 
ell, 48  Penn.  St.  (12  Wright)  372;  Laurent  v.  Chatham  Fire  Ins.  Co.,  1  Hall  (N. 
Y.  Superior  Ct.),  41 ;  Cushman  v.  North  Western  Ins.  Co.,  34  Me.  487  ;  Borden  v. 
Hingham  Mut.  Fire  Ins.  Co.,  18  Pick.  523.  By  the  French  law,  the  valuation  is 
not  conclusive  if  it  exceeds  "  reasonable  limits."     Decree  of  the  Court  of  Aix, 


28  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  expressive  language  of  Mr.  Justice  Yeates,^  must  be 
"grossly  enormous"  to  admit  of  any  dispute.  The  agreed 
vahie  does  not,  however,  admit  an  insurable  interest,  and  this 
must  be  proved  to  some  extent.^ 

§  31.  Valued  and  Open  Policies.  —  Whether  the  policy  is  an 
open  or  valued  one  is  sometimes  a  question  of  some  difficulty. 
The  words  "  valued  at,"  as  qualifying  the  property  insured,  are 
frequently  used ;  but  any  form  of  words  showing  the  intention 
of  the  parties  to  fix  the  value  of  the  property  is  sufficient. 
If  the  property  insured  consists  of  a  single  article,  or  of  sepa- 
rate and  distinctly  different  articles,  either  in  character  or 
value,  and  the  insurance  is  in  a  gross  sum  upon  all,  as,  for 
instance,  ten  thousand  dollars  on  one  brick  house,  or  upon  one 
brick  and  two  wooden  houses,  nothing  being  said  of  the  value, 
this  is  not  a  valued  policy.  The  sum  here  neither  fixes  the 
total  value  of  all,  nor  the  proportionate  value  of  either,  and  in 
case  of  loss  of  either  or  all,  the  question  is  open  for  proof  as 
to  the  amount  of  the  loss.^  But  where  there  is  a  total  loss  of 
an  article  distinctly  valued  in  the  policy,  the  loss  is  to  be  esti- 
mated according  to  the  valuation.  And  if  the  insurance  be 
upon  numerous  articles  of  equal  value,  under  a  valuation  of 
the  whole,  the  insured  will  recover  of  the  whole  valuation  the 
proportion  which  the  number  lost  bears  to  the  whole  number 
insured.  As  where  ten  hogsheads  of  tobacco,  specified  to  be 
worth  one  thousand  dollars,  are  insured,  the  loss  of  one  will 
give  the  right  to  recover  one  hundred  dollars,  or  the  same  pro- 
Mar.  24,  1830,  cited  in  Rogron,  Code  de  Commerce  Explique,  art.  336,  n. ;  Par- 
dessus,  Cours  de  Droit  Com.  593,  6  &  7  ;  Alauzet,  Traite'  General  des  Assurances, 
221  et  seq. ;  Kent's  Com.  3,  273,  n.  {d)  and  cases  there  cited.  Boulay-Paty  is, 
however,  incorrectly  cited.  He  agrees  with  the  other  authors.  Cours  de  Droit 
Com.  Mar.  tit.  10,  §  20.  And  what  are  "  reasonable  limits  "  is  to  be  determined 
by  the  circumstances  of  each  particular  case.  Probably  they  would  not  differ 
much  from  the  "grossly  enormous"  overvaluation  of  Mr.  Justice  Yeates,  or 
that  excessive  overvaluation  which  raises  a  presumption  of  fraud,  of  the  other 
authorities. 

1  Miner  v.  Tagert,  3  Binn.  (Penn.)  205. 

2  Feise  v.  Aquilar,  3  Taunt.  508  ;  s.  c.  Hildyard  on  Marine  Ins.  2G4  ;  Kane  i;. 
Com.  Ins.  Co.,  8  Johns.  (N.  Y.)  176  ;  Pleasants  v.  Maryland  Ins.  Co.,  8  Cranch, 
55 ;  Clark  v.  Ocean  Ins.  Co.,  16  Pick.  (Mass.)  2'J5. 

3  Laurent  v.  Chatham  Fire  Lis.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  41;  Wal- 
lace V.  Insurance  Co,,  4  La.  289. 


FORM    OF    THE    CONTRACT    AND    THE    PARTIES    THERETO.  29 

portion  of  the  amount  insured.^  A  valuation  in  the  applica- 
tion referred  to  in  the  policy  has  the  same  effect  as  if  stated 
distinctly  in  the  policy.  Thus  a  policy  having  this  clause  : 
"  the  amount  insured  being  not  more  than  three-fourths  the 
value  of  said  property,  as  appears  by  the  proposal  of  the  said 
Insured,"  is  a  valued  policy. ^  So  where,  while  there  was  a 
printed  stipulation  in  the  policy  that  tiie  loss  or  damage  was  to 
be  estimated  according  to  the  true  and  actual  cash  value  of 
the  property  at  the  time  of  loss,  it  was  written  in  that  the 
plaintiff  was  insured  "  to  the  amount  of  >§2,000  ;  viz.,  on  the 
building  and  fixed  machinery,  81,700  ;  on  movable  machinery 
therein,  $150  ;  on  stock,  raw  and  wrought,  iloO,  —  said  insured 
being  the  lessee  of  said  mill  for  one  year,  from  Nov.  1,  1850, 
and  having  paid  the  rent  therefor,  of  §2,171.01,  which  inter- 
est, diminishing  day  by  day,  in  proportion  for  the  whole  rent 
for  a  year,  is  hereby  insured,"  the  court  held  that  the  policy 
was  a  valued  one,  as  to  the  first  two  items.  If  an  open  pol- 
icy, neither  the  plaintiff  nor  defendant  could  be  benefited  in 
any  degree  by  the  insertion  therein  particularly  of  the  rent 
paid  by  the  insured  to  the  lessor  ;  it  was  wholly  immaterial  and 
unnecessary  ;  nor,  if  it  was  an  open  policy,  was  there  any  occa- 
sion to  recite  that  the  interest  was  one  diminishing  day  by  day. 
This  was  one  element  in  the  value  of  the  loss,  and  one  so  obvi- 
ous, especially  if  the  policy  was  near  its  expiration,  or  had  run 
any  considerable  time,  that  it  could  not  be  expected  to  be  over- 
looked. And  although  it  was  agreed  that  the  loss  or  damage 
shall  be  estimated  according  to  the  actual  cash  value  at  the 
time  of  the  loss  or  damage,  still  the  parties  could  fix  upon  a 
rule,  and  did,  in  this  case,  fix  upon  a  rule  by  which  the 
cash  value  was  to  be  determined,  not  the  less  a  rule  because 
it  permitted  of  variation  day  by  day.^     But  where  the  applica- 

1  Harris  v.  Eagle  Ins.  Co.,  5  Johns.  (N.  Y.)  3G8. 

-  Nichols  V.  Fayette  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  63  ;  Fuller  v.  Boston 
Fire  Ins.  Co.,  4  Met.  (Mass.)  206 ;  Phoenix  Ins.  Co.  v.  McLoon,  100  Mass.  475. 

*  Cushman  v.  North  Western  Ins.  Co.,  34  Me.  487.  The  policy  in  this  case 
was  dated  Nov.  8,  1850 ;  and  the  fire  took  place  Nov.  23,  1850.  The  jury  re- 
turned a  verdict  assessing  the  damages,  including  interest,  at  §1,872.12,  with  a 
special  finding  that  the  loss  on  movable  machinery  was  §151.79,  and  included  in 
the  verdict. 


30  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

tioii  stated  the  property  to  be  worth  $1,200,  and  it  was  insured 
for  $800,  "  being  not  more  than  three-fourths  of  the  value  of 
the  property  described  in  the  application,"  and  the  policy  also 
contained  the  provision  that  "  this  company  shall  in  no  event 
be  liable  beyond  the  sum  insured,  nor  beyond  three-fourths  of 
the  actual  cash  value  of  the  property  insured  at  the  time  of  loss 
or  damage,  nor  beyond  such  sum  as  will  enable  the  insured  to 
replace  or  restore  the  property  lost  or  damaged,"  this  latter 
clause  was  held  to  control  the  former,  and  to  open  the  question 
as  to  value,  which  otherwise  would  have  been  fixed. ^  But  a 
clause,  providing  that  the  "  company  shall  not  be  held  to  pay 
any  greater  portion  of  the  loss  or  damage  sustained  than  the 
amount  hereby  insured  shall  bear  to  the  whole  amount  insured 
on  said  property,"  is  operative  only  when  there  is  other  insur- 
ance ;  and,  in  the  absence  of  other  insurance,  does  not  con- 
vert a  valued  policy,  like  the  one  in  the  case  last  cited,  into 
an  open  one.^ 

§  32.  The  same  policy  may  be  open  as  to  one  article  insured 
and  valued  as  to  another.  This  was  the  case  in  Post  v. 
Hampshire  Mutual  Insurance  Company,^  where  there  was  an 
insurance  of  five  hundred  dollars  on  a  house  valued  at  seven 
hundred  and  fifty,  and  also  of  five  hundred  dollars  on  furniture, 
to  which  no  value  was  fixed.  But  as  the  by-laws  reserved  to 
the  company  in  this  case  the  right  to  have  a  valuation  made 
anew,  without  regard  to  the  valuation  fixed  in  the  policy,  they 
were  not  concluded  by  that  fixed  valuation.  It  was  also  the 
case  in  Cushman  v.  North  Western  Insurance  Company.^ 

§  33.  Wager  and  Interest  Policies.  —  A  ivager  policy  is  one  in 
which  it  appears  by  its  terms  that  the  insured  has  no  interest, 
or,  in  other  words,  runs  no  risk.  It  is  a  mere  bet,  and  is 
known  by  the  insertion  of  certain  clauses,  —  such  as  "  ivithout 
further  proof  of  inter  est  than  the  policy  ^^^  ^'- interest  orno  interest,''^ 
and  their  equivalents,  —  having  for  their  object  to  relieve  the 
insured  from  the  necessity  of  proving  his  interest  in  case  of 
loss.     In    England,  such    policies   are    prohibited,    and    such 

1  Brown  v.  Quincy  Mut.  Fire  Ins.  Co.,  105  Mass.  396. 

2  Luce  V.  Dorchester  Ins.  Co.,  105  Mass.  298. 

»  12  Met.  (Mass.)  555.  *  Ubi  supra. 


FORM  OF  THE  CONTRACT,  AND  THE  PARTIES  THERETO.    31 

clauses  are  proof  conclusive  that  the  contract  is  a  wager.  In 
this  country,  however,  they  are  ovAj  prima  facie  evidence,  and 
may  be  explained.^  An  interest  policy  is  one  in  which  it  appears 
by  its  terms  that  the  insured  is  interested  in  the  thing  insured, 
or,  in  other  words,  runs  a  risk.  He  has  something  at  stake, 
and,  in  case  of  loss,  something  to  be  indemnified  for.  Policies 
are  usually  in  this  form,  and  import,  unless  otherwise  ex- 
pressed, tliat  the  assured  is  interested  in  the  subject-matter.^ 

§  34.  Time  and  Voyage  Policies.  —  A  time  policy  is  one  in 
which  the  duration  of  the  risk  is  fixed  by  definite  periods  of 
time,  as,  from  January  1st,  M.,  1852,  to  January  1st,  m.,  1853, 
or  for  one  year  from  a  specified  date.  A  voyage  policy  is  one 
in  which  the  duration  of  the  risk  is  determined  by  geographi- 
cal limits,  as  from  New  York  to  Liverpool,  and  is  applicable  to 
cases  of  transportation  by  land,  as  well  as  by  water.^ 

§  35.  "Who  may  be  Parties.  —  Parties  competent  to  contract 
generally  may  be  parties  to  a  contract  of  insurance.  The 
insurers  may  be  private  individuals,  or  companies  of  associated 
individuals,  and  so  may  the  insured.  In  this  country,  the  busi- 
ness, thougli  previously  to  the  commencement  of  the  present 
century  mostly  in  private  hands,  is  now  almost  exclusively  in 
the  hands  of  incorporated  companies  ;  and  there  is  a  large  and 
increasing  class  of  these  based  upon  the  mutual  principle,  in 
which  the  members  are  at  once  the  insurers  and  the  insured. 
In  England,  private  underwriting  in  mercantile  insurance  is 
largely  carried  on  by  a  society  of  capitalists,  who  meet  daily 
for  the  transaction  of  business  at  Lloyd's  Subscription  Rooms, 
and  are  hence  called  members  of  "  Lloyd's."  Each  member 
underwrites  his  name  to  the  policy  offered,  if  he  chooses  to 
take  any  portion  of  the  risk,  and  against  it  the  amount  for 
which  he  will  be  liable  in  case  of  loss,  with  the  date  of  his 
subscription.  Formerly,  private  underwriting  was  extensively 
carried  on  on  the  continent  of  Europe ;  but  there,  as  well  as 
in  England,  the  superior  advantages  of  public  companies  are 
gradually  leading  to  an  abandonment  of  the  ancient  practice. 

1  Alsop  V.  Com.  Ins.  Co.,  1  Sumner,  467. 

2  Williams  v.  Smith,  2  Caines  (X.  Y.),  13  ;  Cousins  v.  Nantes,  3  Taunt.  513. 

3  Boehm  v.  Combe,  2  M.  &  S.  172. 


32  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

§  36.  Disabilities.  —  But  there  may  be  considerations  which 
temporarily  disable  parties  from  contracting.  The  subjects  of 
two  hostile  States  cannot  make  a  valid  contract  of  insurance, 
while  the  war  continues. ^  And  it  has  even  been  held  that  an 
Englisii  underwriter  on  French  property  in  time  of  peace  is 
not  liable  for  a  loss  occasioned  by  capture  by  British  ships 
during  hostilities  which  commenced  between  Great  Britain  and 
France,  subsequent  to  the  time  when  the  policy  was  made,  and 
terminated  prior  to  the  bringing  of  the  action.^  And  it  was 
said,  in  Brandon  v.  Curling,^  that  every  insurance  on  alien 
property,  by  a  British  subject,  must  be  understood  with  this 
implied  exception,  tliat  it  shall  not  extend  to  cover  any  loss 
happening  during  the  existence  of  hostilities  between  the 
respective  countries  of  the  insured  and  the  insurer.  In  such 
a  case,  though  the  contract  is  legal  at  the  time  the  risk  com- 
mences, and  the  insured  cannot  therefore  claim  a  return  of 
the  premium,  yet  considerations  of  public  policy  are  so  strin- 
gent as  to  vitiate  a  once  valid  contract,  by  importing  into  it 
an  implied  condition  which  becomes  operative  upon  a  contin- 
gency beyond  the  control  of  either  of  the  parties.*  This  last 
case  was  decided  in  the  face  of  a  practice  which  had  grown  up 
under  the  patronage  of  Lord  Mansfield,  who  went  so  far  as  to 
try  causes  in  which  the  same  question  arose,  and  permitted 
foreigners  in  their  own  names  and  for  their  own  benefit,  during 
the  war,  to  recover  on  policies  of  insurance  on  foreign  goods 
against  British  capture.  Yet  Lord  Alvanley,  though  he  could 
not  help  animadverting  upon  the  immorality  of  the  defence, 
felt  bound  to  sustain  it,  on  the  ground  that  no  subject  can  be 
permitted  to  enter  into  a  contract  to  do  any  thing  which  may 
be  detrimental  to  the  interests  of  his  own  country  ;  and  that 
such  a  contract  is  as  much  prohibited  as  if  expressly  forbidden 
by  an  act  of  Parliament.  When  hostilities  commence  between 
the  countries  of  the  underwriter  and  the  insured,  the  former 
is  forbidden  to  fulfil  his  contract. 

1  The  Hoop,  1  Rob.  196;  The  Emulous,  1  Gallison,  571;  Griswold  v.  Wad- 
dington,  16  Jolins.  (N.  Y.)  438. 

2  Gamba  v.  Le  Mesurier,  4  East,  407. 

»  4  East,  410.  i  Furtado  v.  Rodgers,  3  Bos.  &  Pul.  191. 


FORM  OF  THE  CONTRACT  AND  THE  PARTIES  THERETO.     33 

§  37.  That  a  subject  may  not  enter  into  such  a  contract,  is 
probably  more  than  was  meant  to  be  said ;  for  such  a  contract 
is  certainly  legal  in  its  inception,  and  its  invalidity  supervenes 
upon  a  contingency  which  he  could  not  foresee.  But  that  he 
is  absolved  from  any  legal  obligation  to  fulfil  it,  and  will  not 
be  compelled  by  the  courts  so  to  do,  from  the  moment  when  it 
proves  to  be  detrimental  to  the  interest  of  the  State,  is  now  the 
established  law.^  In  Bell  v.  Gilson,^  the  judges  undertook  to 
relax  somewhat  the  severity  of  the  rule,  in  favor  of  contracts 
entered  into  between  British  subjects  about  property  purchased 
of  the  enemy  by  a  British  subject  during  the  war,  and  held  that 
property  so  purchased  should  not  be  considered  as  enemy's 
property.  But  this  case  was  afterwards  overruled,  and  the 
disability  to  contract  now  extends  alike  to  alien  enemies  and 
to  subjects  dealing  in  enemy's  property.  And  it  appears  now 
to  be  the  law  of  England,  that  war  between  the  two  countries  to 
which  two  contracting  parties  respectively  belong,  suspends  a 
contract  entered  into  before  the  breaking  out  of  hostilities, 
and  annuls  it  if  entered  into  while  hostilities  continue.^  And 
it  seems  that  the  law  will  not  permit  an  insurance  company  to 
indemnify  a  policy-holder  who  has  lost  his  health,  life,  or  prop- 
erty in  the  service  of  the  enemy,  whether  loss  from  such  cause 
be  excepted  in  the  policy  or  not.*  And  in  a  recent  case  in  this 
country ,5  there  was  a  provision  in  the  policy  which  exempted 
the  company  from  liability  if  the  insured  entered  the  military 
service,  and  it  appeared  that  ho  was  upon  the  staff  of  several 
generals,  though  he  had  no  commission.  And  the  court  thought 
this  entering  the  military  service  within  the  meaning  of  the 
policy  ;  but  put  the  case  upon  the  broader  ground  of  public 
law,  which  forbids  the  insurance  of  the  life  of  a  person  who 
enters  into  the  service  of  the  enemy,  and  avoids  a  policy  for 

•  See  Kent's  Com.  3,  255 ;  and  Griswold  v.  Waddington,  16  Jolins.  438,  where 
the  whole  subject  of  contracts  between  alien  enemies  is  discussed  with  great 
ability  and  research.  See  also  Mr.  Du  Ponceau's  note  to  his  translation  of 
Bynkershoeck  on  the  Laws  of  War,  p.  165. 

i  1  Bos.  &  Pul.  345.  3  Ex  parte  Boussmaker,  13  Vcs.  Jr.  71. 

<  Ex  parte  Lee,  13  Ves.  Jr.  64. 

5  Mitchell  V.  Mat.  Life  Ins.  Co.  of  N.  Y.,  not  reported,  but  cited  in  Bliss  on 
Life  Insurance,  643. 

3 


34  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

that  reason,  without  any  stipulation  to  that  effect,  and  even 
though  the  policy  expressly  agreed  to  pay  if  the  death  occurred 
in  such  service. 

§  38,  Eflfects  of  War  on  Contract.  —  The  question  of  the 
effect  of  the  late  civil  war  in  this  country  upon  the  relations 
of  parties  to  contracts  generally,  though  uot  strictly  a  ques- 
tion of  insurance,  has  been  discussed  in  several  insurance 
cases,  which  it  may  be  useful  to  note  in  this  connection.  The 
general  doctrines  as  applicable  to  the  subjects  of  belligerent 
nations  have  been  declared  by  the  Supreme  Court  of  the 
United  States  as  also  applicable  to  the  hostile  parties  in  the 
late  civil  war ;  ^  and  by  the  same  court  the  commencement 
of  the  period  of  belligerency  was  declared  to  be  the  date  of 
President  Lincoln's  first  proclamation  for  troops,  though,  in 
Leathers  v.  The  Commercial  Insurance  Company ,2  it  was  held 
to  be  the  16th  of  August,  1861,  the  date  of  the  proclamation 
issued  by  the  President  in  pursuance  of  the  non-intercourse 
act  passed  by  Congress  on  the  thirteenth  day  of  July  preced- 
ing ;  and  domicile  in  the  enemy's  territory,  without  regard  to 
personal  sympathy,  is  the  test  as  to  the  hostile  status  of  the 
particular  individual.^  And  the  line  of  demarcation  is  that 
claimed  and  held  by  the  belligerent  power.^ 

§  39.  The  recent  civil  war  had  not  the  effect  to  dissolve  a 
contract  of  life  insurance  entered  into  prior  to  its  commence- 
ment by  parties  belonging  to  the  respective  belligerents,  and 
kept  in  force  until  the  breaking  out  of  the  war.  While  in  such 
cases  as  partnership  and  affreightment,  where  the  performance 
is  continuous  and  unremitting  until  the  end  of  the  contract 
shall  have  been  consummated,  and  therefore  supervening  war 
between  the  parties  disables  them  from  performing  any  of  the 
incumbent  duties,  and  defeats  the  object  of  the  contract,  a 
dissolution  of  the  contract  is  tlie  natural  and  legal  effect  of 
the  war,  neither  the  principle  nor  policy  of  the  law  will  avoid 
a  pre-existing  and  valid  contract  which  may  be  performed  by  a 

1  Prize  Cases,  2  Black  (U.  S.),  635. 

2  2  Bush  (Ky.),  298. 

3  Mrs.  Alexander's  Cotton,  2  Wall.  (U.  S.)  404;  New  York  Life  Ins.  Co.  v. 
Clopton,  7  Bush  (Ky.),  179. 

<  Prize  Cases,  2  Black  (U.  S.),  636. 


FORM   OF   THE   CONTRACT   AND   THE    PARTIES   THERETO.  35 

single  act,  or  by  periodical  acts  between  which  there  is  nothing 
to  be  done,  and  no  continuity  of  performance,  such  as  the  pay- 
ment of  a  debt  or  the  payment  of  premiums.  In  such  a  case 
the  suspension  of  the  remedy  during  the  war  is  the  consistent 
and  only  legitimate  effect  of  the  war.  Belligerent  policy  inter- 
dicts the  payment  because  it  might  aid  the  enemy  in  the  pros- 
ecution of  hostilities.  Suspension  of  the  performance,  therefore, 
until  the  restoration  of  peace,  will  effectuate  the  whole  aim  of 
the  law  without  dissolving  the  contract,  which  may  be  ulti- 
mately enforced  in  perfect  consistency  with  the  principle  and 
end  of  the  temporary  interdict.  In  such  a  case  it  is  tlie  con- 
tract, and  not  the  performance,  which  is  continuing ;  and  the 
suspension  of  the  remedy,  and  not  a  dissolution  of  the  con- 
tract, is  all  that  is  necessary,  befitting,  or  just.^  The  ordinary 
contract  of  insurance  does  not  belong  to  the  class  of  contracts 
of  continuing  performance.  It  is  sui  generis,  governed  by  a 
peculiar  and  rather  arbitrary  code  of  the  modern  common 
law,  but  recently  moulded,  and  not  yet  stamped  in  all  respects 
with  conclusive  authority.  Its  character,  however,  is  so  far 
matured  and  established  as  to  distinguish  it  essentially  from 
ordinary  commercial  contracts,  and  especially  in  the  effect  of 
war  on  its  pre-existing  validity,  which  the  war  as  a  general 
rule  destroys,  whether  the  contract  belong  to  the  category  of 
continuing  performance  or  not.^  Referring  to  the  cases  of  Fur- 
tado  V.  Rodgers  and  Brandon  v.  Curling,^  where  it  was  said  by 
the  court,  —  the  question  arising  under  a  policy  of  marine 
insurance,  —  that  policies  entered  into  prior  to  the  war  be- 
came void  by  the  supervention  of  war,  as  in  every  such  policy 
there  was  an  implied  condition  that  the  insurance  should  not 
extend  to  cover  any  loss  happening  during  the  existence  of 
hostilities  between  the  respective  countries  of  the  insured  and 
the  insurer,  the  court,  in  the  Kentucky  case,  observe :  "  It 
may  be  a  grave  question  whether  the  implied  condition  as  to 
the  perils  of  war  should  be  extended  beyond  the  belligerent 
right  of  capture  or  destruction  by  the  government  of  the  in- 

1  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  179;  Uamilton  v.  Mut. 
Life  Ins.  Co.,  9  Blatch.  (C.  Ct.  U.  S.)  234. 

^  Ibid.  3  Ubi  supra. 


36  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

surer,  and  to  that  extent  only  we  may  admit  that  the  continua- 
tion of  the  policy  during  the  war  would  be  illegal,  and  its 
pre-existing  obligation  become  avoided.  But  the  principle  of 
this  concession  would  not  avoid  a  policy  insuring  property 
which  is  exempted  by  law  from  belligerent  power ;  and  while 
it  would  avoid  a  policy  insuring  the  life  of  one  who  becomes 
an  actual  enemy  of  the  government  of  the  insurer,  which  had 
the  right  to  destroy  that  life,  it  would  not  affect  the  validity 
of  the  insurance  of  the  life  of  a  neutral  or  passive  non- 
combatant,  over  whose  life  there  is  no  belligerent  power ; 
for  though  the  domicile  makes  him  a  technical  enemy,  whose 
property  may  be  lawfully  captured  as  enemy's  property, 
yet  as  such  nominal  hostility  does  not  subject  his  life,  like 
his  estate,  to  peril,  no  belligerent  right  is  affected  by  the 
continued  validity  of  the  insurance ;  and,  consequently,  in 
such  a  case  neither  authority  nor  principle  would  avoid  a 
policy  any  more  than  if  it  had  insured  the  life  of  a  child  in 
the  cradle,  or  insured  property  exempt  from  capture  or  con- 
fiscation.^ 

§  40.  Nor  does  the  occurrence  of  war  revoke  the  powers  of 
an  agent,  domiciled  in  the  enemy's  country,  of  a  foreign  insur- 
ance company,  having  a  general  agency  managed  by  a  board 
of  directors  in  the  country  of  the  other  belligerent,  by  whom 
the  first-mentioned  agent  is  appointed.  The  Virginia  agent 
appointed  by  the  resident  New  York  agency  of  a  London  office 
is  the  agent  of  a  neutral,  and  the  contract  of  insurance  effected 
by  the  Virginia  agent  with  a  citizen  of  that  State  in  behalf  of 
the  company  is  a  contract  between  a  neutral  and  a  belliger- 
ent, and  the  agent's  powers  are  not  revoked  by  the  breaking 
out  of  war.2  ^^^  gygj^  tl^e  agent,  resident  in  one  belligerent's 
territory,  of  a  company  established  in  the  territory  of  the  other 
belligerent,  may  receive  payments  of  premiums  as  they  fall 
due,  and  thus  keep  alive  the  policy,  though  he  may  not  remit 

1  See  also  Manhattan  Life  Ins.  Co.  v.  Warwick,  20  Grat.  (Va.)  614  ;  Semmes 
i>.  City  Fire  Ins.  Co.,  6  Blatch.  (C.  Ct.  U.  S.)  445;  s.  c.  in  the  Supreme  Court 
of  the  United  States,  13  Wall.  (U.  S.)  159. 

2  Robinson  v.  International  Life  Assurance  Society  of  London,  42  N.  Y.  54 ; 
Martin  v.  International  Life  Assurance  Society  of  London,  G2  Barb.  (N.  Y.) 
181. 


FORM    OF   THE   CONTRACT   AND   THE 'PARTIES   THERETO.  37 

tliem,^  and  his  power  may  be  so  far  suspended  that  he  cannot 
negotiate  policies.^ 

§  41.  The  Lynchburg  Hose  Fire  Insurance  Company  v. 
Knox,  was  a  case  where  the  company  sued  to  recover  on  a 
premium  note,  and  the  defence  was  that  war  had  abrogated 
the  contract.  But  it  was  held  that  the  war  merely  suspended 
the  contract.^ 

^  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  179;  Sands  v.  New  Life 
Ins.  Co.,  59  Barb.  (N.  Y.)  556;  Manliattan  Life  Ins.  Co.  v.  Warwick,  20  Grat, 
(Va.)  614. 

2  Ward  V.  Smith,  7  Wall.  (U.  S.)  452.  In  Dillard  v.  Manhattan  Life  Ins.  Co., 
44  Ga.  119,  it  was  held  that  the  insured  liad  no  right  to  pay  the  premiums  to  tlie 
resident  agent  in  Georgia  after  the  war  broke  out,  nor  he  to  receive  ;  and  her  fail- 
ure to  pay  them  according  to  the  stipulations  of  the  policy  prevented  her  recov- 
ery, not  on  the  ground  of  forfeiture  by  reason  of  the  failure,  which  the  court  said 
would  be  e.xcusable,  because  to  pay  would  be  illegal,  but  because  the  company 
having  contracted,  if  the  premiums  are  paid  as  stipulated,  to  pay  a  certain  sum  ; 
the  premiums  not  having  been  so  made,  no  liability  had  been  incurred.  But 
this  case  is  against  the  current  of  authorities  on  both  points.  The  condition  in 
this  case  was  the  usual  one,  that  if  the  premium  was  not  paid  as  stipulated  the 
poUcy  was  to  be  void.  In  Howell  v.  Gordon,  in  the  same  State  (40  Ga.  392),  it 
is  said  ohiler  that  the  war  revoked  the  powers  of  an  agent  in  Georgia  appointed 
by  a  citizen  of  Massachusetts  to  take  care  of  certain  lands  in  Georgia.  Cohen 
V.  New  York  Mut.  Life  Co.,  cited  in  Bliss  on  Life  Insurance,  646,  decided  that 
the  powers  of  a  resident  agent  in  Georgia  of  a  New  York  company  were  sus- 
pended, if  not  terminated,  by  the  war,  so  that  a  tender  to  him  of  the  premium 
falling  due  was  not  effectual  to  keep  the  policy  alive.  This  was  decided  in  1867, 
in  the  Supreme  Court  of  the  City  of  New  York,  and  is  said  to  have  been  ap- 
pealed ;  but  the  result  of  the  appeal  is  not  yet  reported. 

^  Superior  Court  of  the  city  of  Baltimore,  reported  in  the  Baltimore  Law 
Transcript,  vol.  i.  Oct.  24,  1868.  The  opinion  is  given  here  in  extenso  as  worthy 
of  preservation :  — 

DoBBix,  J.  This  is  a  suit  mstitiited  by  the  plaintiff,  a  corporation  created 
by  the  laws  of  Virginia,  and  having  its  principal  office  in  Lynchburg,  against 
the  defendant,  a  citizen  of  the  State  of  Maryland,  resident  in  Baltimore,  to  re- 
cover the  amount  of  a  promissory  note  given  for  the  premium  of  insurance  on 
the  schooner  Graham  for  one  year  from  the  24th  of  ^larch,  1861,  the  date  of  the 
policy  being  the  2od  of  March,  1861.  The  defendant  has  pleaded  in  bar  to  the 
action  "  not  indebted  "  and  "  limitations,"  and  by  an  agreement  in  the  cause, 
any  defence  may  be  given  in  evidence  which  will  be  admissible  under  any  forms 
of  pleading,  and  all  errors  of  pleading  are  waived.  It  is  also  admitted  that,  after 
the  execution  of  the  policy,  the  war  between  the  United  States  and  the  States 
known  as  the  Confederate  States  broke  out,  and  during  its  pendency  the  period 
covered  by  the  policy  transpired,  without  loss  accruing  under  it.  Under  the 
plea  of  "  not  indebted,"  the  defendant  contends  that  upon  the  breaking  out  of  hos- 
tilities the  policy  was  dissolved  as  a  contract  between  parties  whose  respective 


38  insurance:  fire,  life,  accident,  etc. 

§  42.  In  Kershaw  v.  Kelsey,^  Mr.  Justice  Gray,  after  a 
learned  and  exhaustive  review  of  the  authorities   upon  the 

governments  were  at  war  with  each  otlier,  and  under  the  second  plea  he  insists 
that,  as  more  than  three  years  have  elapsed  since  the  maturity  of  the  note, 
recovery  upon  it  is  barred  by  the  statute. 

Inasmuch  as,  since  the  institution  of  tlie  suit,  the  question  of  limitations  in  such 
cases  has  been  disposed  of  by  the  promulgation  of  an  authoritative  decision  of 
the  Supreme  Court  of  the  United  States,  to  the  effect  that  in  computing  the  time 
of  the  running  of  the  statute,  the  period  during  which  the  existence  of  the  war 
suspended  the  remedy  must  be  deducted,  I  am  relieved  from  any  further  exam- 
ination of  that  question,  and  must  determine  against  the  plea.  Hanger  v. 
Abbott,  6  Wall.  532.  The  defence  first  mentioned  is,  therefore,  the  only  one 
,  which  needs  now  to  be  considered.  It  seems  to  me  that  the  solution  of  this  ques- 
tion depends  upon  the  appUcation  of  a  few  propositions  which  are  now  definitely 
adjudged  and  received  as  settled  law. 

First.  The  existence  of  war  does  not  now,  as  was  formerly  held,  annul  con- 
tracts made  between  citizens  of  the  respective  contending  nations,  made  anterior 
to  its  breaking  out,  but  only  suspends  the  remedy  upon  them  during  the  pen- 
dency of  the  war,  unless  they  be  executory  in  their  character,  and  require  for 
their  execution  that  commercial  intercourse  shall  be  maintained  between  the 
contracting  parties,  or  unless  they  be  of  a  character  calculated  to  hinder,  or  to 
repair  by  indemnity,  the  acts  of  war  which  it  is  the  effort  of  the  power,  whose 
courts  are  invoked  to  sustain  them,  to  commit ;  in  which  event  the  policy  of  na- 
tions demands,  that  they  shall  be  held  to  be  dissolved  by  the  declaration  of  war. 
Of  this  last  class  are  contracts  of  insurance,  with  a  clause  covering  capture  by 
the  assured's  own  government,  because  that  government  will  not  allow  indem- 
nity to  be  secured  for  the  injuries  it  is  itself  endeavoring  to  perpetrate,  but  such 
contracts  are  dissolved  only  to  the  extent  of  the  obnoxious  clauses,  remaining 
good  as  to  the  rest.  Hanger  v.  Abbott,  6  Wall.  536;  The  William  Bagely, 
5  Wall.  407 ;  Furtado  v.  Rodgers,  3  Bos.  &  Pul.  201. 

Secondly.  The  right  to  sue  upon  contracts  thus  affected,  with  suspension  of 
remedy,  revives  upon  the  restoration  of  peace,  and  thereafter  exists  as  amply  as 
if  the  war  had  never  arisen.  Applying  these  principles  to  the  premium  note, 
which  is  the  subject  of  this  suit,  we  find  it  is  liable  to  none  of  the  objections 
which  would  dissolve  its  obligations  as  a  contract,  but  must  be  associated  with 
that  class,  the  remedy  upon  which  was  only  suspended  during  the  pendency  of 
the  war,  and  is  by  the  return  of  peace  now  revived,  unless  it  can  be  successfully 
maintained  that  the  policy  for  which  it  constituted  the  consideration  was  itself 
dissolved  by  the  breaking  out  of  hostilities.  We  must  try  the  policj',  then,  by 
the  same  rules  to  which  we  have  subjected  the  note.  It  was  made  before  the 
war  broke  out,  and  was  then  a  valid  contract.  It  is  not  executory  in  its  charac- 
ter, in  the  sense  in  which  that  word  is  to  be  understood  in  connection  with  this 
subject,  and  does  not  necessitate  any  intercourse  between  the  contracting  parties 
during  the  continuance  of  the  war.  It  is  not  chargeable  with  being  injurious  to 
the  government  of  the  United  States,  because  the  courts  will  not  construe  the 


1  100  Mass.  561. 


FORM    OF    THE    CONTRACT    AND    THE    PARTIES    THERETO.  39 

effect  of  war  upon  contracts  between  belligerents,  comes  to 
the  conclusion  that  the  law  of  nations,  as  judicially  declared, 
prohibits  all  intercourse  between  citizens  of  the  two  belliger- 
ents which  is  inconsistent  with  the  state  of  war  between  their 
countries,  and  that  this  includes  any  act  of  voluntary  submis- 
sion to  the  enemy,  or  receiving  his  protection,  as  well  as  any 

general  clause  against  capture  to  include  a  capture  by  the  cruisers  of  that  gov- 
ernment (Brandon  i-.  Curling,  4  East,  417),  and  indemnity  to  the  defendants 
against  capture  by  the  Confederate  cruisers  would  be  rather  in  aid  of,  than  in 
opposition  to,  the  government  of  the  United  States.  We  find,  then,  that  this 
contract  of  insurance,  being  free  from  any  of  the  conditions  which  would  cause 
it  to  be  dissolved  b}'  the  war,  stands  only  in  the  category  of  those  the  remedy 
upon  which,  if  any  loss  within  its  risks  had  happened,  would  have  been  sus- 
pended till  revived  by  the  return  of  peace. 

It  is  a  mistake,  founded  on  loose  statements  of  text-writers,  to  suppose  that 
policies  of  insurance,  effected  before  the  war,  between  assured  and  underwrit- 
ers, respectively,  belonging  to  opposite  belligerent  powers,  are,  for  all  purposes, 
dissolved  by  the  breaking  out  of  the  war.  For  indemnity  against  all  sea  perils, 
barratry,  fire,  and  the  other  usual  sea  risks,  except  captiu-e  by  the  enemy  of 
the  nation,  in  whose  courts  such  loss  is  sought  to  be  recovered,  they  are  per- 
fectly valid,  and  may  be  recovered  on  for  any  such  loss  as  soon  as  the  right  of 
action  is  restored  by  the  return  of  peace. 

Upon  careful  scrutiny  of  the  decided  cases,  it  will  be  found  that  in  all  of 
them  in  which  recovery  on  such  policies  was  desired,  the  claim  was  founded  on 
capture  by  the  enemy,  and  not  on  losses  by  any  other  peril.  In  the  case  of 
Furtado  v.  Rodgers,  in  3  Bos.  &  Pul.,  chiefly  relied  on  by  text-writers  to  sustain 
the  dictum  that  a  policy,  though  executed  before  a  war,  is  avoided ;  or,  as  it  is 
said,  is  dissolved  by  the  breaking  of  the  war,  is  one  where  the  loss  sought  to  be 
recovered  was  a  loss  by  capture  by  the  forces  of  Great  Britain,  in  whose  courts 
the  suit  was  brought. 

The  court  held  that  it  was  not  competent  for  a  British  subject  to  insure 
against  a  capture  by  his  own  government,  and  that  a  claim  for  a  loss  founded 
upon  such  a  capture  could  not  be  recovered,  but,  in  concluding  the  opinion  of 
the  court.  Lord  Alvanley  says  :  "The  plaintiff  is  not  entitled  to  a  return  of  pre- 
mium, because  the  contract  was  legal  at  the  time  the  risk  commenced,  and  was 
a  good  insurance  against  all  other  losses  but  that  arising  from  capture  by  the 
forces  of  Great  Britain."  If,  then,  the  policy  in  the  case  at  bar  was  good  for 
any  purpose,  it  was  a  good  consideration  in  the  beginning  for  the  making 
of  the  premium  note  now  sued  on,  and  as  the  defendant  had  indemnity  under  it 
during  the  whole  year,  against  all  perils  but  capture  by  the  forces  of  the  United 
States,  it  cannot  be  said  that  there  has  been  such  a  failure  of  consideration  as 
will  release  him  from  the  obligation  to  pay  the  note.  I  will  therefore  enter  a 
judgment  in  favor  of  the  plaintiff,  for  the  amount  of  the  note,  with  interest  fi"om 
its  maturity  to  this  date,  deducting  from  that  time  the  period  during  which  the 
war  was  pending. 

See  also,  to  the  same  point,  Semmes  v.  City  Fire  Ins.  Co.  of  Hartford,  1.3 
WaU.  (U.  S.)  159. 


40  INSURANCE:    FJRE,   LIFE,    ACCIDENT,    ETC. 

act  or  contract  which  tends  to  increase  his  resources,  and 
every  kind  of  trading  or  commercial  deahng  or  intercourse, 
whether  by  transmission  of  money  or  goods,  or  orders  for  the 
dehvery  of  either,  between  the  two  countries,  directly  or  indi- 
rectly, or  through  the  intervention  of  third  persons  or  part- 
nerships, or  by  contracts  in  any  form  looking  to  or  involving 
such  transmission,  or  by  insurances  upon  trade  with  or  by  the 
enemy.  Beyond  the  principle  of  these  cases  the  prohibition 
has  not  been  carried  by  judicial  decision,  and  the  more  sweep- 
ing statements  of  the  text-books  rest  upon  the  authority  of 
dicta  which  are  shown  to  be  unsupported  by  the  facts  under 
consideration.  And  the  learned  judge  continues :  "  At  this 
age  of  the  world,  when  all  the  tendencies  of  the  law  of  nations 
are  to  exempt  individuals  and  private  contracts  from  injury  or 
restraint,  in  consequence  of  war  between  their  governments, 
we  are  not  disposed  to  declare  such  contracts  unlawful  as  have 
not  been  heretofore  adjudged  to  be  inconsistent  with  a  state  of 
war.  The  trading  or  transmission  of  property  or  money,  which 
is  prohibited  by  international  law,  is  from,  or  to,  one  of  the 
countries  at  war.  An  alien  enemy,  residing  in  this  country, 
may  contract  and  sue  like  a  citizen.  When  a  creditor,  although 
a  subject  of  the  enemy,  remains  in  the  country  of  the  debtor, 
or  has  a  known  agent  there,  authorized  to  receive  the  amount 
of  the  debt  throughout  the  war,  payment  there  to  such  creditor 
or  his  agent  can  in  no  respect  be  construed  into  a  violation  of 
the  duties  imposed  by  a  state  of  war  upon  the  debtor  ;  it  is  not 
made  to  an  enemy  in  contemplation  of  international  or  munici- 
pal law  ;  and  it  is  no  objection  that  the  agent  may  possibly 
remit  the  money  to  his  principal  in  the  enemy's  country ;  if 
he  should  do  so  the  offence  would  be  imputable  to  him,  and 
not  to  the  person  paying  him  the  money,"  —  a  lucid,  and,  we 
apprehend,  an  accurate  exposition  of  the  present  state  and  ten- 
dency of  the  law  upon  this  interesting  point. 


CONSUMMATION   OF   THE   CONTRACT.  41 


CHAPTER   III. 

OF  THE  CONSUMMATION  OF  THE  CONTRACT. 

§  43.  Contract,  when  completed. — From  the  extent  and  pe- 
culiar character  of  the  operations  of  insurance  companies  and 
their  agencies  questions  frequently  arise,  sometimes  of  great 
difficulty,  as  to  the  fact  whether  any  contract  has  been  made. 
Negotiations  have  been  had,  but  have  they  resulted  in  a  con- 
tract? This,  of  course,  depends  upon  the  question,  whether 
the  respective  parties  have  come  to  an  understanding  upon  all 
the  elements  of  the  contract,  —  the  parties  thereto  ;  the  subject- 
matter  of  insurance  ;  the  amount  for  which  it  is  to  be  insured  ; 
the  limits  of  the  risk,  including  its  duration  in  point  of  time, 
and  extent  in  point  of  hazards  assumed  ;  the  rate  of  premium  ; 
and,  generally,  upon  all  the  circumstances  which  are  peculiar  to 
the  contract  and  distinguish  it  from  every  other,  so  that  nothing 
remains  to  be  done  but  to  fill  up  the  policy  and  deliver  it  on 
the  one  hand,  and  pay  the  premium  on  the  other.  If,  upon  all 
these  points,  an  agreement  has  been  arrived  at,  and  no  stipu- 
lation is  made  that  the  delivery  of  the  policy  shall  be  the  test 
of  the  consummation  of  the  contract,  and  no  law  makes  such 
'delivery  a  condition  precedent  to  its  validity  from  that  time, 
unless  another  time  is  fixed,  the  contract  is  complete,  and 
binds  the  parties.  The  policy,  as  we  have  seen,^  is  not  essen- 
tial to  its  validity.  It  is  but  the  form  and  embodiment,  the 
expression  and  evidence,  of  what  has  already  been  agreed 
upon,  adding  nothing  thereto  and  detracting  nothing  there- 
from. And  whether  issued  immediately  upon  the  arrival  at 
a  mutual  understanding,  or  subsequently,  before  the  loss  or 
after  the  loss,  with  or  without  knowledge,  or  not  issued  at  all, 
the  obligations  of  the  parties  are  not  affected.  If  the  insurers 
refuse  under  such  circumstances  to  issue  a  policy  because  a 

1  Ante,  c.  2.    . 


42  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC, 

loss  has  intervened,  or  any  other  change  has  taken  place  which 
would  not  be  a  defence  under  the  policy  if  that  had  been  deliv- 
ered, they  will  not  be  allowed  by  the  law  to  take  advantage  of 
the  fact  that  no  policy  has  been  issued,  but  in  divers  modes, 
stated  in  another  place,  will  be  compelled  to  recognize  their 
obligations  just  as  fully  as  if  a  policy  had  been  issued. 

§  44.  The  agreement  for  insurance  is  complete  when  the 
terms  thereof  have  been  agreed  upon  between  the  parties,  and 
the  reciprocal  rights  and  obligations  of  the  insurer  and  the 
insured  date  from  that  moment,  without  reference  to  the  exe- 
cution and  delivery  of  the  policy,  unless  these  two  elements 
are  embraced  within  the  terms  agreed  upon.  The  contract 
imports  an  obligation  on  the  part  of  the  insurer  to  execute 
and  deliver  a  policy  to  the  insured.  And  on  the  completion  of 
the  negotiations,  the  policy,  executed  in  accordance  therewith, 
and  dated  on  the  day  of  the  completion,  though  not  actually 
delivered  till  afterwards,  or  at  all,  will  take  effect  from  its  date, 
unless  some  other  terms  are  expressly  agreed  upon.^ 

§  45.  Distinction  between  Policy  and  Agreement  to  insure.  — 
There  is  at  least  a  technical  distinction  between  a  contract  of 
insurance  or  policy  and  an  agreement  to  insure.  The  latter 
may,  and  in  point  of  fact  does,  exist  prior  to  the  drawing  up 
and  the  delivery  of  the  policy,  and  contemplates  the  delivery 
of  the  policy  as  the  consummation  of  the  agreement.  And 
upon  this  distinction  much  important  and  interesting  litigation 
has  arisen.  It  being  settled  that  insurers  may  now  become 
liable  for  a  loss  although  they  may  not  have  issued  a  policy, 
the  question  often  arises  when  that  liability  is  fixed  ;  in  other 
words,  when  the  negotiations  have  reached  such  a  point  that  if 
the  insurers  refuse  to  issue  a  policy  the  courts  will  interpose 
to  compel  them  to  issue  one,  or  to  indemnify  the  insured  to 
the  same  extent  and  in  like  manner  as  if  they  had  issued  a 
policy.  This  interposition  will  usually  be  successfully  invoked 
when  the  negotiations  have  reached  such  a  point  that  nothing 

1  Lightbody  v.  North  Am.  Ins.  Co.,  23  AVend.  (N.  Y.)  18;  Hallock  v.  Com- 
mercial Ins.  Co.,  2  Dutch.  (N.  J.)  268 ;  s.  c.  affirmed,  3  Dutch.  (N.  J.)  645  ;  Flint 
V.  Ohio  Ins.  Co.,  8  Oliio,  501;  Xenos  v.  Markhara,  2  Law  Repts.  (H.  L.)  296; 
American  Home  Ins.  Co.  v.  Patterson,  28  Ind.  17. 


CONSUMMATION    OF   THE   CONTRACT.  43 

remains  to  be  done  by  either  party  but  to  execute  what  has 
been  agreed  upon.  Thus,  in  Kobne  v.  Insurance  Company  of 
North  America,^  the  plaintiff's  agent  applied  for  insurance, 
and  agreed  upon  all  the  terms,  but  left  the  office  before  the 
policy  was  filled  out.  Tliis,  however,  was  filled  out  within  a 
few  hours,  and  notice  thereof  given  by  the  company,  accompa- 
nied, however,  by  notice  that  the  company  had  received  infor- 
mation that  a  loss  had  happened.  On  calling  for  the  policy 
and  tendering  the  premium,  the  agent  was  refused,  on  the 
ground  that  a  loss  had  happened  before  the  delivery,  and  the 
contract  was  not  complete.  But  the  court  held  otherwise, 
as  every  thing  had  been  agreed  on,  and  nothing  remained  to 
be  done  but  to  carry  out  the  terms  already  agreed  on,  and  the 
plaintiff  had  a  verdict.^ 

Completion  after  Loss.  —  As  another  practical  illustration  of 
the  doctrine  that  where  the  parties  have  come  to  an  agreement 
upon  all  the  terms,  and  nothing  remains  but  to  execute  what 
has  already  been  agreed  upon,  a  policy  must  issue,  may  be 
stated  the  case  of  Mead  v.  Davidson,^  where  it  appeared,  in 
an  action  on  a  policy  on  a  sliip,  "  lost  or  not  lost,"  that  the 
risk  had  been  accepted  and  the  premium  paid  before  loss ;  but 
before  the  delivery  of  the  policy,  —  what  was  not  known  to 
either  party  at  the  time  the  agreement  was  made  and  the  pre- 
mium paid,  —  it  came  to  the  knowledge  of  both  parties  that 
a  loss  had  happened,  notwithstanding  which  the  company,  rec- 
ognizing their  obligation  under  the  agreement,  executed  and 
delivered  a  policy  in  accordance  therewith.  And  the  question 
was  whether  such  a  policy,  so  executed  after  knowledge  on  the 
part  of  both  parties  of  the  loss,  could  be  upheld.  Upon  this 
point  the  court  had  no  doubt.  The  conduct  of  the  company 
might  be  extraordinary,  but  it  was  only  in  execution  of  what 
they  had  agreed  to  do  upon  sufficient  consideration. 

§  46.  Negotiation  by  Correspondence.  —  When  the  negotiations 

1  1  Wash.  (U.  S.  C.  C.)  93. 

2  This  case  was  trover  for  the  policy.  The  amount  of  damages  is  not  stated 
in  the  case  as  reported,  but  it  was  undoubtedly  the  same  as  if  the  plaintiff  had 
sued  and  recovered  on  the  policy,  had  it  been  delivered.  See  also  Goodall  v. 
New  England  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  169. 

3  4  Ad.  &  Ell.  303,  in  the  K.  B. 


44  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

are  carried  on  by  correspondence  through  the  mail,  the  precise 
point  at  wliich  the  contract  becomes  binding  on  both  parties 
has  been  the  subject  of  diverse  opinions  held  by  equally  distin- 
guished tribunals.  On  the  one  hand,  it  has  been  held  that 
when  a  party  applies  for  insurance  by  letter,  and  receives  a 
reply  stating  the  terms  upon  which  the  insurance  can  be  had, 
to  which  the  applicant  replies  accepting  the  terms,  the  contract 
does  not  become  binding  until  the  letter  of  acceptance  is  re- 
ceived, or,  at  all  events,  the  fact  of  acceptance  has  in  some 
way  come  to  the  knowledge  of  the  insurers.  This  was  the 
view  taken  by  the  Supreme  Court  of  Massachusetts,  so  that  a 
letter  written  by  the  insurers  retracting  their  offer,  and  mailed 
before  they  had  received  the  letter  accepting  their  offer,  had 
the  effect  to  prevent  an  agreement.^ 

On  the  other  hand,  at  about  the  same  time  the  Court 
of  King's  Bench  in  Adams  v.  Lindsell,^  where  the  defendants 
offered,  by  letter,  to  sell  the  plaintiff  a  lot  of  wool  upon  certain 
terms,  requesting  an  answer  by  due  course  of  mail,  to  which 
letter  the  plaintiff,  as  soon  as  he  received  it,  replied,  accepting 
the  offer,  held  that  the  contract  was  complete  when  the  plain- 
tiff mailed  the  letter  accepting  the  offer,  as  otherwise  no  contract 
could  ever  be  completed  by  the  post ;  for  if  the  defendants  were 
not  bound  by  their  offer,  when  accepted  by  the  plaintiffs,  until 
the  answer  was  received,  then  the  plaintiffs  ought  not  to  be 
bound  till  after  they  had  received  notice  that  the  defendants 
had  received  their  answer  and  assented  to  it,  and  so  it  might 
go  on  ad  injinitimi.  The  defendants  must  be  considered,  in 
law,  as  making,  during  every  instant  of  the  time  their  letter 
was  travelling,  the  same  identical  offer  to  the  plaintiffs  ;  and 

1  McCuUoch  V.  Eagle  Ins.  Co.,  1  Pick.  (Mass.)  278.  The  court  cited  Cooke 
V.  Oxley,  3  D.  &  E.  653,  which  was  a  case  where  the  defendant  offered  to  sell 
tobacco  to  the  plaintiff  upon  certain  terms,  and  at  the  plaintiff's  request  gave 
him  till  a  certain  time  to  accept  or  reject,  before  tlie  arrival  of  which  time  notice 
of  acceptance  was  given,  and  the  court  held  that  there  was  no  contract ;  and 
Tayne  v.  Cave,  3  D.  &  E.  148,  which  was  a  case  where  the  court  held  that  a 
bidder  at  an  auction  liad  a  right  to  withdraw  his  bid  at  any  time  before  the 
hammer  was  down  ;  that  is,  at  any  time  before  tlie  acceptance  of  the  bid.  The 
doctrine  of  this  last  case  is  fully  sustained  by  Pothier,  Traite  du  Contrat  de 
Vente,  p.  1,  §  2,  art.  3,  no.  32. 

2  1  Barn.  &  Aid.  681. 


CONSUMMATION    OF    THE    CONTRACT.  45 

then  the  contract  is  completed  by  the  acceptance  of  it  by  the 
latter.i 

§  47.  In  this  irreconcilable  conflict  of  opinion  the  Court  of 
Errors  of  New  York,^  the  Supreme  Court  of  Pennsylvania,^ 
and  the  Supreme  Court  of  the  United  States,*  have  been  called 
on  to  adjudicate  upon  substantially  the  same  question.  In  the 
first  of  these  cases,  the  letter  of  acceptance,  after  much  corre- 
spondence, was  mailed  before  the  death  of  the  party  to  whom  it 
was  addressed,  but  did  not  arrive  at  its  destination  till  after  the 
death,  and  the  court  approved  a)\d  adopted  the  doctrine  of 
the  English  case,  as  well  upon  the  reason  of  the  thing,  as  upon 
the  apparent  approval  of  the  same  by  the  Court  of  Common 
Pleas,  in  Routledge  v.  Grant.^  The  case  in  Pennsylvania  was 
a  little  more  complex  in  its  facts,  which  were  substantially  as 
follows :  The  plaintiff  applied  to  the  agent  of  an  insurance 
company  by  written  application  for  insurance  upon  an  academy 
building,  agreed  upon  the  terms,  and  paid  the  premium,  and 
received  a  certificate  from  the  agent  that  the  property  would 
be  insured  from  the  date  of  the  application,  if  the  company 
approved.  On  transmitting  the  papers  to  the  company,  with- 
out approving  the  application  they  wrote  to  the  agent  that  the 
plaintiff  must  make  certain  changes ;  and  when  the  company 
were  duly  certified  that  these  requisites  were  complied  with  a 
policy  would  be  sent.  These  requisites  were  complied  with, 
and  the  agent  duly  notified  thereof,  and  requested  to  call  and 
examine  for  himself,  which  however  he,  from  press  of  busi- 
ness, neglected  to  do  until  the  building  insured  was  burned. 
On  a  refusal  on  the  part  of  the  company  to  pay  the  loss  on 
the  ground  that  no  contract  had  been  perfected,  the  court, 
adopting  the  principle  of  the  English  case,  held  that  the  con- 

1  The  cases  of  Payne  v.  Cave  and  Cooke  v.  Oxley,  uhi  supra,  were  cited  in 
this  case  by  the  defendants'  counsel,  but  the  court  did  not  regard  tliem  as 
autlioritative.  During  the  delay  wiiich  intervened  between  the  forwarding  the 
offer,  whicli  by  misdirection  did  not  reach  the  plaintiff  in  the  usual  season,  the 
defendants  had  sold  the  wool  to  another  purchaser.  This  decision  has  the  ap- 
proval of  Chancellor  Kent,  Com.  vol.  ii.  p.  477,  note  a. 

2  Mactier  v.  Frith,  6  Wend.  (N.  Y.)  103. 

»  Hamilton  v.  Lycoming  Mut.  Ins.  Co.,  5  Barr  (Penn.),  339. 
*  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  390. 
s  4  Bingham,  653. 


46  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

tract  was  completed  by  notice  given  to  the  agent  of  his  com- 
pliance with  the  requisitions  of  the  company.  He  had  performed 
tliat  in  consideration  of  which  a  policy  had  been  promised,  and 
he  was  therefore  entitled  to  his  policy.  In  the  case  in  the 
Supreme  Court  of  the  United  States,  the  facts  were  that  the 
plaintiff  applied  for  insurance  to  the  company's  agent,  who,  after 
communication  with  his  principal,  wrote  the  plaintiff  stating 
the  terms,  and  added  that  if  he  wished  to  insure  he  could  send 
his  check  for  the  premium,  "  and  the  business  is  concluded." 
This  letter  was  delayed  by  misdirection  ;  but  as  soon  as  re- 
ceived and  before  any  loss,  the  plaintiff  replied,  accepting  the 
terms,  and  inclosing  his  check.  Tiie  letter  of  acceptance, 
however,  did  not  reach  the  agent  till  the  property  insured  had 
been  destroyed  ;  and  in  this  case  also  it  was  claimed  on  the 
part  of  the  insurers  that  no  contract  had  been  completed ; 
and  the  case  having  been  elaborately  argued  on  both  sides  by 
very  able  counsel,  the  court  said,  in  giving  their  decision  :  — 

"  Several  objections  have  been  taken  to  the  right  of  the  com- 
plainant to  recover,  which  it  will  be  necessary  to  notice ;  but 
the  principal  one  is,  that  the  contract  -of  insurance  was  not 
complete  at  the  time  the  loss  happened,  and,  therefore,  that 
the  risk  proposed  to  be  assumed  had  never  attached. 

"  Two  positions  have  been  taken  by  the  counsel  for  the  com- 
pany for  the  purpose  of  establishing  this  ground  of  defence. 

"  1.  The  want  of  notice  to  the  agent  of  the  company  of  the 
acceptance  of  the  terms  of  the  insurance  ;  and, 
"  2.  Tiie  non-payment  of  the  premium. 
"  The  first  position  assumes  that,  where  the  company  have 
made  an  offer  through  the  mail  to  insure  upon  certain  terms, 
the  agreement  is  not  consummated  by  the  mere  acceptance  of 
the  offer  by  the  party  to  whom  it  is  addressed  ;  that  the  con- 
tract is  still  open  and  incomplete  until  the  notice  of  accept- 
ance is  received ;  and  that  the  company  are  at  liberty  to 
withdraw  the  offer  at  any  time  before  the  arrival  of  the  notice, 
and  this  even  without  communicating  notice  of  the  with- 
drawal to  the  applicant;  in  other  words,  that  the  assent  of 
the  company,  express  or  implied,  after  the  acceptance  of  tlie 
terms  proposed  by  the  insured,  is  essential  to  a  consumma- 
tion of  the  contract. 


CONSUMMATION    OF   THE   CONTRACT.  47 

"  The  effect  of  this  construction  is,  to  leave  the  property  of 
the  insured  uncovered  until  his  acceptance  of  the  offer  has 
reached  tlie  company,  and  has  received  their  assent ;  for,  if  the 
contract  is  incomplete  until  notice  of  the  acceptance,  till  then 
the  company  may  retract  the  offer,  as  neither  party  is  bound 
until  the  negotiation  has  resulted  in  a  complete  bargain  be- 
tween the  parties. 

"  In  our  apprehension,  this  view  of  the  transaction  is  not  in 
accordance  with  the  usages  and  practice  of  these  companies  in 
taking  risks  ;  nor  with  the  understanding  of  merchants  and 
other  business  men  dealing  with  them  ;  nor  with  the  principles 
of  law,  settled  in  analogous  cases,  governing  contracts  entered 
into  by  correspondence  between  parties  residing  at  a  distance. 
On  the  contrary,  we  are  of  opinion  that  an  offer  under  the 
circumstances  stated,  prescribing  the  terms  of  insurance,  is 
intended,  and  is  to  be  deemed  a  valid  undertaking  on  the  part 
of  the  company,  that  they  will  be  bound,  according  to  the 
terms  tendered,  if  an  answer  is  transmitted  in  due  course  of 
mail  accepting  them  ;  and  that  it  cannot  be  withdrawn,  unless 
the  withdrawal  reaches  the  party  to  whom  it  is  addressed  before 
his  letter  of  reply  announcing  the  acceptance  has  been  trans- 
mitted. 

"  This  view  of  the  effect  of  the  correspondence  seems  to  us 
to  be  but  carrying  out  the  intent  of  the  parties,  as  plainly 
manifested  by  their  acts  and  declarations. 

"  On  the  acceptance  of  the  terms  proposed,  transmitted  by 
due  course  of  mail  to  the  company,  the  minds  of  both  parties 
have  met  on  the  subject,  in  the  mode  contemplated  at  the  time 
of  entering  upon  the  negotiation,  and  the  contract  becomes 
complete.  The  party  to  whom  the  proposal  is  addressed  has 
a  right  to  regard  it  as  intended  as  a  continuing  offer  until  it 
shall  have  reached  him,  and  shall  be  in  due  time  accepted  or 
rejected. 

"  Such  is  the  plain  import  of  the  offer.  And  besides,  upon 
any  other  view,  the  proposal  amounts  to  nothing,  as  the  accept- 
ance would  be  but  the  adoption  of  the  terms  tendered,  to  be, 
in  turn,  proposed  by  the  applicant  to  the  company  for  their 
approval  or  rejection.     For,  if  the  contract  is  still  open  until 


48  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  company  is  advised  of  an  acceptance,  it  follows,  of  course, 
that  the  acceptance  may  be  repudiated  at  any  time  before  the 
notice  is  received.  Nothing  is  effectually  accomplished  by  an 
act  of  acceptance. 

"  It  is  apparent,  therefore,  that  such  an  interpretation  of 
the  acts  of  the  parties  would  defeat  the  oljject  which  both  had 
in  view  in  entering  upon  the  correspondence. 

"  The  fallacy  of  the  argument,  in  our  judgment,  consists 
in  the  assumption,  that  the  contract  cannot  be  consummated 
without  a  knowledge  on  the  part  of  the  company  that  the  offer 
has  been  accepted.  This  is  the  point  of  the  objection.  But 
a  little  reflection  will  show,  that,  in  all  cases  of  contracts 
entered  into  between  parties  at  a  distance  by  correspondence, 
it  is  impossible  that  both  should  have  a  knowledge  of  it  the 
moment  it  becomes  complete.  This  can  only  exist  where  both 
parties  are  present. 

"  The  position  may  be  illustrated  by  the  case  before  us.  If 
the  contract  became  complete,  as  we  think  it  did,  on  the 
acceptance  of  the  offer  by  the  applicant,  on  the  21st  Decem- 
ber, 1844,  the  company,  of  course,  could  have  no  knowledge 
of  it  until  the  letter  of  acceptance  reached  the  agent,  on  the 
31st  of  the  month ;  and,  on  the  other  hand,  upon  the  hypoth- 
esis it  was  not  complete  until  notice  of  the  acceptance,  and 
then  became  so,  the  applicant  could  have  no  knowledge  of  it 
at  the  time  it  took  effect.  In  either  aspect,  and,  indeed,  in 
any  aspect  in  which  the  case  can  be  presented,  one  of  the  par- 
ties must  be  unadvised  of  the  time  when  the  contract  takes 
effect,  as  its  consummation  must  depend  upon  the  act  of  one 
of  them  in  the  absence  of  the  other. 

"  The  negotiation  being  carried  on  through  the  mail,  the 
offer  and  acceptance  cannot  occur  at  the  same  moment  of 
time  ;  nor,  for  the  same  reason,  can  the  meeting  of  the  minds 
of  the  parties  on  the  subject  be  known  by  each  at  the  moment 
of  concurrence  ;  the  acceptance  must  succeed  the  offer  after 
the  lapse  of  some  interval  of  time  ;  and,  if  the  process  is  to 
be  carried  farther  in  order  to  complete  the  bargain,  and  notice 
of  the  acceptance  must  be  received,  the  only  effect  is  to  re- 
verse the  position  of  the  parties,  changing  the  knowledge  of 
the  completion  from  the  one  party  to  the  other. 


CONSUMMATION   OF   THE   CONTRACT.  49 

"  It  is  obviously  impossible,  therefore,  under  the  circum- 
stances stated,  ever  to  perfect  a  contract  by  correspondence,  if 
a  knowledge  of  both  parties  at  the  moment  they  became  bound 
is  an  essential  element  in  making  out  the  obligation.  And 
as  it  must  take  effect,  if  effect  is  given  at  all  to  an  endeavor 
to  enter  into  a  contract  by  correspondence,  in  tlie  absence  of 
the  knowledge  of  one  of  the  parties  at  the  time  of  its  consum- 
mation, it  seems  to  us  more  consistent  with  the  acts  and 
declarations  of  the  parties  to  consider  it  complete  on  the 
transmission  of  the  acceptance  of  the  offer  in  the  way  they 
themselves  contemplated,  instead  of  postponing  its  comple- 
tion till  notice  of  such  acceptance  has  been  received  and 
assented  to  by  the  company. 

"  For  why  make  the  offer,  unless  intended  that  an  assent  to 
its  terms  should  bind  them  ?  And  why  require  any  further 
assent  on  their  part,  after  an  unconditional  acceptance  by  the 
party  to  whom  it  is  addressed  ? 

"  We  have  said  that  this  view  is  in  accordance  with  the 
usages  and  practice  of  these  companies,  as  well  as  with  the 
general  principles  of  law  governing  contracts  entered  into  by 
absent  parties. 

"  In  the  instructions  of  this  company  to  their  agent  at 
Fredericksburg,  he  is  advised  to  transmit  all  applications  for 
insurance  to  the  office  for  consideration  ;  and  that,  upon  the 
receipt  of  an  answer,  if  the  applicant  accepts  the  terms,  the 
contract  is  considered  complete  without  waiting  to  commu- 
nicate the  acceptance  to  the  company ;  and  the  policy  to  be 
thereafter  issued  is  to  bear  date  from  the  time  of  the  accept- 
ance. 

"  The  company  desire  no  further  communication  on  the 
subject,  after  they  have  settled  upon  the  terms  of  the  risk,  and 
sent  them  for  the  inspection  of  the  applicant,  in  order  to  the 
consummation  of  the  bargain.  The  communication  of  the 
acceptance  by  the  agent  afterwards  is  to  enable  them  to  make 
out  the  policy.  The  contract  is  regarded  as  complete  on  the 
acceptance  of  the  terms. 

"  This  appears,  also,  to  have  been  the  understanding  of  the 
agent ;  for,  on  communicating  to  the  insured  tlie  terms  received 

4 


50  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

from  the  company,  he  observes,  '  Should  you  desire  to  effect 
the  above  insurance,  send  me  your  check  payable  to  my  order 
for  fifty-seven  dollars,  and  the  business  is  concluded ; '  obvi- 
ously enough  importing  that  no  other  step  would  be  necessary 
to  give  effect  to  the  insurance  of  the  property  upon  the  terms 
stated. 

"  The  cases  of  Adams  v.  Lindsell  ^  and  Mactier's  Adminis- 
trators V.  Frith  2  are  authorities  to  shov/  that  the  above  view 
is  in  conformity  with  the  general  principles  of  law  governing 
the  formation  of  all  contracts  entered  into  between  parties 
residing  at  a  distance  by  means  of  correspondence. 

"  The  unqualified  acceptance  by  the  one  of  the  terms  pro- 
posed by  the  other,  transmitted  by  due  course  of  mail,  is 
regarded  as  closing  the  bargain,  from  the  time  of  the  transmis- 
sion of  the  acceptance. 

"  This  is  also  the  effect  of  the  case  of  Eliason  v.  Henshaw,^ 
in  this  court,  though  the  point  was  not  necessarily  involved  in 
the  decision  of  the  case.  The  acceptance  there  had  not  been 
according  to  the  terms  of  the  bargain  proposed,  for  which  rea- 
son the  plaintiff  failed. 

"  2.  The  next  position  against  the  claim  is  the  non-payment 
of  the  premium. 

"  One  of  the  conditions  annexed  to  the  policies  of  the 
company  is,  that  no  insurance  will  be  considered  as  made  or 
binding  until  the  premium  be  actually  paid  ;  and  one  of  the 
instructions  to  the  agent  was  that  no  credit  should  be  given 
for  premiums  under  any  circumstances. 

"  But  the  answer  to  this  objection  is  that  the  premium,  in 
judgment  of  law,  was  actually  paid  at  the  time  the  contract 
became  complete.  The  mode  of  payment  had  not  been  pre- 
scribed by  the  company,  whether  in  specie,  bills  of  a  particular 
bank,  or  otherwise  ;  the  agent,  therefore,  was  at  liberty  to 
exercise  a  discretion  in  the  matter,  and  prescribe  the  mode  of 
payment ;  and,  accordingly,  we  find  him  directing  in  this  case, 
that  it  may  be  paid  by  a  check  payable  to  his  order  for  the 
amount.  It  is  admitted  that  the  insured  had  funds  in  the 
bank  upon  which  it  was  drawn,  at  all  times  from  the  date  of 
1  1  Barn.  &  Aid.  681.  -^  6  Wend.  104.  3  4  Wheat.  228. 


CONSUMMATION   OF   THE    CONTRACT.  51 

the  check  till  it  was  received  by  the  agent,  sufficient  to  meet 
it;  and  that  it  would  have  been  paid  on  presentment. 

"  It  is  not  doubted  that,  if  the  check  for  the  premium  had 
been  received  by  the  agent  from  the  hands  of  the  insured,  it 
would  have  been  sufficient ;  and  in  the  view  we  have  taken  of 
the  case,  the  transmission  of  it  by  mail,  according  to  the  direc- 
tions given,  amounts,  in  judgment  of  law,  to  the  same  tlijng. 
Doubtless,  if  the  check  had  been  lost  or  destroyed  in  the  trans- 
mission, the  insured  would  have  been  bound  to  make  it  good  ; 
but  the  agent,  in  this  respect,  trusted  to  his  responsibility, 
having  full  confidence  in  his  ability  and  good  faith  in  the 
transaction."  ^ 

§  48.  And  the  doctrine  of  this  latter  case,  so  well  expounded 
and  maintained  in  the  opinion  cited  at  so  much  length,  must 
now  be  considered  as  the  one  which  is  supported  by  tlie  great 
preponderance  of  authority,  and  as  recommended,  if  not  by  the 
better  reason,  at  least  by  its  greater  practicability,  a  considera- 
tion which  seems  to  have  had  controlling  importance  in  leading 
to  its  adoption. 2 

And,  indeed,  it  may  be  inferred  from  what  fell  from  the 
court  in  a  later  case,^  that,  even  in  Massachusetts,  it  is  by  no 
means  certain  that  the  case  of  McCuUoch  v.  Eagle  Insurance 
Company  would  be  followed  except  in  a  case  exactly  coinciding 
with  it  in  its  facts,  the  court  there  observing  that  it  may  well 
be  conceded  that  when  notice  of  acceptance  is  to  be  given  by 
mail  a  notice  actually  put  into  the  mail,  especially  if  forwarded, 
and  beyond  the  control  or  revocation  of  the  party  making  it, 
may  be  good  notice. 

§  49.  Acceptance. —  An  offer  of  insurance  by  mail  is,  there- 
fore, a  continuing  offer,  and  becomes  binding  upon  acceptance 
before  notice  of  withdrawal  in  due  course  of  mail;  and  the 
unqualified  acceptance  by  one  party  of  the  terms  proposed  by 
the  other,  transmitted  by  due  course  of  mail,  is  to  be  regarded 
as  closing  the  bargain  from  the  time  of  the  transmission  of  the 
acceptance.     The  concurrence  of  knowledge  in  point  of  time 

1  Tajloe  V.  Merch.  Fire  Ins.  Co.,  4  How.  (U.  S.)  390. 
.  -  Palra  V.  Medina  Ins.  Co.,  20  Oliio,  529,  and  cases  cited,  post,  §  49. 
8  Thayer  v.  Middlesex  Mut.  Fire  Ins.  Co.,  10  Pick.  (Mass.)  332. 


52  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

with  the  act  of  completion  is  wholly  impracticable  in  contracts 
by  correspondence,  since  the  consummation  must  depend  upon 
the  act  of  one  party  in  the  absence  of  the  other. ^ 

But  the  acceptance  must  be  within  reasonable  time.  And 
where  a  reply  would  naturally  be  expected  by  the  next  return 
mail  after  the  receipt  of  the  offer,  a  delay  covering  the  depart- 
ure of  one  or  more  mails  would  seem  to  be  unreasonable,  and 
the  party  making  the  offer  would  have  a  right  to  presume 
that  the  offer  was  rejected. ^ 

§  50.  No  Contract  unless  all  the  Terms  are  agreed  upon.  —  But 
it  is  to  be  carefully  noted  that,  unless  the  parties  have  come  to 
an  agreement  upon  all  the  terms  of  the  contract,  so  that  so  far 
as  the  terms  are  concerned  nothing  remains  open,  and  nothing 
remains  to  be  done  but  to  execute  what  has  been  agreed  upon, 
the  contract  is  still  incomplete,  and  of  no  binding  force  upon 
either  party.  An  offer  by  one  party  imposes  no  obligation 
upon  another  until  accepted  by  him  according  to  the  terms  in 
which  the  offer  is  made.  The  offer  must  be  accepted  as  it  is. 
If  not,  and  any  qualification  of  or  departure  from  its  terms  is 
made,  it  must  be  referred  back  to  the  party  making  the  origi- 
nal offer  for  his  acceptance  of  the  qualification  before  he  can  be 
bound.3  Hence,  when  the  defendant  offered  to  purchase  flour 
at  a  certain  price,  and  required  the  answer  to  be  sent  to  a  cer- 
tain place,  an  answer  accepting  the  offer,  but  addressed  to  the 
defendant  at  another  place  than  that  by  him  designated,  was  held 
not  to  be  an  acceptance  which  would  bind  the  defendant,  al- 
though the  defendant  received  it.  The  terms  of  the  offer  had 
not  been  complied  with.* 

§  51.  And  to  the  same  effect  is  the  following  case :  On  the 
18th  day  of  the  month  the  plaintiff  wrote  to  the  defendant  that 
he  would  sell  him  oil-cake  at  a  certain  price.     On  the  19th  the 

1  Western  v.  Genesee  Mut.  Ins.  Co.,  2  Kernan  (N.  Y.),  258 ;  Hallock  v.  Com. 
Ins.  Co.,  2  Dutch.  (N.  J.)  268 ;  8.  c.  affirmed,  3  Dutch.  (N.  J.)  645 ;  Duncan  v. 
Topham,  8  C.  B.  225.  In  this  case  tlie  letter  of  acceptance  never  reached  its 
destination. 

2  Thayer  v.  Middlesex  Mut.  Fire  Ins.  Co.,  10  Pick.  (Mass.)  326.  See  also 
Insurance  Co.  v.  Johnson,  23  Penn.  St.  72.     And  see  post,  §  53. 

s  Chase  v.  Hamilton  Mut.  Ins.  Co.,  22  Barb.  (N.  Y.)  527. 
*  Eleason  v.  Ilenshaw,  4  Wheat.  (U.  S.)  228. 


CONSUMMATION  OF  TBE  CONTRACT.  63 

defendant  replied  that  he  would  take  a  certain  amount,  "  but 
it  must  be  put  ou  board  directly."  On  the  22d  of  the  same 
month  the  plaintitf  replied,  "  I  shall  ship  to-morrow."  This 
last  letter  never  reached  its  destination.  Upon  the  facts,  the 
court  held  that  "  directly"  meant,  in  point  of  time,  something- 
less  than  "  within  a  reasonable  time,"  and  that  an  acceptance 
which  might  have  been  made  on  the  20th,  made  and  posted  on 
the  22d,  coupled  with  a  day's  further  delay  in  shipping,  was 
not  an  acceptance  according  to  the  terms  of  the  defendant's 
offer.^  So  where  a  proposal  was  made  for  insurance,  in  whicli 
the  rate  of  premium  \Vas  not  fixed,  and  the  company  trans- 
mitted to  their  agent  a  letter  accepting  the  proposal,  and 
stating  that  a  policy  would  be  issued  on  the  payment  of  a 
certain  premium  ;  which  letter,  however,  owing  to  an  unfavor- 
able change  in  the  health  of  tlie  applicant,  the  agent  did  not 
make  known  to  him  ;  it  was  held  that  the  terms  of  the  con- 
tract were  never  agreed  upon,  the  rate  of  premium  not  having 
been  stated  and  accepted.^ 

So  where  the  insured  agrees  to  take  the  policy  at  any  rate  of 
premium  fixed  by  the  company,  and  the  agent  forwards  the 
application  and  fixes  the  rate  of  premium  which  he  thinks  the 
principal  should  accept ;  but  the  principal,  opposing  the  appli- 
cation, fixes  a  larger  rate,  with  the  right  of  the  applicant  to 
decline,  and  forwards  the  policy  to  the  agent,  which,  through  his 
neglect,  is  lost,  and  not  brought  to  the  notice  of  the  applicant 
till  after  a  lo'ss,  the  contract  was  held  incomplete,  as  the  parties 
had  come  to  no  understanding  as  to  the  rate  of  premium.^ 

§  52.  So  where  an  action  was  brought  for  the  recovery  of  a 
premium  note  given  by  the  defendant,  on  a  policy  executed  by 
the  company,  and  the  question  was,  whether  the  policy  corre- 
sponded with  the  previous  agreement,  so  that  the  defendant 
was\  bound  to  accept  it ;  it  appeared  that  Carrington  wrote  to 
the  company  to  inquire  upon  what  terms  they  would  make  an 

1  Duncan  v.  Topliam,  8  C.  B.  225. 

2  Rose  V.  Med.  Ins.  &  Gen.  Life  Ins.  Soc.,11  Courtof  Session  Cases  (Scotch), 
2d  series,  345;  s.  c.  20  Scotch  Jur.  534.  See  also  Neville  v.  Mer.  &  Man.  Ins. 
Co.,  19  Ohio,  452.     And  see  post,  §§  50,  57. 

»  Wallingford  v.  Home  Mut.  Fire  &  Mar.  Ins.  Co.,  30  Mo.  46. 


5-1  insurance:  fire,  life,  accident,  etc. 

insurance  "  on  twenty-six  horses  and  twenty  oxen,  on  board 
the  brig  Gleaner,  from  Saybrook  to  the  West  Indies,"  saying 
nothing  as  to  the  valuation  of  the  property,  or  the  sum  he 
desired  to  be  insured.  The  company  replied  in  these  words  : 
"  The  office  will  take  the  risk  at  fifteen  per  cent,  or  at  ten  per 
cent  with  a  warranty  that  the  property  was  safe  on  the  7th  of 
December  last,  but  no  partial  loss  is  to  be  paid  under  ten  per 
cent."  By  the  mail  of  the  next  day  Carrington  replied,  "  Wc 
accept  your  terms  with  a  policy  filled,  on  twenty-six  horses 
valued  at  $2,200,  and  on  twenty  oxen,  valued  at  $800,"  and 
in  this  letter  inclosed  the  premium  note.  The  company,  on 
the  following  day,  forwarded  by  mail  a  policy  "  for  $3,000  on 
stock,  on  the  deck  of  the  brig  Gleaner,"  with  this  note  in  the 
margin,  "forty-six  head  of  horses  and  oxen,  valued  at  $3,000." 
This  policy  the  defendant  refused  to  accept,  and  immediately 
returned  it  to  the  company.  The  ground  of  this  refusal  was, 
that  the  horses  and  oxen  were  included  in  one  gross  valuation, 
instead  of  being  separately  valued,  according  to  the  terms  in 
which  he  had  accepted  the  offer.  In  delivering  the  judgment 
of  the  court,  and  commenting  on  the  defendant's  second  letter, 
Chief  Justice  Hosmer  said,  "Thiswas  a  neiv  proposal,  which 
Carrington  might  presume  the  company  would  accept,  but 
could  not  know  it.  The  office  had  assumed  no  such  obligation, 
as  the  office  had  not  agreed  to  underwrite  a  valued  policy ; 
neither  had  the  defendant  agreed  to  receive  an  open  policy. 
Tlie  minds  of  the  parties  had  not  met.  It  would  be  plainly 
an  unjustifiable  stress  upon  the  first  words  of  the  letter  '  we 
accept,'  to  consider  this  expression  as  concluding  the  contract. 
The  underwriters,  by  the  valued  policy  which  they  transmitted, 
recognized  the  new  proposal  in  part,  and  if  they  had  attended 
to  their  import,  the  same  words  would  have  convinced  them 
that  a  separate  valuation  of  the  horses  and  oxen  was  proposed. 
The  policy  transmitted  was  not  conformable  to  the  proposition. 
The  parties  never  did  agree."  ^ 

§  53.  Acceptance.  —  Where  the  proposition  is  by  letter,  the 
usual  mode  of  acceptance  is  by  sending  a  letter  announcing 
the  acceptance.     When  it  is  made  by  a  messenger,  a  determi- 

1  Ocean  Ins.  Co.  v.  Carrington,  3  Conn.  357. 


CONSUMMATION  OF  THE  CONTRACT.  65 

nation  to  accept  returned  through  him,  or  by  another,  would 
seem  to  be  all  the  law  requires.  But  there  are  other  modes 
of  acceptance  equally  conclusive  upon  the  parties.  Any  thing 
that  amounts  to  a  manifestation  of  a  formal  determination  to 
accept,  communicated,  or  put  in  the  proper  way  to  be  commu- 
nicated to  the  party  making  the  offer,  would  doubtless  com- 
plete the  contract.  An  acceptance  is  the  distinct  act  of  one 
party  to  the  contract,  as  much  as  the  offer  is  of  the  other. 
What  will  constitute  an  acceptance  depends  in  a  great  measure 
upon  the  circumstances  of  the  case.  A  mere  mental  assent, 
not  indicated  by  any  outward  expression,  has  nowhere  been 
held  to  be  sufficient.  Nor  is  mere  silence  or  neglect  to  respond 
sufficient,  even  when  the  applicant,  having  done  all  that  is  re- 
quired of  him,  is  to  receive  his  policy  if  the  directors  approve, 
otherwise  the  premium  paid  is  to  be  refunded.  And  this  is 
so  although  neither  the  money  is  refunded  nor  a  reply  made 
within  six  months.^ 

And  a  letter  of  acceptance  written,  but  still  in  the  posses- 
sion of  the  writer,  or  under  his  control,  would  not  probably 
be  regarded  as  any  thing  more  than  a  mere  mental  assent. 
The  unpublished  or  undelivered  letter  would  perhaps  be  con- 
sidered as  but  little  better  as  matter  of  evidence  than  the 
unspoken  intent.  What  seems  to  be  necessary  is,  that  the 
acceptance  should  be  manifested  by  some  act  which  is  open  to 
the  observation  of  others,  and  of  such  a  character  as  naturally 
to  give  rise  to  the  presumption  of  acceptance,  in  contradis- 
tinction to  an  equivocal  act,  which  might,  or  might  not,  be 
connected  with  an  acceptance,  but  would  not  naturally  sug- 
gest it.  The  observation  of  the  late  Mr.  Ciiief  Justice  Gibson 
in  Hamilton  v.  Lycoming  Mutual  Insurance  Company ,2  that  an 
actual  concurrence  of  assent  at  any  particular  moment  is  the 
ruling  circumstance,  must  be  taken  with  the  qualification  that, 
the  assent,  though  not  brought  to  the  knowledge  of  the  other 
party,  must  have  taken  some  outward  form  of  expression. 
Nothing  further  than  this  was  called  for  by  the  case.     The 

1  New  York  Union  Mut.  Ins.  Co.  v.  Johnson,  23  Penu.  St.  92;  Myers  v. 
Keystone  Mat.  Life  Ins.  Co.,  27  Penn.  St.  268. 

2  9  Barr  (Penu.),  339. 


56  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

meeting  of  two  minds,  the  aggregatio  mentium  necessary  to 
the  constitution  of  every  contract,  must  take  place  eo  instanti 
with  the  doing  of  any  overt  act  intended  to  signify  to  the  other 
party  the  acceptance  of  the  proposition,  without  regard  to  when 
tliat  act  comes  to  the  knowledge  of  the  other  party.  The  overt 
act  may  vary  with  the  form  and  nature  of  the  contract.  It 
may  he  by  the  fall  of  the  hammer,  by  words  spoken,  by  letter, 
by  telegraph,  by  remitting  the  article  sent  for,  by  mutual 
signing,  or  by  delivery  of  papers ;  and  the  delivery  may  be  by 
any  act  intended  to  signify  that  the  instrument  shall  have  a 
present  vitality.  Whatever  the  form,  the  act  done  is  the  irrev- 
ocable evidence  of  the  aggregatio  mentium  ;  and  at  that  instant 
the  bargain  is  struck.  The  acceptor  can  no  more  overtake  and 
countermand  by  telegraph  his  letter  mailed,  than  he  can  his 
words  of  acceptance  after  they  have  issued  from  his  lips  on 
their  way  to  the  hearer.^ 

§  54.  Agreement  vrith  Agent  subject  to  Approval  of  Principal. 
—  If  an  agent  agrees  with  the  applicant  upon  the  terms  of 
insurance,  subject  to  the  approval  of  his  principal,  and  his 
principal  returns  a  policy  containing  a  modification  of  the  terms, 
which  the  agent  forwards  to  the  applicant,  with  a  request  that 
he  will  return  it  if  he  does  not  comply  with  the  terms,  and 
the  applicant  neither  returns  the  policy  nor  complies  witii  the 
modified  terms,  —  the  payment  of  additional  cash  premiums, — 
the  delivery  is  only  conditional,  and  the  contract  is  not  com- 
plete till  the  compliance  with  the  new  terms.^  So  where  all 
the  terms  are  agreed  upon,  and  the  assured  is  told  that  he 
may  regard  himself  as  insured,  but  pending  the  issue  of  the 
policy  the  assured  notifies  the  insurers  that  he  desires  a 
change,  the  particulars  of  which  he  does  not  state,  and  neglects 
to  attend  to  the  modification,  though  requested,  and  notified 
by  the  insurers  that  unless  he  call  and  make  known  the  de- 
sired change  they  will  not  be  held  responsible,  the  contract  is 
still  incomplete.^  And  the  plaintiff  will  be  in  no  better  posi- 
tion if  he  inquire  for  his  policy,  and  being  told  by  the  agent 

1  Ilallock  V.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268;  s.  c.  3  Dutch.  (N.  J.)  G45. 

2  Myers  v.  Keystone  Mut.  Life  Ins.  Co.,  27  Penn.  St.  268. 

»  Sandford  v.  Trust.  Fire  Ins.  Co.,  II  Paige  (N.  Y.  Ch.),  547. 


CONSUMMATION  OF  THE  CONTRACT.  57 

that  he  could  not  tell  whether  he  bad  received  it  or  not,  but 
thought  he  delivered  it  to  the  plaintiff,  neglects  further  inquiry. 
He  must  accept  the  contract  as  modified,  or  there  is  no  con- 
tract, and  the  negligence  of  the  agent  will  not  excuse  his  non- 
acceptance.^ 

§  55.  Agreement  •writh  Agent,  Payment  of  Premium.  —  And 
although  the  policy  be  made  out  and  forwarded  to  the  agent  to 
be  delivered  to  the  applicant  on  payment  of  the  premium,  the 
applicant,  by  an  understanding  with  the  agent,  having  still 
the  option  to  take  or  reject  the  policy,  as  it  still  remains  for 
tlie  applicant  to  declare  his  option  and  pay  the  premium,  he 
will  not  be  entitled  to  a  delivery  thereof  until  such  a  payment. 
And  if  on  being  called  upon  by  the  agent  and  tendered  the 
policy  on  payment  of  the  premium,  he  refers  him  to  a  third 
person,  who,  he  says,  will  pay  the  premium,  and  the  agent 
agrees  to  call  upon  that  person,  this  is  not  the  equivalent  of 
payment.  Perhaps  it  would  be  otherwise  if  the  third  person 
had  agreed  to  pay  the  premium.^  Such  a  case  is  to  be  distin- 
guished from  those  where  the  party  claiming  the  policy  has 
done  every  thing  which  is  required  of  him.  There  the  policy 
is  held  merely  as  a  deposit,  and  for  delivery;  while  here  it  is 
held  for  payment  of  the  premium. 

§  56.  Contract  prima  facie  Incomplete  if  no  Delivery  and  no 
Payment  of  Premium.  —  If  there  has  been  no  payment  of  the 
premium,  and  no  delivery  in  fact  of  the  policy,  the  contract 
is,  jy^'ima  facie,  incomplete,  and  he  who  claims  under  it  must 
show  that  it  was  the  intention  of  the  parties  that  it  should  be 
operative  notwithstanding  these  facts.^  The  presumption  of 
law  is,  that  the  delivery  of  the  policy  and  the  payment  of  the 
premium  are  dependent  upon  each  other.  But  this  presump- 
tion may  be  rebutted  by  showing  a  waiver  of  the  payment,  or 
such  other  facts  as  go  to  show  the  intention  and  understand- 
ing of  both  parties  that  the  policy  shall  be  valid  as  if  delivered, 
notwithstanding  the  non-payment  of  the  premium.     And  an 

1  Wallingford  v.  Home  Mat.  Fire  Ins.  Co.,  30  Mo.  46. 

2  Hoyt  V.  Mutual  Benefit  Life  Ins.  Co.,  98  Mass.  539. 

3  Faunce  v.  State  Mut.  Life  Assurance  Co.,  101  Mass.  279 ;  Heiman  v.  Phccnix 
Mut.  Life  Ins.  Co.,  Supreme  Court  of  Minnesota,  Jan.  1872;  1  Insurance  Law 
Journal,  415. 


58  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

actual  delivery,  obtained  by  misrepresentation,  is  no  delivery 
to  give  effect  to  the  contract.  The  mere  manual  possession  of 
the  policy  is  of  little  consequence,  whether  it  be  in  the  hands 
of  the  insurers  or  the  insured.  Its  possession  by  the  insured 
makes  a  prima  facie  case  for  him,  subject  to  be  met  by  proof 
that  it  was  fraudulently  obtained,  and  so  never  delivered  by  the 
consent  of  the  insurers  ;  while  its  possession  by  the  insurers 
makes  a  prima  facie  case  for  them,  subject  to  be  met  by  proof 
that,  though  not  transferred,  it  was  intended  by  the  parties  to 
be  a  valid  contract,  without  further  action  by  either,  and  so  in 
legal  contemplation  there  was  a  delivery. 

In  Markey  v.  Mutual  Benefit  Life  Insurance  Company,^ 
there  had  been  an  actual  manual  possession  of  the  policy  by 
the  assured,  but  under  such  circumstances  that  in  the  opinion 
of  the  court  it  was  for  inspection  only,  according  to  the  inten- 
tion and  understanding  of  both  parties,  it  having  been  returned 
to  the  agent  who,  it  was  understood,  would  call  upon  a  third 
party,  referred  to  by  the  insured,  to  see  if  he  would  pay  the 
premium.  In  Collins  v.  Insurance  Company  of  Philadelphia,^ 
the  policy  was  sent  to  the  agent  for  delivery,  on  payment  of 
the  premium,  which  however  was  neither  tendered,  though 
requested,  before  the  death,  nor  was  there  any  waiver  of  the 
payment.  In  St.  Louis  Mutual  Life  Insurance  Company  v. 
Kennedy,^  the  applicant  forwarded  with  his  application  one 
note  due  in  one  year  from  the  date  of  the  application,  and 
one  note,  being  for  the  amount  of  the  cash  premium,  pay- 
able on  the  delivery  of  the  policy.  It  was  a  mere  memo- 
randum of  the  cash  premium,  and  it  was  understood  by  the 
parties  that,  while  the  payment  of  the  premium  in  cash  would 
make  the  insurance  take  effect  from  that  date,  the  promise, 
by  this  note,  to  pay  it  when  the  policy  should  be  delivered, 
would  have  the  effect  to  keep  the  contract  open  until  delivery 
on  the  one  hand,  and  the  payment  of  the  premium  on  the 
other.  And  it  was  said  that  even  if  the  note  was  pre- 
sumptively to  be  taken  as  in  place  of  the  cash  premium, 
parol  testimony  going  to  show  that  it  was  not  so  regarded  by 

1  103  Mass.  78.  2  7  PhUa.  Rep.  201. 

3  6  Bush  (Ky.),  450. 


CONSUMMATION   OF   THE   CONTRACT.  59 

the  parties  was  admissible  to  rebut  the  presumption.  In 
Faunce  v.  State  Mutual  Life  Insurance  Company/  the  new 
policy  was  deliverable  as  a  substitute  for  and  upon  surrender 
of  a  prior  policy,  which  surrender  was  never  made  or  ten- 
dered, but  on  the  contrary  enforced  and  paid  by  the  company. 
In  Bidwell  V.  St.  Louis  Floating  Dock  and  Insurance  Company,^ 
the  insured  was  to  execute  his  note  to  the  company  with  the 
indorser,  which  was  never  done. 

§  57.  Acceptance  subject  to  Approval.  —  But  a  company 
which  has  informed  its  agent  that  they  will  be  liable  for  a  loss 
after  the  payment  of  the  premium  to  him,  and  pending  its 
receipt  by  them,  subject  however  to  their  right  to  reject  the 
risk,  if  from  the  rate  of  premium,  or  otherwise,  it  be  not  satis- 
factory, will  not  be  allowed  arbitrarily  to  reject  it  and  refuse  a 
policy,  or  to  reject  it  merely  because  a  fire  has  intervened.^ 

So  when  an  agent  is  merely  authorized  to  receive  and  for- 
ward applications  on  which  the  company  are  to  issue  policies, 
if  approved,  as  of  the  date  of  the  application.  And  this  rule 
was  applied  where  the  loss  occurred  before  the  company  had 
received,  or,  in  due  course  of  mail,  would  regularly  receive  the 
application  and  premium  forwarded  by  their  agent,  and  there- 
fore had  no  opportunity  to  disapprove ;  and  where  there  was 
no  agreement  for  intermediate  insurance,  except  what  is  to  be 
inferred  from  the  rule  that  if  approved  the  policy  was  to  bear 
the  date  of  the  application.  The  contract  was  held  to  be  con- 
summated on  the  day  when  the  premium  was  paid,  and  it  was 
said  that  the  reservation  of  the  right  of  approval  did  not  give 
to  the  insurers  the  arbitrary  right  to  set  aside  any  contract, 
however  fair,  made  by  their  agent,  but  only  in  cases  where 
the  agent  had  been  imposed  upon,  or  where  the  contract  made 
by  the  agent  would  operate  as  a  fraud  upon  the  right  of  the 
company.^ 

§  58.  It  is  to  be  observed,  however,  that  the  case  last  cited 
upon  the  point  as  to  the  time  when  the  contract  was  consum- 

1  101  Mass.  279.  2  40  Mo.  42. 

3  Perkins  v.  Washington  Ins.  Co.,  4  Cowen  (N.  Y.),  645;  Ins.  Co.  v.  "Web- 
ster, 6  Wall.  (U.S.)  129. 

4  Palm  V.  Medina  Ins.  Co.,  20  Ohio,  529. 


60  insurance:  fire,  life,  accident,  etc.    . 

mated,  it  being  made  subject  to  the  approval  of  the  company, 
though  probably  sound  upon  the  other  point  of  arbitrary  disap- 
proval, goes  farther  than  other  courts  seem  inclined  to  follow. 
Thus  in  a  later  case  in  Pennsylvania,  the  agent  was  authorized 
to  receive  and  forward  applications,  the  insurance  to  take  effect 
on  all  approvable  applications  the  day  they  were  taken.  The 
agent  gave  a  receipt  for  the  premium  and  forwarded  the  same 
with  the  application  to  the  company  "  if  not  approved  by 
directors,  money  to  be  refunded."  It  appeared  however  that 
no  notice  was  taken  of  the  application  by  the  company,  nor 
was  the  money  refunded ;  and  in  point  of  fact  the  company 
denied  that  they  ever  received  the  application  or  the  premium. 
Upon  these  facts  it  was  held  that  there  was  no  contract  to 
insure,  but  simply  a  proposal  forwarded  by  the  agent ;  and 
delay  under  such  circumstances  to  forward  a  policy  or  refund 
the  money,  even  if  the  company  received  the  application,  was 
rather  ground  for  inference  that  they  rejected  than  accepted 
the  proposal.  A  proposal  not  answered  remains  a  proposal 
for  a  reasonable  time,  and  then  is  regarded  as  withdrawn. 
It  is  only  a  delay  or  neglect  that  has  a  tendency  to  mislead, 
and  which  is  incompatible  with  honesty,  which  can  be  alleged 
as  a  ground  of  liability  ;  as  where  one  knows  that  another  is 
acting  as  his  agent  in  a  particular  matter  without  or  beyond 
his  authority,  and  does  not  promptly  disavow  his  acts.^ 

§  59.  In  a  very  recent  English  case,  in  the  same  general  spirit, 
the  facts  were  that  the  plaintiff,  through  an  agent,  insured  in  a 
certain  office.  The  agent  then  left  the  service  of  this  office,  and 
became  agent  for  another.  The  plaintiff,  not  knowing  the  fact, 
on  application  for  further  insurance,  received  from  the  agent  a 
receipt  for  a  certain  sum  of  money  deposited  in  part  payment  of 
premium  and  duty,  in  consideration  of  which  the  property  was 
to  be  insured  for  one  month,  or  until  notice  that  the  proposal 
was  declined,  pending  the  negotiations  on  belialf  of  the  new 
company.  Upon  the  plaintiff's  observing  this,  he  wrote  to  the 
agent  that  he  knew  nothing  of  the  new  company,  and  wished 
to  be  satisfied  of  its  standing  before  giving  them  all  the  sums. 

1  Ins.  Co.  V.  Johnson,  23  Penn.  St.  72,  Woodward,  J.,  dissenting.  And  see 
also  Myers  v.  Keystone  Mut.  Life  Ins.  Co.,  27  Penn.  St.  268. 


CONSUMMATION   OF    THE   CONTRACT.  61 

Before  any  policy  was  made  out  the  fire  happened.  Amongst 
Other  grounds  of  defence  was  this,  that  when  the  plaintiff  first 
received  his  receipt  he  supposed  he  was  contracting  with  tlie 
first  company,  and  therefore  there  was  no  agreement  witli  the 
second.  But  the  court  said  that  when  the  receipt  was  given 
the  contract  was  complete,  there  being  no  repudiation  by  the 
plaintiff,  and  that  the  defence  set  up  on  the  other  ground  was 
contemptible  and  ridiculous.^ 

So  where  a  wife  applies  to  an  agent  for  a  policy  on  the  life 
of  her  husband,  and  pays  fifty  dollars,  in  accordance  with  the 
company's  rules,  which  is  to  be  applied  to  the  first  year's  pre- 
mium if  the  risk  is  taken,  and  a  policy  is  made  out  and  sent  to 
the  agent  for  delivery  but  not  delivered,  it  was  held  that  a 
tender  of  the  balance  of  the  first  year's  premium  after  the 
death  of  the  insured  gave  a  valid  claim  upon  the  company 
for  the  amount  insured.^ 

§60.  What  constitutes  Delivery  of  Policy.  —  To  constitute 
a  delivery  of  a  policy  it  is  not  necessary  that  there  should  be 
an  actual  manual  transfer  from  one  party  to  the  other. 
The  agreement  upon  all  the  terms  and  the  issue  and  trans- 
mission to  the  agent  of  a  policy  in  accordance  therewith,  for 
delivery  without  conditions,  is  tantamount  to  a  delivery  to  the 
insured.^  The  delivery  may  be  by  any  act  intended  to  signify 
that  the  instrument  shall  have  present  vitality.'^  A  policy 
purporting  to  be  "  signed,  sealed,  and  delivered,"  as  required 
by  the  charter,  is  complete  and  binding  as  against  the  party 
executing  it,  though,  in  fact,  it  remain  in  his  possession, 
unless  some  further  particular  act  be  required  to  be  done  by 
the  other  party  to  declare  his  adoption  of  it.  No  formal 
acceptance  is  necessary  to  complete  the  delivery.  Whether 
there  is  a  delivery  or  not  is  often  a  question  of  intention. 
There  is  a  delivery  if  the  intention  of  both  parties  is,  that  from 

1  Mackie  v.  European  Ins.  Co.,  21  Law  Times,  n.  s.  102. 

^  Cooper  V.  Pacific  Mut.  Life  Ins.  Co.,  7th  Nevada,  116;  Fried  v.  Royal  Ins. 
Co.  of  Liverpool,  47  Barb.  (N.  Y.)  127  ;  s.  c.  Ct.  of  App.  Dec.  1872. 

8  See  cases  cited  in  the  last  section.  Also,  New  Eng.  Fire  and  Mar.  Ins.  Co. 
V.  Robinson,  25  Ind.  637 ;  Whitaker  v.  Farmers'  Union  Ins.  Co.,  29  Barb.  (N.  Y.) 
312. 

*  Ilallock  V.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268;  s.  c.  3  Dutch.  (N.J.)  645. 


62  insurance:  fire,  life,  accident,  etc. 

and  after  a  certain  act  the  policy  shall  become  operative.^  And 
the  principle  here  laid  down  has  been  applied  in  a  recent  case 
where  application  on  the  twenty-seventh  of  September  was  made 
for  insurance,  the  first  year's  premium  to  be  paid  in  adver- 
tising the  insurers'  agency.  The  application  was  approved,  a 
policy  duly  executed,  and,  on  the  second  day  of  October,  mailed 
to  the  agent  of  the  insurer  who  had  forwarded  the  application. 
On  the  fourth  of  October  the  insured  died.  On  the  fifth  day 
of  October  the  policy  came  to  the  hands  of  the  agent,  and  he 
immediately  returned  it  to  the  insurers.  The  agency  was  ad- 
vertised as  agreed.  Upon  these  facts  it  was  held  that  the  con- 
tract was  complete  when  the  policy  was  mailed  to  the  agent ; 
if  not,  which  was  not  decided,  at  the  date  of  the  receipt.  If 
the  premium  was  not  paid  in  full  it  was  the  fault  of  the  com- 
pany .^  In  Lightbody  v.  North  American  Insurance  Company, 
the  premium  having  been  paid  and  a  receipt  taken,  it  was  held 
that  insurance  related  back  to  the  date  of  the  receipt,  though 
the  policy  was  not  delivered  till  some  three  weeks  after,  and 
after  the  fire.^  If  the  terms  of  the  policy  transmitted  for 
delivery  be  changed  by  an  authorized  agent  upon  further 
negotiation  with  the  insured,  the  insurance  will  take  effect 
from  the  change,  and  not  from  the  date,  of  the  policy."^ 

§  61.  Obligations  Reciprocal. —  The  cases  we  have  been  con- 
sidering have  been  cases  where  the  insured  was  seeking  to 
enforce  his  rights  against  the  insurers.  But  the  insurers  may 
have  occasion  to  enforce  their  rights  against  the  insured,  as 
was  the  case  in  Massachusetts.  The  defendant  made  written 
application  for  insurance  to  a  mutual  insurance  company. 
The  rate  of  premium  was  agreed  upon  by  the  parties  and  the 
policy  was  made  out,  and  the  defendant  requested  to  take 

1  Xenos  V.  Wickham,  Law  Reports,  2  H.  of  L.  296,  reversing  same  case  in 
the  Exchequer  Chamber.  "  Delivery  is  either  actual,  i.e.,  by  doing  something 
and  saying  nothing  ;  or  else  verbal,  i.e.,  by  saying  something  and  doing  nothing; 
or  it  may  be  by  both ;  and  either  of  these  may  make  a  good  delivery  and  a 
perfect  deed."  Sheppard,  Touchstone,  1,  57.  See  also  Doe  v.  Knight,  5  B.  & 
C.  692. 

2  Kentucky  Mut.  Ins.  Co.  v.  Jenks,  5  Lid.  96. 
5  23  Wend.  (N.  Y.)  18. 

*  Gloucester  Man.  Co.  v.  Howard  Ins.  Co.,  5  Gray  (Mass.),  497. 


CONSUMMATION   OP   THE    CONTRACT.  63 

them  and  sign  the  premium  note  and  pay  the  premium.  He 
however  refused,  and  the  policies  were  never  delivered.  In  an 
action  brought  to  recover  the  amount  of  the  premium  and  cer- 
tain assessments,  the  court  held  that  the  plaintiff  must  fail, 
for  the  YQYj  obvious  reason  that  no  contract  was  ever  com- 
pleted between  the  parties.  The  proceedings  on  the  part 
of  the  defendant  were  merely  the  initiatory  steps  to  a  con- 
tract. The  plaintiffs,  pursuant  to  the  defendant's  request,  had 
prepared  a  policy  which  would  take  effect  as  a  contract  on 
being  delivered  and  not  before.  By  the  plaintiffs'  by-laws  the 
policy  was  not  to  be  delivered  until  the  payment  of  the  pre- 
mium and  the  signature  of  the  deposit  note,  neither  of  which 
had  taken  place.  If  a  loss  had  occurred,  under  the  circum- 
stances the  plaintiffs  would  not  have  been  liable,  because  there 
was  no  delivery  of  the  policy.^  But  if  the  case  had  taken  the 
form  of  a  bill  in  equity  to  enforce  a  proper  performance  of 
the  contract,  the  payment  of  the  premium  and  assessments, 
and  the  execution  of  the  deposit  note,  upon  the  general 
doctrine  which  is  so  familiar  and  so  well  established,  that, 
when  all  the  terms  of  the  contract  are  agreed  on,  and  nothing 
remains  to  be  done  by  either  party  but  to  execute,  the  court 
will  compel  execution,  it  is  yet  to  be  decided  that  such  a  bill 
would  not  be  sustained.  It  would  certainly  seem  that  the 
rights  and  obligations  of  the  parties  are  reciprocal,  and  if,  as 
as  we  shall  hereafter  see,^  the  defendant,  in  this  case,  upon 
tender  of  performance  on  his  part,  could  have  compelled  the 
execution  and  delivery  of  a  policy,  it  would  seem  to  follow 
that  the  plaintiffs,  on  tender  of  performance  on  their  part, 
could  equally  compel  payment  of  the  premium,  and  the  exe- 
cution and  delivery  of  the  deposit  note. 

§  62.  Effect  of  the  provisions  of  the  Charter  or  Policy  on  Rights 
of  Parties.  —  Tlie  relation  of  the  delivery  of  a  policy  by  a 
mutual  insurance  company  to  the  consummation  of  the  con- 
tract was  considered  under  the  following  interesting  circum- 
stances. The  general  and  local  agents  of  the  defendants, 
together,  called  upon  the  plaintiff  on  the  seventh  of  October, 

1  Real  Estate  Mut.  Fire  Ins.  Co.  v.  Roessle,  1  Gray  (Mass.),  336. 
'  See  Index,  Remedies. 


64  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

and  after  negotiations  with  him  applications  were  prepared  by 
the  general  agent,  upon  request  to  be  insured  from  that  time, 
and  signed  by  the  plaintiff  in  a  manner  satisfactory  to  the 
general  agent,  who  said  the  policies  would  be  made  out  with- 
out delay.  The  local  agent  at  the  same  time  told  the  plaintiff 
that  it  made  no  difference  to  him  whether  the  plaintiff  paid 
the  cash  premium  at  that  time,  or  when  he  should  take  the 
policies  ;  and  he  did  not  then  pay  it.  The  plaintiff  then  asked 
the  agents  for  a  copy  of  the  by-laws  of  the  company,  and  was 
told  that  they  had  none  with  them,  but  he  would  be  furnished 
witli  a  copy  on  the  policies.  No  rules  or  regulations  of  the 
company  were  made  known  to  the  plaintiff.  It  was  also  under- 
stood between  the  agents  and  the  plaintiff  that  the  policies 
should  be  made  out  at  once,  and  left  with  M.  and  F.,  M.  being 
the  local  agent  and  P.  his  partner,  no  time  being  fixed  when  the 
plaintiff  should  call  for  them.  The  policies  were  accordingly 
executed  and  left  with  F.  before  the  loss.  F.  was  afterwards 
told  by  the  president  of  the  company  to  put  them  in  the  safe  and 
take  care  of  them,  but  was  afterwards  directed  by  the  company 
not  to  deliver  them,  and  they  were  subsequently  taken  back 
by  the  company.  On  the  10th  October  the  plaintiff  tendered 
the  premium  to  F.,  while  the  policies  were  yet  in  his  keeping, 
but  after  he  had  been  instructed  not  to  deliver  them,  who 
declined  to  receive  it  for  the  company,  but  consented  to  hold 
it  as  a  deposit  till  suit  was  brought,  when  it  was  paid  into 
court.  F.  at  the  same  time  declined  to  deliver  the  policies. 
The  policies  provided  that  each  person  should  pay  upon  the 
execution  of  his  policy,  and  before  its  delivery,  the  premium 
thereon ;  that  no  insurance  should  take  effect  until  the  cash 
premium  was  paid  ;  and  that  no  insurance  agent,  or  broker,  for- 
warding applications,  was  authorized  to  bind  the  company  in  any 
case  whatever.  And  it  was  held  that,  upon  these  facts,  a  jury 
might  find  a  waiver  of  the  right  to  receive  the  cash  premiums 
before  the  delivery  of  the  policies,  and  if  they  should  find  such 
waiver,  the  policies  were  effectual  from  the  time  wlien  they 
were  left  with  F.  for  delivery.^ 

1  Bragdon  v.  Appleton  Mut.  Ins.  Co.,  42  Me.  259.     Cutting,  J.,  dissented,  on 
the  ground  that  mutual  insurance  companies  cannot  waive  a  compliance  with 


CONSUMMATION   OF   THE    CONTRACT.  65 

§  63.  On  tlie  other  hand,  there  are  numerous  and  most 
respectable  authorities,  that  insurance  companies  whose  char- 
ters and  by-laws  define  the  mode  in  which  they  may  contract, 
and  the  time  and  circumstances  under  which  their  contracts 
shall  become  binding  upon  them,  cannot  be  held  otherwise  than 
iu  conformity  with  such  provisions. 

In  the  case  of  Belleville  Mutual  Insurance  Company  v.  Yan 
Winkle,^  it  appeared  that  all  the  terms  of  the  .contract  had 
been  agreed  upon,  and  that  a  policy  was  to  be  issued  dated  as 
of  the  day  of  the  agreement,  it  being  distinctly  stated  by  the 
secretary  of  the  company  that  the  applicant  was  thenceforth 
insured,  and  that  the  policy  should  be  made  out  and  sent  right 
away.  The  policy  was  executed  upon  the  eighteenth  day  of 
April.  On  the  twentieth  day  the  secretary  wrote  to  the  appli- 
cant, requesting  him  to  sign  the  enclosed  premium  note  and 
forward  by  return  mail.  On  the  twenty-second  day,  and  before 
the  note  could  be  returned,  a  fire  occurred.  The  applicant 
then  tendered  his  note  and  demanded  his  policy,  which  the 
company  refused,  and  placed  their  refusal  on  the  ground  that 
no  deposit  note  had  been  received  at  the  time  of  the  loss ; 
whereas,  it  was  provided  by  the  charter  of  the  company,  that 
"  every  person  who  shall  become  a  member  by  effecting  insur- 
ance, shall,  before  he  receives  the  policy,  deposit  his  promis- 
sory note  for  such  a  sum  of  money  as  shall  be  determined 
by  the  directors,"  thus  making  the  deposit  note  a  condition 
precedent  to  the  membership.  And  the  court,  upon  bill  in 
equity  for  relief,  sustained  this  view,  reversing  the  decree  of 
the  court  below.  The  applicant,  said  the  court,  was  bound  to 
know  the  terms  of  the  charter  and  by-laws,  and  it  was  his  duty 
to  see  that  the  premium  note  was  duly  made,  and  deposited, 
and  if  he  chose  to  wait  till  it  could  be  sent  to  him  by  the 
secretary  and  returned,  it  was  at  his  own  peril.     The  by-laws 

the  terms  and  conditions  upon  which  they  may  by  their  charter  contract,  as  to 
which  it  was  the  duty  of  the  plaintiff  to  have  informed  himself,  adopting  the 
rule  laid  down  in  the  cases  cited  in  the  following  section.  See  also  to  the  same 
point  with  the  case  above  cited  from  the  Maine  reports,  Pino  v.  Merchants'  Mut. 
Ins.  Co.,  19  La.  Ann.  214 ;  New  Eng.  Fire  and  Mar.  Ins.  Co.  v.  Schettler,  38 
111.  167. 

1  1  Beasley  (N.  J.),  333. 

5 


QQ  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

expressly  forbade  any  person  becoming  a  member  until  the 
premium  note  was  deposited.  No  officer  had  any  right  to  dis- 
pense with  this  condition,  and  no  one  had  any  right  to  rely 
upon  his  assurances  that  it  could  be  dispensed  with,  or  that  the 
insurance  should  take  efifect  before  the  deposit  of  the  note.^ 

§  64.  But  though  mutual  insurance  companies  and  others 
may  be  inhibited  by 'the  terms  of  their  charter  from  issuing 
policies  except  upon  certain  conditions,  it  does  not  follow  that 
they"are  inhibited  from  agreeing  to  issue  a  policy  in  conformity 
with  those  conditions.^  This  was  what  was  done  in  the  case 
cited  in  the  text.  And  although  the  secretary  may  have  tran- 
scended his  power  when  he  undertook  to  say  that  the  insurance 
should  take  effect  from  and  after  the  time  of  the  conference,  it 
was  not  beyond  his  right  to  promise  that  the  policy  should  be 
sent  right  away.  Had  this  been  done  the  policy  would  have 
been  delivered  at  the  time  of  the  loss  as  a  valid  and  binding 
policy.  It  was  because  he  did  not  forward  the  note  to  be 
signed  "  right  away,"  as  he  had  agreed  to  do,  that  the  policy 
was  not  issued  before  the  fire.  The  secretary  had  a  right  to 
make  this  promise  on  behalf  of  the  company,  and  the  appli- 
cant had  a  right  to  rely  upon  it ;  and,  it  seems,  did  rely  upon 
it.  He  was  lulled  into  security  by  it ;  and  by  the  fault  of  the 
secretary,  that  is,  the  company,  he  was  without  his  promised 
policy  when  the  fire  occurred.  If  the  fire  had  not  occurred, 
can  it  be  doubted  that  on  a  tender  of  the  deposit  note  in  re- 
sponse to  the  secretary's  note  enclosing  it  for  signature,  and 

^  Barrett  v.  Union  Mut.  Fire  Ins.  Co.,  7  Cush.  (Mass.)  175;  Eeal  Estate 
Mut.  Fire  Ins.  Co.  v.  Roessle,  1  Gray  (Mass.),  336  ;  Montreal  Ins.  Co.  v.  McGil- 
ivray,  9  Lower  Canada,  Q.  B.  488 ;  Spitzer  v.  St.  Marks  Ins.  Co.,  6  Duer  (N.  Y. 
Superior  Ct.),  6;  Mound  City  Mut.  Fire  Ins.  Co.  v.  Curran,  42  Mo.  374.  See 
also  Flint  v.  Ohio  Ins.  Co.,  8  Ohio,  501.  This  ground  of  defence  would  doubt- 
less have  been  sufficient  had  it  been  answered  to  an  action  at  law  on  the  policy. 
A  promise  by  the  treasurer  to  see  that  the  premium  is  paid  is  not  the  equivalent, 
nor  a  waiver  of  the  payment.  Buffum  v.  Fajette  Mut.  Fire  Ins.  Co.,  3  Allen 
(Mass.),  300.  And  see  also  Mulrey  v.  Shawmut  Mut.  Fire  Ins.  Co.,  4  Allen 
(Mass.),  116,  which  was  a  case  where  the  policy  had  been  delivered,  but  the  pre- 
mium had  not  been  paid  to  the  company,  though  it  had  been  paid  to  the  agent, 
with  whom  they  settled  monthly.  The  payment  of  the  premium  was  a  con- 
dition precedent  to  the  validity  of  this  policy. 

2  See  cases  cited  ante,  §§  23,  63,  and  post,  §  65. 


CONSUMMATION  OF  THE  CONTRACT.  67 

refusal  of  the  company  to  issue  the  policy  thereupon,  a  bill  in 
equity  to  enforce  the  delivery  of  the  policy  would  have  been 
sustained  ?  If  so,  how  can  the  intervention  of  the  fire  cliange 
the  obligations  of  the  parties  already  previously  entered  into  ? 
In  Perkins  v.  Washington  Insurance  Company,^  and  Palm  v. 
Medina  Insurance  Company,^  it  was  held  that  where  a  company 
had  authorized  their  agent  to  give  a  receipt  which  should  make 
the  insurance  binding  from  its  date,  subject  however  to  the 
proviso  that  the  office  should  be  satisfied  with  the  rate  of 
premium  and  otherwise  satisfied  with  tiie  risk,  they  could  not 
arbitrarily  refuse  to  issue  a  policy,  and  merely  because  a  fire 
had  intervened.  The  neglect  in  this  case  is  the  neglect  of  the 
company,  and  differs  therefore  from  the  neglect  of  the  agent 
in  Hoyt  v.  Mutual  Benefit  Life  Insurance  Company,^  who, 
after  tendering  the  policy,  and  requesting  payment  of  the  pre- 
mium, promised  to  call  on  a  third  person,  to  whom  the  appli- 
cant had  referred  him  for  the  premium,  but  did  not.  This  was 
held  to  be  a  merely  personal  undertaking  on  the  part  of  the 
agent,  in  no  way  binding  upon  the  company,  and  tlie  facts  and 
circumstances  were  not  the  equivalent  of  the  actual  delivery 
of  the  policy  and  payment  of  the  premium. 

§  65.  Countersigning  by  Agent.  —  In  general,  when  the  policy 
provides  that  the  counter-signature  of  an  agent  is  requisite  to 
the  validity  of  the  policy,  this  counter-signature  must  be  had. 
But  this  stipulation  in  a  policy  may  doubtless  be  waived. 
Countersigning  by  the  agent  is  evidence  of  the  completion  and 
delivery  of  tiie  contract.  Yet  if  this  evidence  be  wanting,  other 
evidence  may  be  equivalent ;  as,  for  instance,  a  delivery  by 
letter  from  the  agent.*  And  the  counter-signature,  at  all 
events,  is  only  necessary  when  a  policy  is  issued.  Thougli 
the  charter  of  the  company,  or  general  statute  law,  require 
the  counter-signature  of  agents  to  policies,  companies  may, 
by  themselves  or  their  agents,  agree  to  issue  policies,  and  be 
bound  thereby .°     Tlie  fact,  however,  that  a  policy  is  issued  to 

1  4  Co  wen  (N.  Y.),  645.  '■^  2  Ohio,  529. 

s  98  Mass.  539  ;  ante,  §  55. 

*  Myers  v.  Keystone  Mut.  Life  Ins.  Co.,  27  Penn.  St.  268. 
5  Walker  i-.  Met.  Ins.  Co.,  56  Me.  371 ;  Kelley  v.  Com.  Ins.  Co.,  10  Bosw. 
(N.  Y.  Superior  Ct.)  82. 


68  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

its  own  agent  upon  his  life,  does  not  dispense  with  his  counter- 
signature in  order  to  make  the  policy  valid,  if  the  policy  itself 
provides  that  it  shall  have  no  force  until  countersigned  by  such 
agent.  Though  the  agent  receive  tlie  policy,  and  place  it  amongst 
his  private  papers,  it  is  no  valid  contract  till  it  is  counter- 
signed by  him.i  The  delivery  by  an  unauthorized  person  of 
a  policy  requiring  the  counter-signature  of  a  particular  local 
agent  to  make  it  valid,  is  of  no  effect  if  the  counter-signature 
of  the  agent  is  wanting.^ 

§  66.  Place  of  Contract.  —  It  follows  from  the  rule  that  the 
contract  is  completed  when  the  proposals  of  the  one  party  have 
been  accepted  by  the  other  by  some  appropriate  act  signifying 
the  acceptance,  that  the  place  of  the  contract  is  the  place  of  the 
acceptance.  And  if  an  agent,  resident  in  one  State,  of  an  in- 
surance company  resident  in  another,  forwards  the  requisite 
papers  to  the  home  office,  and  a  policy  is  thereupon  issued  and 
mailed  directly  to  the  applicant,  the  contract  is  a  contract  made 
in  the  State  where  the  home  office  is  situated.  And  since  the 
acceptance  is  the  test  of  completion  it  would  seem  that  a  trans- 
mission of  the  policy  by  mail  to  the  agent,  to  be  delivered  by 
him  to  the  applicant,  would  have  the  like  effect.  And  upon 
this  ground  it  was  held,  that  a  New  York  company  which  had 
accepted  proposals  forwarded  by  its  agent  from  Ohio,  did  not 
come  within  the  statute  of  Ohio  which  prohibits  foreign  insur- 
ance companies  to  insure  in  Ohio  without  license.^  If,  how- 
ever, by  the  terms  of  the  policy,  it  is  not  to  be  binding  unless 
countersigned  by  an  agent  resident  at  a  designated  place,  that 
place  must  be  regarded  as  the  place  where  the  contract  is 
made,  and  tlie  laws  and  usages  of  that  place  must  govern  in 
the  interpretation  of  the  contract.* 

§  67.  Cancellation.  —  It  need  hardly  be  said  that  when  the 
contract  has  been  once  entered  into  and  become  binding  upon 
the  parties,  it  cannot  be  cancelled  by  either,  nor  can  either 
party  withdraw  himself  from  its  obligations  without  the  consent 

1  Badger  v.  The  American  Popular  Life  .Ins.  Co.,  103  Mass.  244. 

2  Lynn  v.  Burgoyne,  13  B.  Mon.  (Ky.)  400. 

3  Hyde  v.  Goodenow,  3  Conist.  (N.  Y.)  266;  Huntley  r.  Merrill,  32  Barb. 
(N.  Y.)  650;  Western  v.  Genesee  Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  258. 

♦  Daniels  v.  Hudson  River  Fire  Ins.  Co.,  12  Cush.  (Mass.)  416. 


CONSUMMATION    OF   THE   CONTRACT.  69 

of  the  other.  And  when  negotiations  are  had  between  the  par- 
ties with  reference  to  the  abrogation  of  the  contract,  the  same 
rnles  apply  as  in  the  making  the  contract.  An  agreement  to 
abrogate,  cancel,  or  rescind,  can  no  more  be  made  without 
mutual  consent  at  some  moment  of  time,  than  could  the  origi- 
nal agreement  have  been  made  without  that  consent.^  The  right 
of  cancellation  or  notice  reserved  or  given  by  the  terms  of  the 
policy  to  either  party  should  be  exercised  with  care  that  the 
notice  be  explicit.  A  mere  notice  of  a  desire  to  cancel,  with 
an  agreement  at  the  same  time  that  the  policy  may  remain  till 
the  assured  can  obtain  other  insurance,  is  not  such  an  exer- 
cise of  the  right  of  cancellation  or  notice  as  will  relieve  a  com- 
pany from  the  obligations  of  the  policy.^  In  Atlantic  Insurance 
Company  v.  Goodall,-^  it  was  held  tiiat  the  cancellation  took 
effect  in  that  particular  case  before  it  had  been  assented  to  by 
the  other  party  interested.  But  this  was  because  it  was  agreed 
between  the  parties  litigant  that,  as  between  them,  only  one  of 
whom  was  interested  in,  or  a  party  to,  the  cancelled  contract, 
the  cancellation  should  be  deemed  to  take  effect  before  that 
time.  The  insurers  under  a  new  policy  agreed  that  a  surren- 
der of  the  old  policy  should  protect  the  newly  assured  from 
any  danger  by  reason  of  a  stipulation  in  the  new  policy  that 
other  insurance  not  indorsed  upon  the  new  policy  should 
render  the  new  policy  void.  Where  the  policy  had  once  taken 
effect,  although  tlie  insured  declared  that  he  would  have  noth- 
ing further  to  do  with  the  insurers,  and  that  he  abandoned  the 
whole  thing,  but  still  retained  the  policy,  while  the  insurers  re- 
tained the  note,  and  nothing  appeared  to  show  that  they  assented 
to  the  abandonment,  the  plaintiff  was  afterwards  allowed  to 
recover.^  And  the  exercise  of  the  right  will  also  be  confined 
strictly  within  the  terms  under  which  it  is  allowable  by  the 
provisions  of  the  contract.  If  the  contract  is  made  terminable 
on  a  refusal  to  pay  an  assessment  on  demand,  an  illegal  assess- 

1  Allmnce  Mut.  Ins.  Co.  v.  Swift,  10  Cush.  (Mass.)  433;  Sands  v.  Hill,  42 
Barb.  (N.  Y.)  651 ;  Fabyan  v.  Union  Mut.  Fire  Ins.  Co.,  33  N.  H.  233. 

2  Goit  V.  National  Protection  Ins.  Co.,  25  Barb.  (N.  Y.)  189. 

3  35  N.  H.  328. 

♦  McAllister  Admr'x  v.  New  England  Mut.  Life  Ins.  Co.,  101  Mass.  558. 


70  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

ment,  or  one  not  laid  according  to  the  rules  by  which  tlie 
insurers  are  governed,  is  in  point  of  law  no  assessment,  and 
the  refusal  on  demand  of  payment  of  such  an  assessment 
gives  no  right  to  terminate  the  contract.^ 

§  68.  If  the  policy  provide  the  length  of  the  notice  to  be 
given,  it  does  not  seem  to  be  material  that  the  notice  itself 
makes  a  mistake  in  the  designation  of  the  date  when  the 
policy  will  become  cancelled,  provided  the  required  time  shall 
have  elapsed  between  the  time  when  the  notice  is  given  and  loss 
shall  have  happened.  Thus  where  it  was  provided  that  after 
seven  days'  notice  of  intention  to  cancel  the  insurance  should 
terminate,  a  notice  dated  the  13th  of  February  and  deposited 
on  that  day  in  the  post-office,  but  not  till  after  the  office  was 
closed  for  the  day,  which  notice  was  received  by  the  insured 
on  the  next  day  in  du6  course  of  mail,  and  informed  him  that 
his  insurance  would  terminate  on  the  20th,  the  loss  not  hav- 
ing occurred  till  the  22d,  it  was  held  that  the  notice  was 
sufficient  both  within  the  letter  and  the  spirit  of  the  con- 
tract.2 

§  69.  So  too,  a  contract  of  insurance  made  by  what  is  some- 
times called  an  intermediary  receipt  given  by  an  agent,  that  is, 
a  receipt  for  the  premium,  containing  a  statement  that  the 
receipt  is  subject  to  the  approval  of  the  insurers,  to  be  notified 
to  the  insured,  and  certifying  that  meanwhile  the  applicant  is 
insured  for  a  specified  time,  may  be  cancelled  within  the  time 
specified,  and  at  any  period  prior  to  that  time,  if  notice  of  dis- 
approval be  given.  In  other  words,  the  certificate  of  insurance 
for  a  specified  time  pending  the  negotiation  for  a  policy,  does 
not  constitute  an  absolute  contract  for  that  time,  but  only  a 
conditional  contract  that  the  insurance  shall  extend  for  so  long 
a  time,  unless  the  insurers,  having  the  option  to  decline  the 
risk,  shall  sooner  signify  their  determination  to  decline.^ 
And  the  neglect  of  an  agent  of  the  insurers,  instructed  to 
give  the  requisite  notice  of  cancellation  and  to  take  other 
prerequisite  steps  necessary  to  its  validity,  to  obey  such 
instructions,  will  be  imputable  to  the  principal,  and  will  not 

1  Matter  of  People's  Mut.  Equitable  Fire  Ins.  Co.,  9  Allen  (Mass.),  319. 

2  Emraott  V.  Slater  Mut.  Fire  Ins.  Co.,  7  R.  I.  562. 

«  GoodfeUow  v.  Times  &  Beacon  Assurance  Co.,  17  U.  C.  (Q.  B.)  411. 


CONSUMMATION   OF   THE   CONTRACT.  71 

prejudice  the  rights  of  the  insured  under  his  contract.^  The 
right  to  cancel  a  policy,  reserved  by  the  company,  can  only  be 
made  effectual  by  strictly  observing  the  conditions  under  which 
the  right  is  to  be  exercised.  An  insurance  terminable  "  on 
giving  notice  to  that  effect,  and  refunding  a  ratable  proportion 
of  the  premium,  is  not  cancelled  by  a  notice  that  the  insurers 
will  cancel  the  policy  and  return  the  ^;ro  rata  premium,  but 
will  give  the  insured  till  a  certain  day  to  effect  insurance 
elsewhere.  The  notice  should  be  that  the  policy  is  then  and 
there  cancelled,  and  the  pro  rata  premium,  sufficient  in  amount, 
should  be  at  the  same  time  paid  or  tendered  to  the  insured. 
The  acceptance  of  the  return  premium  by  the  insured,  after 
such  insufficient  notice,  might,  indeed,  cancel  the  policy  ;  but 
the  cancellation  must  be  taken  to  be  as  of  the  date  of  the  pay- 
ment and  acceptance  of  the  return  premium.  Hence,  if  a  fire 
intervenes  between  the  date  of  the  notice  and  the  acceptance 
of  the  return  premium,  unknown  to  the  insured,  he  will  not 
lose  his  right  to  recover  for  the  loss.^ 

§  70.  Accident  Insurance.  —  Insurance  Ticket.  —  In  some 
branches  of  accident  insurance  —  railway  passengers  for  in- 
stance —  it  is  the  practice  to  issue  tickets,  the  nature  of  the 
business  being  such  that  there  is  not  the  time  to  follow  the 
routine  iisual  in  other  kinds  of  insurance.  These  tickets^ 
are  made  out  and  signed  at  the  company's  office,  and  trans- 
mitted to  their  agencies  to  be  sold  indifferently  to  all  who 
apply  for  them.  The  sale  and  delivery  by  an  agent,  or  by  any 
one  in  his  employ,  and  the  payment  of  the  price,  give  the 
owner  a  valid  claim  against  the  company,  subject  to  the  con- 
ditions set  forth  in  the  ticket.* 

1  Franklin  Fire  Ins.  Co.  v.  Massy,  33  Penn.  St.  221. 

2  Van  Valkenburg  v.  Lexington  Ins.  Co.,  N.  Y.  (Com.  of  App.)  Jan.  1873, 
2  Ins.  L.  J.  205;  Lyman  v.  State  Mut.  Fire  Ins-  Co.,  14  Allen  (Mass.),  329. 

3  The  following  is  a  sample  of  such  tickets,  styled  a   "  General   Accident 

Ticket":    "The  company   of  will   pay   the  owner  of  this  ticket 

dollars  per  week  in  case  of  personal  injury  causing  total  disability,  for  a 

period  not  exceeding weeks,  or  the  sum  of dollars  to  his  legal  repre- 
sentatives in  the  event  of  his  death,  from  personal  injury,  ensuing  within 

montlis  from  the  iiappening  thereof,  when  caused  by  any  accident  while  travelling 
by  public  or  private  conveyance,  provided  for  the  transportation  of  passengers 
in  the ,  it  being  understood  that  the  policy  covers  no  description  of  war  risk." 

*  Brown  v.  Railway  Passengers  Assurance  Co.,  45  Mo.  221. 


72  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 


CHAPTER    IV. 

OF   THE    SUBJECT-MATTER   OF    THE    CONTRACT. 

§  71.  What  may  be  insured.  —  One  may  insure  that  in  which 
he  has  an  interest,  and  which  the  law  does  not  forbid  to  be 
insured.  There  are  certain  unlawful  enterprises  in  which 
property  may  be  embarked,  but,  being  unlawful,  the  law  will 
not  uphold  any  contract  of  insurance  or  other  contract  in 
favor  of  them,  which  has  for  its  purpose  to  aid  or  in  any  way 
promote  the  success  of  such  enterprises  by  protecting  the 
property  embarked  therein.  Of  this  kind  of  enterprises  the 
slave-trade  is  an  example.  The  same  may  be  said  of  lotteries. 
Neither  will  insurance  protect  property  which  it  ig  unlawful 
to  have.  Whatever  the  law  discourages  and  disapproves  of, 
whether  by  special  statute  or  upon  general  principles  enforced 
by  the  common  law  in  the  interest  of  good  morals,  good  order, 
and  general  public  policy,  will  not  be  fostered  or  encouraged 
by  insurance.^ 

§  72.  Subject  to  the  limitation  stated  in  the  preceding  sec- 
tion, whatever  has  an  appreciable  pecuniary  value,  and  is  sub- 
ject to  loss  or  deterioration,  or  of  which  one  may  be  deprived, 
or  which  he  may  fail  to  realize,  whereby  his  pecuniary  interest 
is  or  may  be  prejudiced,  may  properly  constitute  the  subject- 
matter  of  insurance.^  It  may  have  neither  a  corporeal  exist- 
ence, nor  marketable  value,  nor  an  actual  but  only  a  potential 
being ;  for  it  is  not  so  much  the  right,  thing,  or  expectancy 
which  is  insured,  as  the  possessor  himself,  against  the  loss  or 
damage  which  unforeseen  events  may  bring  thereto.  When, 
therefore,  the  subject-matter  of  insurance  is  termed,  as  it  fre- 

i  Boulay-Paty,  Cours  de  Droit  Com.  title  x.  §  5,  who  cites  Kuricke,  Diatr. 
Assec.  Assecurari  possunt,  omnia  quae  assecurari  nee  de  jure,  nee  de  consuetu- 
dine,  quaj  vim  juris  habet,  proliibentur.  jNIount  et  al.  v.  Waite,  7  Jolins.  (N.  Y.) 
434  ;  Lord  v.  Dall,  12  Mass.  115;  ante,  §  T. 

^  Pardessus,  Cours  de  Droit  Com.  589,  2  &  4. 


SUBJECT-MATTER   OF   THE    CONTRACT.  73 

quently  is,  the  aliment  of  the  contract,  it  is  not  to  be  under- 
stood that  this  aliment  is  something  upon  which  the  contract 
fastens  and  feeds,  to  which  it  clings,  and  from  which  it  is 
inseparable.  In  popular  language,  a  Iwuse  is  said  to  be 
insured ;  but  in  point  of  fact  the  owner  is  insured  on,  or  in 
respect  of,  the  house,  or,  in  other  words,  against  any  loss 
which  may  happen  to  him  while  he  is  owner  and  because  of 
his  ownership,  absolute  or  qualified.  When  this  ownership 
ceases,  the  property  also  ceases  to  furnish  aliment  for  the  con- 
tract, and  it  dies.  It  is  the  union  between  the  two  —  between 
the  person  with  whom  the  contract  is  made  and  the  subject- 
matter  about  which  it  is  made,  in  the  relation  of  the  possessor 
to  the  thing  possessed  —  that  keeps  alive  the  contract.  And 
when  this  union  is  permanently  sundered  before  loss  or  the 
event  insured  against  happens,  the  contract  loses  its  vitality. 
A  transfer  of  the  property  and  an  assignment  of  the  policy  is 
not  a  prolongation  of  the  life  of  the  contract,  but  a  new  con- 
tract witii  another  person  about  the  same  subject-matter.^ 

§  73.  Under  these  qualifications  the  contract  may  embrace 
not  only  personal  property  and  real  estate,  but  the  lives  of 
animals,  among  which  slaves  are  included  for  this  purpose ; 
the  life,  health,  and  personal  liberty  of  man;  the  solvability  of 
a  debtor ;  the  payment  of  a  note  at  maturity  ;  ^  the  fidelity  of  a 
servant ;  expected  profits  ;  the  damages  to  wliich  growing  crops 
are  exposed  from  frosts  and  storms  ;  the  risk  of  death  or  injury 
by  accident  to  the  person  in  travelling  or  otherwise ;  lottery 
tickets,  where  lotteries  are  permitted ;  the  risk  of  loss  of  prop- 
erty by  the  capture  of  a  fort  by  an  enemy  ;  ^  the  danger  of  loss 
by  dishonesty,  fraud,  and  theft,  or  by  the  non-payment  of  rent, 
interest,  or  income,  or  by  the  invalidity  of  titles,  or  by  the  death 
of  one  upon  whom  depends  the  continuance  of  pecuniary  sup- 
port or  assistance :  and,  in  general,  "  it  is  applicable,"  to  use 
the   language   of    Mr.  Justice   Lawrence,*   "  to    protect  men 

1  Wilson  V.  Hill,  3  Met.  (Mass.)  66;  Carpenter  v.  Prov.  Wash.  Ins.  Co.,  16 
Peters  (U.  S.),  495. 

-  Ellicott  V.  United  States  Ins.  Co.,  8  GUI  &  Johns.  (Md.)  166. 

3  Carter  v.  Boehm,  3  Burr.  1905. 

*  Lucena  v.  Crawford,  2  New  Rep.  301. 


74  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

against  uncertain  events  which  may  in  any  wise  be  of  disad- 
vantage to  them."  In  most  of  these  instances  the  contract 
has  been  successfully  applied.  Of  their  respective  peculiari- 
ties we  shall  have  occasion  to  treat  more  at  length  hereafter. 
The  practice  of  insuring  crops  is  much  in  vogue  in  France ;  ^ 
and  guarantee  insurance,  as  it  is  called,  instituted  as  a  substi- 
tute for  private  suretyship,  to  aid  persons  in  obtaining  places 
of  trust  and  responsibility,  and  to  protect  employers  from  the 
unfaithfulness  of  employes,  has  met  with  some  success  in 
England. 

§  74.  Insured  must  have  an  Interest.  —  When  there  is  no 
interest  at  all  to  be  protected,  a  policy  of  insurance  will  be 
invalid,  as  counter  to  the  spirit  and  purpose  of  the  contract, 
as  well  as  against  public  policy.  Insurance  is  made  for  the 
benefit  and  protection  of  legitimate  business  and  purposes, 
and  not  that  persons  unconcerned  therein,  and  without  any 
interest  in  the  property  or  event,  should  profit  thereby.  And 
although  innocent  wagers  were  once  sustained,  the  courts  will 
not  waste  their  time  in  discussing  the  question  whether  what 
is  substantially  a  wager  ought  or  ought  not  to  be  uplield  upon 
any  grounds.  Under  the  influence  of  a  healthy  public  senti- 
ment they  have  become  impatient  of  investigating  disputes 
founded  upon  any  species  of  gambling,  and  almost  without 
exception  refuse  to  enforce  a  contract  supported  by  such  a 
subject-matter.2  Insurance  of  interests  prohibited  by  law,  and 
insurance  without  interest,  if  included  in  the  same  policy  with 
interests  which  may  be  lawfully  insured,  do  not  vitiate  the 
policy,  except  as  to  the  prohibited  or  non-existent  interests.  It 
remains  valid  for  so  much  as  constitutes  a  legitimate  insur- 
able interest.^    If,  however,  where  several  parcels  of  property, 

1  Pardessus,  Droit  Com.  589. 

2  Sadler's  Co.  v.  Badcock,  2  Atk.  554  ;  19  Geo.  II.  c.  37  ;  Kent  v.  Bird,  Cowp. 
583;  Amory  v.  Gilman,  2  Mass.  1;  King  v.  State  Mut.  Fire  Ins.  Co.,  7  Cush. 
(Mass.)  10;  Prichett  v.  Ins.  Co.  of  North  America,  3  Yeates  (Penn.),  464; 
8  Kent,  Com.  278 ;  Ruse  v.  Mut.  Benefit  Life  Ins.  Co.,  23  N.  Y.  516 ;  Fowler  v. 
New  York  Indemnity  Ins.  Co.,  26  N.  Y.  422;  Freeman  v.  Fulton  Fire  Ins.  Co., 
38  Barb.  (N.  Y.)  247;  s.  c.  14  Abbott,  Fr.  Cases,  398. 

^  Of  wliat  may  constitute  an  insurable  interest  we  shall  speak  further  on  in 
this  chapter. 


I 


A-^to7",  -y  „t  Law, 


SUBJECT-MATTER   OF   THE    CONTRACT.  75 

separately  valued,  are  insured  by  a  policy  by  its  terms  made 
void  if  the  true  titles  be  not  stated,  the  title  of  either  parcel 
be  untruly  stated,  there  can  be  no  recovery  for  the  loss  of  either 
parcel.^ 

§  75.  Although  policies  of  insurance  made  for  the  benefit  of 
parties  who  have  no  interest  in  the  property  or  event  which 
constitutes  the  subject-matter  of  insurance  are  inconsistent 
with  the  true  principles  of  insurance,  yet  the  courts,  in  the 
early  history  of  the  contract  in  cases  of  marine  insurance, 
"  interest  or  no  interest,"  looking  upon  such  policies  as  in 
the  nature  of  an  innocent  wager,  and  therefore  sustainable  at 
common  law,  manifested  a  disposition  to  uphold  them.^  But 
both  in  England  and  in  some  of  the  States  of  this  country 
the  legislative  power  has  intervened  and  expressly  declared 
the  invalidity  of  policies  without  interest.  And  where  this 
intervention  has  not  taken  place  the  courts  now,  nearly  with- 
out exception,^  hold  such  policies  void,  not  only  because  in 
contravention  of  the  fundamental  object  of  the  contract, 
indemnity,  since  where  there  is  no  interest  there  can  be  no 
loss,  and  where  there  is  no  loss  there  can  be  no  indemnity, 
but  because,  when  the  insured  has  nothing  to  lose,  but  every 
thing  to  gain,  by  the  happening  of  the  event  insured  against, 
it  would  be  dangerous  and  demoralizing  to  subject  the  insured 
to  so  great  a  temptation  to  destroy  the  property  or  the  life 
upon  which  the  insurance  is  etfected.  A  sound  public  policy 
will  not  sanction  any  such  temptation.  And,  indeed,  the 
nearer  the  insured  is  brought  by  the  terms  of  the  contract 
into  such  a  position  that  he  can  in  no  event  be  the  gainer,  the 
more  nearly  will  the  contract  conform  to  the  true  principles 

1  Day  V.  Charter  Oak  Fire  and  Mar.  Ins.  Co.,  51  Me.  91. 

2  "  There  is  some  strange  language,"  says  Lord  Eldon,  —  Lucena  v.  Crawford, 
2  New  Rep.  (5  Bos.  &  Pul.)  322,  —  "  to  be  found  in  our  books  respecting  wagering 
and  vaUied  policies,  the  latter  of  which,  though  frequently  in  effect  wagering 
policies,  have  been  permitted  because  it  has  been  supposed  that  the  convenience 
of  them  is  greater  than  would  result  from  the  prohibition  of  them." 

^  In  New  Jersey,  in  1854,  it  was  said,  though  the  case  did  not  require  the 
point  to  be  decided,  that  a  life  policj'  without  interest  is  an  innocent  wager  and 
good  at  conmion  law.  Trenton  Mutual  Life  and  Fire  Ins.  Co.,  4  Zabr.  (N.  J.) 
576;  Ruse  v.  Mut.  Benefit  Life  Ins.  Co.,  23  N.  Y.  (9  Smitli)  516.  And  perhaps 
the  same  would  be  held  in  Rhode  Island.     Mowry  v.  Home  Ins.  Co.,  9  R.  I.  1 


76  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

of  insurance.  In  accordance  with  this  view,  the  better  class 
of  insurers  not  only  take  the  smallest  risks  in  proportion  to 
the  total  value  of  the  thing  insured,  but  exercise  the  greatest 
caution  lest  the  total  valuation  should  be  fixed  at  so  high  a 
rate,  as  practically  to  offer  to  the  insured  a  margin  of  profit, 
beyond  the  actual  indemnity,  in  case  of  loss. 

§  76.  Insurable  Interest.  —  As  to  what  amounts  to  an  insur- 
able interest  there  has  been  much  discussion  in  the  courts, 
without  hitherto  arriving  at  any  satisfactory  definition.  It 
may  be  said  generally,  however,  that  while  the  earlier  cases 
show  a  disposition  to  restrict  it  to  a  clear,  substantial,  vested 
pecuniary  interest,  and  to  deny  its  applicability  to  a  mere 
expectancy  without  any  vested  right,  the  tendency  of  modern 
decisions  is  to  relax  the  stringency  of  the  earlier  cases,  and 
to  admit  to  the  protection  of  the  contract  whatever  act, 
event,  or  property  bears  such  a  relation  to  the  person  seeking 
insurance  that  it  can  be  said  with  a  reasonable  degree  of 
probability  to  have  a  bearing  upon  his  prospective  pecuniary 
condition. 1  An  insurable  interest  is  sui  ffene7'is,  said  peculiar 
in  its  texture  and  operation.  It  sometimes  exists  where  there 
is  not  any  present  property,  —  any  jus  in  re  or  jus  ad  rem. 
Yet  such  a  connection  must  be  established  between  the  subject- 
matter  insured  and  the  party  in  whose  behalf  the  insurance 
has  been  effected  as  may  be  sufficient  for  the  purpose  of 
deducing  the  existence  of  a  loss  to  him  from  the  occurrence 
of  an  injury  to  it.^ 

§  77.  The  question,  what  constitutes  an  insurable  interest, 
was  much  discussed,  but  not  decided,  as  long  ago  as  1806, 
in  a  noted  case  in  which  the  several  judges  who  gave  their 
opinions  seem  to  have  given  the  matter  their  careful  consid- 
eration.    Their  conflicting  views  very  well  illustrate  the  diffi- 

1  It  was  said  in  Mitchell  v.  Home  Ins.  Co.,  32  Iowa,  424,  that  whetlier  there 
is  an  insurable  interest  is  a  question  for  the  jury,  under  proper  instructions. 
But  this,  in  view  of  the  universal  current  of  authorities,  can  only  mean  that  the 
court  are  to  say  that  if  certain  facts  are  found  to  be  true,  then  there  is,  or  is 
not,  as  tiie  case  may  be,  an  insurable  interest.  In  other  words,  the  facts  being 
proved,  it  is  a  question  of  law,  whether  there  arises  out  of  them  an  insurable 
interest. 

2  Warren  v.  Davenport  Fire  Ins.  Co.,  31  Iowa,  465. 


SUBJECT-MATTER   OP   THE   CONTRACT.  77 

culties  of  the  question.  The  facts  in  the  case  were  as  follows: 
Certain  ships,  with  their  cargoes,  belonging  to  subjects  of  the 
United  Provinces,  by  direction  of  the  admiralty  had  been 
seized  by  a  British  man-of-war  and  ordered  home.  Tlie  de- 
fendants in  error  were  by  statute  made  commissioners,  with 
authority  to  take  into  their  possession  and  under  their  care, 
and  to  manage,  sell,  or  otherwise  dispose  of  to  the  best  ad- 
vantage, all  such  ships  and  cargoes  as  had  then  been  or 
might  thereafter  be  detained  in  or  brought  into  the  ports  of 
the  United  Kingdom,  and  had  accordingly  insured  these  ships 
and  cargoes ;  but  before  arriving  at  any  port  of  the  United 
Kingdom  they  were  lost.  The  question  was  whether  the 
defendants  in  error  had  an  insurable  interest.  And  it  was 
said  on  the  one  side,  that  though  it  were  conceded  that  the 
commissioners  had  no  scintilla  of  right  in  possession  or  rever- 
sion, yet  they  had  a  contingent  interest  founded  on  the  statute, 
their  commission,  and  the  seizure,  which  made  it  their  duty  by 
all  lawful  means  to  provide  for  the  preservation  of  the  prop- 
erty till  they  should  come  into  possession ;  that  a  contingent 
interest  is  sufficient,  and  a  vested  interest  is  not  necessary  ; 
that  nothing  stood  between  the  commissioners  and  the  vesting 
of  the  contingent  interest  but  the  perils  insured  against,  and, 
in  fact,  they  lost  by  the  perils  of  the  sea  what,  but  for  those 
perils,  would  have  vested  in  them  absolutely ;  that  though  an 
interest  may  be  prevented  from  vesting  by  other  events  than 
the  perils  insured  against,  as  by  the  countermand  of  a  con- 
signor, yet  this  possibility  of  countermand  will  not  take  away 
the  right  from  the  consignee  to  insure,  and  that  where  there 
is  an  expectancy  coupled  witii  a  present  existing  title,  there 
is  an  insurable  interest ;  that  inchoate  rights,  such  as  freight, 
respondentia,  and  bottomry,  and  wages  (though  the  insurance 
of  the  latter  is  universally  prohibited  on  grounds  of  public 
policy),  founded  on  subsisting  titles,  lands,  charter-parties, 
and  agreements,  are  insurable;  that  the  object  of  insurance 
is  to  protect  men  against  uncertain  events  which  may  in  any 
wise  be  of  disadvantage,  not  only  those  persons  to  whom  posi- 
tive loss  may  come  by  such  events,  occasioning  the  deprivation 
of  that  which  they  may  possess,  but  those  also  who,  in  con- 


78  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

sequence  of  such  events,  may  have  intercepted  from  them  the 
advantage  or  profit  which,  but  for  such  events,  they  would 
acquire  according  to  the  ordinary  and  probable  course  of 
things ;  that  though  .a  man  must  somehow  or  other  be  inter- 
ested in  the  preservation  of  the  subject-matter  exposed  to 
perils,  yet  to  confine  the  contract  to  the  protection  of  the 
interest  which  arises  out  of  property  is  adding  a  restriction 
to  the  contract  which  does  not  arise  out  of  its  nature ;  that  a 
man  is  interested  in  a  thing,  to  whom  advantage  may  accrue 
or  prejudice  may  happen  from  the  circumstances  which  may 
attend  it,  and  whom  it  concerneth  that  its  condition  as  to 
safety  or  other  quality  should  continue  ;  that  interest  does  not 
necessarily  imply  a  right  to  the  whole  or  a  part  of  a  thing, 
nor  necessarily  and  exclusively  that  which  may  be  the  subject 
of  privation,  but  the  having  some  relation  to  or  concern  in 
the  subject-matter  of  insurance,  which  relation  or  concern,  by 
the  happening  of  the  perils  insured  against,  may  be  so  affected 
as  to  produce  damage,  detriment,  or  prejudice  to  the  person 
insuring ;  and  when  a  man  is  so  circumstanced  with  respect  to 
matters  exposed  to  risks  or  dangers  as  to  have  a  moral  cer- 
tainty of  advantage  or  benefit  but  for  those  risks  or  dangers, 
he  may  be  said  to  be  interested  in  the  safety  of  tiie  thing ; 
that  to  be  interested  in  the  preservation  of  a  thing  is  to  be  so 
circumstanced  with  respect  to  it  as  to  have  benefit  from  its 
existence  or  prejudice  from  its  destruction  ;  and  that  the  prop- 
erty of  a  thing  and  the  interest  derivable  from  it  may  be  very 
different,  the  price  being  generally  the  measure  of  the  first, 
while  by  interest  in  a  thing  every  benefit  and  advantage  arising 
out  of  or  depending  on  such  thing  may  be  considered  as  being 
comprehended. 1 

§  78.  On  the  other  hand,  it  was  said  that  the  mere  naked 
expectation  of  acquiring  a  trust  or  charge  respecting  property 
without  a  scintilla  of  present  interest,  either  absolute  or  con- 
tingent, in  possession,  reversion,  or  expectancy,  in  the  proper 
legal  sense  of  the  word,  can  be  no  foundation  for  an  insurable 
interest ;  that  that  intermediate  thing  between  a  strict  right, 

1  Crawford  v.  Hunter,  8  T.  R.  13;  Lucena  v.  Crawford,  3  Bos.  &  Pul.  75; 
8.  c.  II.  of  L.  2  New  Kep.  (5  Bos.  &  Pul.)  21)9 ;  s.  c.  1  Taunton,  324. 


I 


SUBJECT-MATTER   OF   THE    CONTRACT.  79 

or  a  right  derived  under  a  contract,  and  a  mere  expectation  or 
hope,  which  is  said  to  constitute  an  insurable  interest,  and 
which  is  sometimes  termed  a  moral  certainty,  is  so  shadowy 
as  to  be  totally  incapable  of  legal  definition ;  that  what  is  the 
difference  between  a  moral  certainty  and  an  expectation  no 
one  can  tell ;  and  that  in  point  of  fact  there  can  be  no  insur- 
able interest  where  there  is  no  right  in  the  property,  or  a  right 
derivable  out  of  the  property  by  virtue  of  a  contract  relative 
thereto,  which,  in  eitiier  case,  may  be  lost  upon  some  contin- 
gency affecting  the  possession  or  the  enjoyment  of  the  party 
having  the  property  or  right ;  and  that  an  expectation  of  a 
grant  or  trust  or  possession,  founded  upon  great  probability, 
is  not  an  insurable  interest,  nor  would  it  be,  whatever  might 
be  the  chances  in  favor  of  the  expectation.  In  other  words, 
as  was  tersely  said  by  Lord  Ellenborough  in  a  subsequent 
case  while  discussing  the  same  question,  "  a  man  has  no 
right  to  an  indemnity  because  he  has  lost  the  chance  to  receive 
a  gift."  1 

§  79.  Expected  Profits.  —  Expected  profits  may  be  insured 
both  in  this  country  and  England,  though  the  rule  in  France 
is  different,  where  only  an  acquired  profit  may  be  insured. 
But  the  insured  must  have  an  interest  in  the  property  out  of 
which  the  profits  are  expected  to  proceed,  and  the  profits  must 
be  insured  as  profits.-  "  It  is  not  necessary,"  says  Alauzet,^ 
"  to  the  validity  of  the  contract  that  the  thing  exist,  and  that 
the  interest  be  born  at  the  moment  of  the  making  of  the  con- 
tract. Thus  crops  may  be  validly  insured  against  hail  and 
frost  or  any  other  risk,  even  before  they  are  sown  ;  but  from 

1  Ibid. ;  Routh  v.  Thompson,  11  East,  426.  In  this  discussion  were  engaged, 
on  one  side  or  on  the  other,  most  of  the  judges  of  the  difierent  courts,  and 
amongst  them  some  of  the  ablest  that  ever  adorned  the  British  judiciary ;  and 
in  its  different  stages  the  cause  will  be  found  to  be  an  invaluable  storehouse  of 
learning  upon  this  much  vexed  question  of  iqsurance  law,  wliich  will  abundantly 
reward  the  most  careful  perusal. 

2  Sun  Tire  Office  v.  Wright,  3  N.  &  M.  819;  s.  c.  1  A.  &  E.  621 ;  Barclay  v. 
Cousins,  2  East,  544;  Grant  v.  Parkinson,  Park,  402;  s.  c.  Marsh.  Ins.  05  ;  Put- 
nam V.  Mercantile  Ins.  Co.,  5  Met.  391 ;  Loomis  i-.  Shaw,  2  Johns.  Cases,  36 ; 
Niblo  V.  N.  A.  Fire  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  551;  Leonarda  v. 
Phoenix  Assurance  Co.,  2  Rob.  (La.)  131. 

3  Traite  Gen.  des  Assurances,  153;  Pardessus,  Droit  Com.  588. 


80  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  moment  when  the  crop  begins  to  take  root  or  branch,  the 
contract  will  be  perfect  and  susceptible  of  execution.  Until 
then  it  is  only  a  conditional  insurance."  ^  And  such  expected 
profits  are  still  insurable  though  the  insured  may  have  no  abso- 
lute ownership  in  the  property  out  of  which  the  profits  are 
expected  to  arise,  but  merely  a  right,  if  he  should  so  elect,  to 
take  it  on  certain  terms  and  conditions,  in  a  certain  event,  as 
where  one  purchases  for  a  consideration,  then  paid,  the  right 
to  take  a  portion  of  a  cargo  expected  to  arrive,  on  the  pay- 
ment of  a  certain  further  sum,  if  on  the  arrival  he  shall  so 
elect. ^  But  though  there  be  an  ownership  in  the  property, 
if  before  it  comes  to  the  possession  of  the  purchaser  he  be- 
comes insolvent,  and  the  goods  are  intercepted  by  the  vendor 
by  right  of  stoppage  in  transitu,  there  being  no  longer  either 
property  or  any  expectation  of  profits  thereon,  there  can  be 
no  recovery  under  the  policy .^ 

§  80.  Insurable  Interest,  who  may  have.  —  The  mortgagee, 
being  the  owner  of  a  limited  interest  in  the  estate,  has  in  his 
own  right  an  insurable  interest  to  the  amount  of  the  mortgage 
debt.'*  So  have  executors  an  insurable  interest  in  the  prop- 
erty of  the  testator  which  the  executor  is  bound  to  protect,^ 
and  administrators  in  the  like  property  of  the  intestate,^ 
and  trustees  in  property  under  their  charge,'^  and  sheriffs  in 
property  attached.^  So  also  have  consignees,  common  carriers, 
and  supercargoes  under  instructions  to  land  the  goods  and 
wait  for  a  market,^  or  when  compensation  depends  upon  the 
safety  of  the  cargo  ;  '^^  captors,  having  a  well-founded  expecta- 

1  Grant  v.  Parkinson,  3  Bos.  &  Pul.  85. 

2  French  v.  Hope  Ins.  Co.,  16  Pick.  397. 

3  Clay  V.  Harrison,  10  B.  &  C.  99. 

*  Carpenter  i;.  Washington  Ins.  Co.,  16  Pet.  (U.  S.)  475;  Keller  v.  Merchants' 
Ins.  Co.,  7  La.  29;  Addison  v.  Louisville  Ins.  Co.,  7  B.  Mon.  (Ky.)  470. 
5  Phelps  V.  Gebhard  Fire  Ins.  Co.,  9  Bosw.  (N.  Y.  Superior  Ct.)  404. 
B  Herkimer  v.  Rice,  27  N.  Y.  163. 

7  Ins.  Co.  V.  Chase,  5  Wall.  (U.  S.)  509. 

8  White  i;.  Madison,  26  N.  Y.  117. 

^  Deforest  v.  Fulton  Fire  Ins.  Co.,  1  Hall  (N.  Y.),  184;  Waters  v.  Monarch 
Fire  and  Life  Ins.  Co.,  5  El.  &  Bl.  870;  ^tna  Ins.  Co.  v.  Jackson,  16  B.  Mon. 
(Ky.)  242. 
i*^  Robinson  t.  New  York  Ins.  Co.,  2  Caines  (N.  Y.),  357. 


SUBJECT-MATTER   OF   THE    CONTRACT.  81 

tion  that  their  claim  will  be  allowed  ;  ^  and  pledgees,  innkeep- 
ers, factors,  wharfingers,  pawnbrokers,  warehousemen,  and, 
generally,  persons  charged  either  specially,  by  law  or  by  cus- 
tom or  by  contract,  with  the  duty  of  caring  for  and  protecting 
property  in  behalf  of  others,  or  having  a  right  so  to  protect 
such  property,  though  not  bound  thereto  by  law,  or  who  will 
receive  benefit  from  the  continued  existence  of  the  property, 
whether  they  have,  or  have  not,  any  title,  lien  upon  or  pos- 
session of,  it,  have  an  insurable  interest.^  Indeed,  the  law  has 
gone  very  near  to  holding  a  lawful  possession  to  be  an  ade- 
quate interest  to  support  the  contract.^ 

§  81.  Divers  Interests  in  same  Subject-matter. —  Many  are 
the  rights  amounting  to  an  insurable  interest  which  different 
parties  may  have  in  the  same  subject-matter.  Of  course  the 
owner  in  fee  of  real  estate  may  insure,  and  his  interest  not 
only  continues  after  a  mortgage,  but  it  even  survives  a  sale  of 
the  equity  of  redemption  or  execution  until  his  right  to  redeem 
under  that  sale  expires.*  In  personal  as  well  as  real  property 
there  is  an  insurable  interest  while  there  is  any  right  to  re- 
deem.^ So  may  the  owner  of  a  leasehold  estate  insure,^  espe- 
cially if  he  own  the  building;"  so  may  a  husband  as  tenant  by 
the  curtesy,  after  issue  born  alive,  though  the  wife  be  only  a 
joint  tenant ;  ^  and  so,  too,  if  he  lives  with  his  wife,  and  shares 
with  her  the   use  of  her  own   separate    personal   property.^ 

1  Stockdale  v.  Dunlop,  6  Mees.  &  yeh.  224. 

2  Eastern  R.  R.  Co.  v.  Relief  Fire  Ins.  Co.,  98  Mass.  420.  And  see  post, 
§§  89,  90. 

3  Sutherland  v.  Pratt,  11  Mees.  &  Wels.  296  ;  Barclay  v.  Cousins,  2  East,  544. 
But  see  post,  §  97. 

*  Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  (Mass.)  40  ;  Columbian  Ins.  Co. 
V.  Lawrence,  2  Pet.  (U.  S.)  725. 

5  Allen  V.  Franklin  Fire  Ins.  Co.,  9  How.  (N.  Y.)  501 ;  Franklin  Ins.  Co.  v. 
Findlay,  6  Whart.  (Penn.)  483. 

6  Saddlers'  Co.  v.  Badcock,  1  Wil.  10 ;  s.  c.  2  Atk.  534  ;  Niblo  v.  North  Ameri- 
can Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  551. 

7  Fletcher  v.  Commonwealth  Ins.  Co.,  18  Pick.  (Mass.)  419  ;  Laurent  v.  Cliat- 
ham  Fire  Ins.  Co.,  1  Hall  (N.  Y.),  41 ;  Tongue  v.  Nutwell,  31  Md.  302. 

8  Franklin  Ins.  Co.  v.  Drake,  2  B.  Mon.  (Ky.)  47;  Abbott  v.  Hampden  Mut. 
Fire  Ins.  Co.,  30  Me.  414  ;  Harris  v.  York  Mut.  Ins.  Co.,  50  Penn.  St.  341.  And 
see  also  Curry  v.  Commonwealth  Ins.  Co.,  10  Pick.  (Mass.)  535. 

9  Goulstone  v.  Royal  Ins.  Co.,  Fost.  &  Fin.  (N.  P.)  276  ;  Clark  v.  Fireman's 
Ins.  Co.,  18  La.  431. 

6 


82  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

Upon  the  same  principles  a  tenant  in  dower  may  doubtless 
insure.  So  the  assignee  of  a  bond  for  a  deed  of  real  estate 
upon  which  the  obligee  has  made  improvements  has  an  insur- 
able interest.^  A  disseisor  may  be  considered  as  the  owner, 
80  far  as  to  give  him  an  insurable  interest,  especially  if  the 
disseisee's  right  of  entry  is  tolled  ;  for  if  the  disseisee  has  no 
right  to  enter,  but  only  a  right  of  action,  he  is  not  the  absolute 
owner  of  the  land,  —  the  disseisor  is  the  owner  under  a  title 
which  is  defeasible.^  Rent  is  itself  a  distinct  insurable  inter- 
est, and  is  not  a  proper  item  of  loss  to  enhance  the  damages 
under  a  policy  insuring  the  building.^ 

§  82.  Mortgagor  and  Mortgagee.  —  A  mortgagor  whose  equity 
of  redemption  has  been  foreclosed,  has  nevertheless  an  insur- 
able interest,  so  long  as  the  mortgage  debt  remains  unpaid,  on 
account  of  his  liability  therefor  ;  *  and  the  holder  of  a  mort- 
gage as  collateral  security  for  a  debt  has  an  insurable  inter- 
est in  the  mortgaged  property,  while  the  debt  for  which  the 
mortgage  is  pledged  as  collateral  remains  unpaid."  Succes- 
sive mortgagees,  holding  claims  upon  the  same  property  at  the 
same  time,  may  each  insure  their  respective  interests.^ 

§  83.  Mortgagee.  —  The  amount  of  interest  or  its  character 
is  not  material,  in  determining  the  question  whether  a  party 
who  attempts  to  recover  under  a  policy  has  an  insurable  inter- 
est. A  mortgagee's  interest,  as  we  have  already  seen,  in  the 
protection  of  the  property  as  a  fund  out  of  which  to  pay  the 
debt, is  undoubtedly  insurable;  and  he  does  not  lose  that  insur- 
able interest,  although  he  sell  and  assign  the  mortgage  and  the 
note  thereby  secured,  if  he  indorse  the  note.  His  responsibil- 
ity for  the  debt  remaining,  he  is  still  interested  in  the  preserva- 
tion of  the  property,  out  of  which  to  pay  wliat  has  ceased  to 
be  a  debt  due  him  indeed,  but  nevertheless  a  debt  due  another, 
which  he  has  assumed,  in  a  certain  contingency,  to  pay.'^ 

1  Sayres  v.  Hartford  Fire  Ins.  Co.,  17  Iowa,  176. 

2  Curry  v.  Commonwealth  Ins.  Co.,  10  Pick.  (Mass.)  535. 

3  Leonarda  v.  Phoenix  Assurance  Co.  of  London,  2  Eob.  (La.)  131. 
*  Buffalo  Steam-Engine  Works  v.  Smi  Mut.  Ins.  Co.,  17  N.  Y.  401. 

5  Sussex  County  Mut.  Fire  Ins.  Co.  v.  Woodruff,  2  Dutch.  (N.  J.)  541. 

6  Fox  I'.  Piicenix  Fire  Ins.  Co.,  52  Me.  333. 

7  New  England  Fire  and  Mar.  Ins.  Co.  v.  Wetmore  et  al.,  82  111.  221. 


SUBJECT-MATTER   OF   THE   CONTRACT.  83 

§  84.  Lessee  and  Lessor. —  The  interest  of  a  lessee  is  based 
upon  his  right  to  the  possession  and  use,  his  liability  to  repair 
or  for  waste,  or  his  covenant  or  parol  agreement  ^  to  keep 
insured,  and  may  exist  whether  he  be  tenant  for  years  or  at 
will.  In  England  the  incumbent  of  a  benefice,  and  generally 
the  tenants  of  ecclesiastical  property,  whether  in  possession  or 
not,  and  other  persons  bound  by  custom  or  otherwise  to  repaiV, 
are  considered  to  have  an  insurable  interest.^  A  sub-lessee  by 
parol,  who  rents  a  building  on  the  leased  land,  has  an  insurable 
interest  in  the  building.^ 

And  it  seems  that  a  possession  under  such  circumstances 
that  the  tenant  may  be  liable  as  a  wrong-doer  gives  an  in- 
surable interest,  as  appears  by  the  following  interesting  case : 
The  city  of  New  York  had  leased  a  plot  of  ground  for  the 
Crystal  Palace  building  to  an  association  which  failed,  and 
a  receiver  was  appointed  by  the  court  under  the  statute  re- 
lating to  the  dissolution  of  corporations.     The  receiver  held 
possession  of  the  property  some  year   and  a  half  after   the 
lease  expired,  when  the  plaintiffs  entered  by  force  and  took 
possession,  and    then    procured    this    insurance.      The   court 
oliserved,  that  if  the  building  was  to   be  considered  as  the 
property  of  the  lessee  at   the  termination  of  the  lease,  the 
plaintiffs  were  liable   to  be  charged   for  its  value  as  wrong- 
doers, at  the  suit  of  the  receiver,  after  they  had  forcibly  ejected 
him  and  taken  possession  thereof.     The  plaintiffs  were  in  pos- 
session under  a  claim  of  ownership.     The  receiver  can  main- 
tain no  action  to  recover  the  actual  possession  of  the  building 
since  its  destruction,  and  a  recovery  against  the  plaintiffs  for 
the  value,  by  way  of  damages,  would  vest  the  ownership  in 
them,  even  though  they  acquired  no  title  in  it  by  the  conditions 
of  the  lease  and  the  expiration  of  the  term.     And  so  on  this 
ground  there  was  an  insurable  interest.*     So,  too,  a  landlord 
has  an  insurable  interest  in  the  goods  of  his  tenant  liable  to 
distress  for  rent.° 

1  Lawrence  v.  St.  Mark's  Fire  Ins.  Co.,  43  Barb.  (N.  Y.)  479. 

2  Bunyon,  Fire  Ins.  17. 

3  Mitchell  V.  Home  Ins.  Co.,  32  Iowa,  421. 

*  Mayor,  &c.,  of  New  York  v.  Brooklyn  Fire  Ins.  Co.,  41  Barb.  (N.  Y.)  231. 
s  Columbia  Ins.  Co.  v.  Cooper,  50  Fenn.  St.  331. 


84  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  85.  Lessor.  —  Of  course  when  a  building  is  erected  by  the 
lessee,  and  reverts  to  the  lessor  at  the  expiration  of  the  lease, 
an  insurable  interest  exists  in  the  lessor  from  the  time  of  the 
reversion.^  In  Macarty  v.  Commercial  Insurance  Company,^ 
it  is  said  that  a  donor  who  has  given  a  deed  of  his  property 
inter  vivos,  and  at  the  delivery  of  the  deed  has  by  parol  agreed 
with  the  donees  that  he  shall  retain  the  estate  during  his  life, 
and  does  in  fact  retain  it,  taking  the  profits  and  paying  taxes 
and  making  repairs,  has  no  insurable  interest.  But  the  case 
is  hardly  an  authority,  as  it  went  off  upon  other  points.  So  if 
the  lessee  has  a  right  to  remove  the  buildings  at  the  expiration 
of  the  lease,  as  their  destruction  will  diminish  the  lessor's 
security  for  rent,  he  may  insure  for  his  protection.^ 

§  86.  Equitable  Title.  —  The  plaintiff  advanced  money  to  a 
builder,  and  took  his  notes,  secured  by  a  deed  in  trust  to  a  third 
party  in  payment.  The  maker  of  the  notes  was  unable  to  pay 
them  at  maturity,  and  it  was  agreed  that  the  plaintiff  should 
surrender  the  notes  and  take  possession  of  the  property,  which 
he  accordingly  did,  with  the  assent  of  the  trustee,  who  deliv- 
ered to  him  the  deed  of  trust.  At  the  time  insurance  was 
effected,  the  plaintiff  had  so  held  the  property  for  about  two 
years,  and  it  was  held  that  he  had  an  insurable  interest.* 

§  87.  Intruder.  —  It  has  been  held,  however,  that  when  a 
person  is  a  mere  intruder,  and  has  no  license  or  permission 
to  occupy  land  belonging  to  another,  he  can  have  no  insurable 
interest  in  buildings  which  he  may  erect  thereon.  Thus,  cer- 
tain parties  jointly  agreed  to  build  a  hotel  on  the  beach  on  land 
belonging  to  the  State,  without  lease  or  other  permission.  The 
plaintiff,  one  of  the  corporation,  contracted  with  the  rest  to 
build  the  house,  and  by  virtue  of  the  contract  became  a  creditor 
of  the  company.  After  it  was  built,  several  of  the  joint  pro- 
prietors being  unable  to  pay,  their  interest  was  transferred 
to  the  plaintiff,  who  thenceforth  for  two  or  three  years  used 
and  occupied  the  premises,  and  at  length  procured  insurance 

1  Mayor,  &c.,  of  New  York  v.  Exchange  Fire  Ins.  Co.,  9  Bosw.  (N.  Y.)  424; 
Same  v.  Brooklyn  Ins.  Co..  41  Barb.  (N.  Y.)  231. 

2  17  La.  365. 

'  Miltenberger  v.  Beacom,  9  Penn.  St.  198. 
*  Coursin  v.  Penn.  Ins.  Co.,  46  Penn.  St.  323. 


SUBJECT-MATTER   OF   THE   CONTRACT.  85 

thereon.  But  the  court  said  they  had  no  rights  individually 
or  collectively ;  they  were  mere  intruders,  and  had  no  inter- 
est which  the  liiw  could  in  any  way  recognize.^ 

§88.  Stockholder  in  Corporate  Property.  —  Philips  I',  KllOX 
County  Mutual  Insurance  Company^  has  been  regarded  as  an 
authority  that  the  stockholder  of  an  incorporated  company 
has  no  insural)le  interest,  though  he  own  all  the  stock  of  the 
company.  But  the  real  question  in  this  case  seems  to  have 
been  whether  the  stockholder  truly  represented  the  title  when 
he  stated  that  the  property  was  his,  the  insurers  by  their  char- 
ter being  entitled  to  a  lien,  and  whether  the  insured  was  the 
owner  in  fee,  in  which  case  only  the  insurance  was  to  be 
binding. 

But  in  Warren  v.  Davenport  Fire  Insurance  Company  ^  the 
point  was  distinctly  made,  and  decided  in  the  affirmative. 
Upon  full  consideration  the  court  held  that  a  stockholder  is 
clearly  interested  in  the  preservation  of  the  property  which 
gives  value  to  his  stock,  and  out  of  which  come  the  dividends, 
and  that  the  interest  is  of  such  a  nature  as  to  be  insurable. 
The  court  refer  to  tlie  Ohio  case  just  cited,  and,  after  pointing 
out  the  fact  that  the  case  turned  upon  the  provision  of  the 
charter  making  the  policy  void  if  the  true  title  be  not  stated, 
well  observe  that  a  mortgagee  who  had  represented  th.e  prop- 
erty as  his  own  would  have  failed  in  the  same  case,  and  for 
the  same  reason. 

§89.  Incomplete  Title.  —  Insurable  interest  does  not  at  all 
depend  upon  the  completeness  or  validity  of  the  title  by  which 
the  insured  property  is  held.  Thus  possession  under  a  con- 
tract of  sale  upon  which  partial  payment  has  been  made,  may 
give  an  insurable  interest,  although  the  conditions  of  the  con- 
tract have  been  so  far  violated,  that,  if  the  breach  be  insisted 
on,  the  contract  cannot  be  enforced,  since  the  contract,  not- 
withstanding the  breach  of  its  conditions,  may  be  carried  into 
effect  by  the  parties  in  interest.'*     And  this  is  true,  though  the 

1  Sweeney  i-.  Franklin  Ins.  Co.,  20  Penn.  St.  337. 

2  20  Oliio,  178. 
s  31  Iowa,  463. 

4  Tyler  v.  ^tna  Fire  Ins.  Co.,  16  Wend.  (N.  Y.)  385;  3.  c.  12  Wend.  (N.  Y. 


86  INSURANCE  :   FIRE,   LIFE,    ACCIDENT,   ETC. 

vendor,  availing  himself  of  the  violation  of  the  conditions  by 
the  vendee,  has  resold  the  property,  and  is  resisting  a  proceed- 
ing in  equity  brought  by  the  vendee  to  compel  a  conveyance. 
If  this  were  not  so,  the  property  might  be  destroyed  pending 
the  litigation,  to  the  prejudice  of  the  vendee  should  he  ulti- 
mately prevail.  1 

§  90.  And  it  has  been  held  in  Tennessee  that  this  interest 
exists  under  the  following  state  of  facts :  The  plaintiff  had 
purchased  the  property  at  a  sale  on  execution.  He  had  neither 
paid  the  purchase-money  nor  any  part  thereof,  nor  had  he  re- 
ceived or  been  tendered  a  deed.  Some  arrangement  was  made 
with  the  creditors  for  time,  and  there  was  some  understanding 
with  the  execution  debtor  that  he  was  to  hold  the  property  as 
security  for  the  amount  bid,  and  other  debts  for  which  the 
plaintiff  was  liable  to  him.  After  the  loss,  the  plaintiff  being 
still  delinquent  in  the  payment  of  the  purchase-money,  the 
property  was  resold  to  another  person.^  So  one  who  holds 
property  by  a  conveyance  which  is  fraudulent  as  against  credit- 
ors, has  an  insurable  interest.^ 

§  91.  Administratrix,  —  An  administratrix  was  held  to  have 
an  insurable  interest  under  the  following  state  of  facts :  The 
husband  before  his  death  agreed  with  the  defendants  for  a 
policy  upon  his  building  and  machinery.  Before,  however, 
the  policy  was  issued,  he  died,  and  the  policy  was  afterwards 
issued,  insuring  his  "  estate."  In  a  suit  brought  on  the  policy 
assigned  after  the  loss,  and  brought  by  the  assignee,  it  was 
contended,  on  the  part  of  the  defendants,  that  the  "  estate  "  of 
the  husband  meant  his  administratrix,  and  that  she  as  such 
administratrix  had  no  interest  in  the  realty.  But  the  court 
said  it  was  apparent  that  both  parties  intended  that  the  build- 
ing as  well  as  the  machinery  should  be  insured,  for  so  ex- 
pressly- said  the  policy ;  and  as  the  heirs  had  the  chief  interest 
in  the  real  estate,  it  might  fairly  be  presumed  without  the  aid 

507;  Columbian  Ins.  Co.  v.  Lawrence,  2  Pet.  (U.  S.)  25;  s.  c.  10  Pet.  (U.  S.) 
607;  McGivney  v.  Phraiix  Fire  Ins.  Co.,  1  Wend.  (N.  Y.)  85;  Smith  v.  Bow- 
ditch  Ins.  Co.,  6  Cush.  (Mass.)  448. 

1  MilHgan  v.  Equitable  Ins."  Co.,  16  Upper  Canada  (Q.  B.),  314. 

'^  JEtna  Ins.  Co.  v.  Miers,  5  Sneed  (Tenn.),  139. 

'  Lerow  v.  Williams,  9  Allen  (Mass.),  382. 


SUBJECT-MATTER   OF   THE   CONTRACT.  87 

of  extraneous  evidence,  that  such  insurance  was  effected  for 
their  benefit.  If,  however,  this  were  doubtful,  extraneous  evi- 
dence might  be  adduced  to  ascertain,  in  all  cases  of  ambiguity 
in  this  respect,  what  interests  were  intended  to  be  insured.^ 

§  92.  Insolvent.  —  Insolvent  debtors  and  bankrupts  may  also 
have  an  insurable  interest.  Thus,  an  insolvent  having  obtained 
his  discharge,  acquired  property  and  insured  it.  Subsequently, 
and  after  the  loss,  the  creditors  discover  that  the  discharge  was 
obtained  by  fraud,  and  upon  proper  proceedings  had  in  court 
the  discharge  was  revoked.  Under  the  English  insolvent  law, 
all  the  property  which  the  insolvent  has  at  the  time  of  filing 
his  petition,  and  all  which  he  shall  acquire  before  he  becomes 
entitled  to  his  discharge,  vests  in  his  assignee.^  It  was  con- 
tended that  as  the  order  for  the  insolvent's  discharge  had  been 
annulled,  he  was  in  the  same  position  as  if  the  discharge  had 
never  been  granted,  and  consequently  the  assignee  was  enti- 
tled to  the  property  in  question,  and  might  compel  the  insur- 
ance company  to  pay  the  loss  to  him.  A  party  who  insures,  it 
was  contended,  must  have  a  real  and  tangible,  and  not  a  merely 
speculative,  interest  in  the  property  insured.  But  by  Pollock, 
C.  B. :  "  It  is  enough  if  he  is  responsible  to  some  person  for 
the  property.  There  are  many  cases  on  marine  policies  which 
show  that  if  a  person  can  be  called  upon  to  account  for  prop- 
erty he  has  an  insurable  interest  in  it."  And  per  Alderson, 
B.  :  "  The  insolvent  having  possession  of  the  property  is  re- 
sponsible for  it  to  his  assignee.  Then  why  may  he  not  insure 
it  ?  "  After  advisement,  it  was  held  that,  as  the  insolvent  was 
in  possession  as  the  apparent  owner,  responsible  to  those  who 
were  the  real  owners,  he  might  insure.-^  And  the  insurable 
interest  remains  even  though  the  insolvent  has  concealed  his 
goods  from  his  creditors.* 

§  93.  Lien.  —  Where  by  statute  the  mechanic  has  a  lien  for 
labor  and  materials  furnislied  in  the  erection  of  a  building,  he 
has  an  insurable  interest  in  the  building.     The  lien  attaches 

1  Clinton  v.  Hope  Ins.  Co.,  51  Barb.  (N.  Y.)  G47. 

2  1  &  2  Vict.  c.  110,  §  37. 

3  Marks  v.  Hamilton,  7  Wels.  Hurl.  &  Gor.  (Exch.)  323. 
*  Goulstone  v.  Royal  Ins.  Co.,  1  F.  &  F.  (N.  P.)  276. 


88  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

from  the  commencement  of  the  labor  and  the  furnishing  the 
materials.  Nor  is  it  necessary  that  the  validity  of  the  lien 
should  have  in  any  way  been  brought  to  judicial  cognizance. 
Before  judgment,  and  even  before  filing  the  claim,  if  the 
period  within  which  the  claim  must  be  filed  has  not  trans- 
pired, the  interest  subsists. ^  And  it  has  been  intimated  that 
a  contractor  would  have  an  insurable  interest  in  the  house 
he  was  engaged  in  building,  irrespective  of  his  statutory  lien, 
if  his  compensation  in  any  way  depended  upon  the  comple- 
tion of  the  house  ;  or  in  other  words,  if  by  contract  or  custom 
he  was  not  to  be  paid  till  the  house  was  finished.^  But  a 
general  lien,  like  that  of  a  judgment  in  some  States,  where  by 
law  it  is  a  lien  first  upon  the  personal  estate  of  the  judgment- 
debtor,  and  then  upon  his  real  indiscriminately,  does  not 
give  an  insurable  interest  in  the  whole  or  any  part  of  the 
debtor's  property  to  the  judgment-creditor,  and  in  this  respect 
is  to  be  distinguished  from  a  mortgage,  which  is  a  specific 
pledge  of  definite  property,  and  gives  the  mortgagee  an  insur- 
able interest.^ 

§  94.  Inability  for  Loss.  —  In  Maine,  Massachusetts,  and 
probably  other  States,  railroads  are  by  statute  given  an  insur- 
able interest  in  buildings  and  other,  property  along  the  line  of 
the  road,  for  the  loss  of  which  by  fire  communicated  from 
the  engine,  they  would  be  responsible.*  The  interest  here  is 
analogous  to  that  of  the  common  carrier,  who  is  an  insurer 
by  the  common  law,  or  to  that  of  an  underwriter  who  is  an 
insurer  by  contract.^  Such  insurable  interest  has  been  held 
to  exist  in  growing  timber  located  at  a  distance  of  three  hun- 
dred feet  from  the  line  of  the  road,*^  or  even  half  a  mile  dis- 

1  Franklin  Fire  Ins.  Co.  v.  Coates,  14  Md.  285 ;  Carter  v.  Humbolt  Fire  Ins. 
Co.,  12  Iowa,  284;  Stout  v.  City  Fire  Ins.  Co.,  ib.  371 ;  Longhurst  v.  Star  Ins. 
Co.,  19  Iowa,  364. 

■i  Protection  Ins.  Co.  v.  Hall,  15  B.  Mon.  (Ky.)  411. 

8  Grevemeyer  v.  Southern  Mut.  Ins.  Co.,  62  Penn.  St.  (P.  F.  Smith,  12)  340. 

*  Cliapman  v.  Atlantic  and  St.  Lawrence  R.  R.  Co.,  37  Me.  92 ;  Hart  v. 
Western  K.  R.  Co.,  13  Met.  (Mass.)  99;  Hookset  v.  Concord  R.  R.  Co.,  38 
N.  II.  242. 

5  Eastern  R.  R.  Co.  v.  Relief  Fire  Ins.  Co.,  98  Mass.  420. 

6  Pratt  V.  Atlantic  and  St.  Lawrence  R.  R.  Co.,  42  Me.  579. 


SUBJECT-MATTER   OF   THE    CONTRACT.  89 

tant,  where  the  fire  starting  in  the  grass  adjacent  to  the  road 
extends  continuously  to  the  wood.^ 

§  95.  Debtor  in  Property  Attached.  —  Where  the  gOods  of  an 
assured  were  levied  upon  by  the  sheriff  by  virtue  of  an  exe- 
cution against  him,  and  the  sheriff  took  actual  possession  of 
the  goods,  and  left  them  in  the  store  of  the  assured,  the  doors 
of  which  he  fastened  and  the  windows  of  which  he  nailed  up, 
and  the  sheriff  went  out  of  town  and  took  the  key  of  the  store 
with  him,  and  during  his  al)sence  a  fire  took  place,  which  de- 
stroyed the  store  with  its  contents,  it  was  held  that  the  insured 
was  nevertheless  entitled  to  recover.^  In  this  case  it  was  urged 
by  the  counsel  for  the  plaintiffs  in  error  that  the  question  was 
not  one  of  an  insurable  interest,  but  of  a  change  of  interest 
and  risk  produced  by  extrinsic  circumstances.  But  the  court, 
per  Kennedy,  J.,  did  not  acquiesce  in  this  view  of  the  case. 
They  held  that  the  position  that  the  assured  could  not  recover 
on  his  policy  for  the  loss  of  a  diminished  interest  was  unten- 
able ;  nor  did  they  admit  that  the  interest  in  this  case  was  a 
diminished  interest ;  for  the  loss  must  fall  upon  the  defendant 
in  error,  neither  the  sheriff  nor  the  plaintiffs  in  the  execution 
being  in  default,  unless  he  could  obtain  remuneration  from  the 
insurers  upon  the  policy  ;  and  he  was  still  liable  on  the  judg- 
ment obtained  against  him  to  pay  the  debt  for  which  his  goods 
were  taken  on  execution. 

Bailee  of  Attached  Property.  —  A  bailee,  who  has  given  a 
bond  to  dissolve  an  attachment,  and  is  under  obligation  to 
produce  the  property  to  respond  to  the  judgment,  has  an  insur- 
able interest.^ 

§  96.  Vendee  without  Title.  —  It  has  been  said  that  an  inter- 
est in  goods  under  a  contract  which  cannot  be  enforced  as 
being  in  contravention  of  the  Statute  of  Frauds,  is  not  an 
insurable  interest.  Thus,  where  by  verbal  agreement  the 
plaintiff  had  agreed  to  purchase  oil  to  arrive,  and  to  be  paid 
for  if  it  arrived,  but  not  otherwise,  and  it  was  lost,  it  appear- 
ing that  the  contract  was  one  which,  by  the  Statute  of  Frauds, 

1  Perley  v.  Eastern  R.  R.  Co.,  98  Mass.  414. 

2  The  Franklin  Fire  Ins.  Co.  v.  Findlay,  6  Whart.  (Penn.)  483. 

3  Firemen's  Ins.  Co.  v.  Powell,  13  B.  Mon.  (Ky.)  312. 


90  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

is  required  to  be  in  writing,  it  was  held  that  he  had  no  insur- 
able interest.^  And  so  where  the  plaintiff  held  an  instrument 
made  by  the  captain  of  a  vessel,  in  the  nature  of  a  mortgage, 
to  secure  the  plaintiff  for  money  loaned  with  whicli  to  pay 
for  repairs  on  the  vessel,  as  the  instrument  was  one  which  the 
captain  of  the  vessel  had  no  right  to  make,  and  was  therefore 
void,  the  court  said  it  did  not  give  to  the  plaintiff  an  insurable 
interest.^  Upon  the  doctrine  of  these  cases  it  has  been  stated, 
as  a  general  proposition,  that  a  right  under  a  contract  not  en- 
forceable at  law  or  equity,  will  not  support  a  policy  of  insurance, 
and  among  such  contracts  would  be  included  a  verbal  contract 
for  the  purchase  of  real  estate,  when  it  is  not  aided  by  part 
performance. 3 

§  97.  Vendor  in  Possession,  but  without  Title.  —  In  North 
British  and  Mercantile  Insurance  Company,'^  goods  on  a  wharf 
were  insured  as  "  the  assured's  own,  in  trust  or  on  commis- 
•  sion,  for  which  the  assured  was  responsible."  The  assured 
had  sold  a  portion  of  the  goods  destroyed  and  received  the 
pay  therefor,  but  still  held  the  wharfinger's  delivery-warrant 
for  the  goods  on  behalf  of  the  purchaser,  though  merely  for 
the  convenience  of  paying  the  charges  necessary  to  clear  the 
goods ;  and  it  was  held  that  the  goods  had  passed  to  the  pur- 
chaser, so  that  the  vendor,  the  assured,  had  no  longer,  at  the 
time  of  the  fine,  any  interest  in  the  goods,  or  any  responsi- 
bility therefor. 

Holder  of  Promissory  Note.  —  The  holder  of  a  note  may 
insure  its  prompt  payment,  and  the  assignee  of  the  policy, 
that  being  negotiable,  has  an  insurable  interest.^     And  so  a 

1  Stockdale  v.  Dunlop,  6  Mees.  &  "Wels.  224. 

2  Steinback  v.  Fenning,  6  Eng.  L.  &  Eq.  41. 

3  Angell,  Ins.  §  Q'j.  The  learned  author  cites  Tidswell  v.  Ankerstein,  Peake, 
151,  and  Fletcher  v.  Commonwealth  Ins.  Co.,  18  Pick.  (Mass.)  419,  neither  of 
which  seem  to  give  the  least  support  to  the  doctrine,  or  even  to  discuss  the  point 
in  any  way.  The  former  merely  decides  that  an  executor  has  an  insurable 
interest  in  the  life  of  one  who  has  granted  an  annuity  to  his  testator,  and  the 
latter  that  a  person  having  a  house  on  the  land  of  another,  for  which  he  paj's 
rent  under  a  verbal  agreement,  is  not  guilty  of  concealment  in  not  stating  this 
fact  as  to  his  title,  not  being  interrogated  thereupon.  There  is  doubtless  some 
mistake  in  the  citation.     And  see  ante,  §§  89,  90. 

*  41  L.  J.  N.  8.  C.  P.  1. 

6  Ellicott  V.  United  States  Ins.  Co.,  8  Gill  &  Johns.  (Md.)  166. 


SUBJECT-MATTER   OF   THE   CONTRACT.  91 

surety  for  the  fidelity  of  an  employ^  may  insure  against  his 
default.! 

§98.  Reinsurance. — The  risk  which  one  insurer  has  as- 
sumed with  reference  to  any  subject-matter  of  insurance,  con- 
stitutes an  insurable  interest,  which  the  insurer  may  protect, 
to  the  extent  of  his  liability,  by  affecting  an  insurance  in  his 
own  favor  against  the  risk  he  has  assumed.  Tiiis  procuring 
insurance  to  cover  a  risk  already  assumed  is  called  reinsur- 
ance. The  subject-matter  of  the  insurance  in  each  case  is  the 
same,  but  the  interests  are  different.  In  the  first  case,  the 
owner's  interest  is  that  which  is  protected  ;  in  the  latter  it  is 
the  insurer's  interest  in  the  preservation  of  the  property  by 
reason  of  the  fact  that  he  is  under  obligation  to  pay  for  it  in 
case  of  loss.  As  the  practice  came  to  be  a  mode  of  specula- 
ting in  the  rise  and  fall  of  premiums,  and  there  was  danger 
that  it  might  become  a  cover  for  wager  policies,  it  was  pro- 
hibited in  England  by  statute,-  except  in  certain  cases.^  But 
it  is  a  contract  entirely  within  the  general  purposes  and  objects 
of  insurance,  and  comes  within  the  scope  of  the  powers  usually 
conferred  by  charters,  and  has,  it  is  believed,  been  very  gener- 
ally, if  not  universally,  England  alone  excepted,  upheld."! 

§  99.  Copartner.  —  A  partner  has  an  insurable  interest  to 
the  amount  of  the  value  of  the  entire  stock  ;°  and  in  a  house 
purchased  with  partnership  funds,  but  standing  upon  land  of 
the  other  partner  by  his  consent.^  Upon  settlement  of  the 
joint  account,  the  building  must  be  treated  as  joint  property, 
and  his  equitable  interest  in  its  preservation  is  an  insurable 
one.'  Wljen  a  partner  retires  from  the  firm,  but  no  notice  of 
a  dissolution  is  given,  and  the  firm  name  is  used  by  the  re- 
maining partner,  the  retired  but  nominal  partner  has  an  insur- 

1  Towle  V.  National  Guardian  Ins.  Co.,  5  L.  T.  n.  s.  193 ;  s.  c.  30  L.  J. 
c  900  ;  7  Jur.  n.  s.  1109.     See  post,  Chapter  on  Guarantee  Insurance. 
•^  19  Geo.  II.  c.  27. 
»  Arnould,  Ins.  1,  287. 

4  New  York  Bowery  Fire  Ins.  Co.  v.  New  York  Fire  Ins.  Co.,  17  Wend. 
(N.  Y.)  359;  Eastern  Railroad  Co.  v.  Relief  Fire  Ins.  Co.,  98  Mass.  425.  See 
also  ante,  §§  9-12. 

5  Manhattan  Ins.  Co.  v.  Webster,  57  Penn.  St.  (7  P.  F.  Smith)  227. 

6  Converse  i-.  Citizens'  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  37. 

■?  Ibid.     See  also  Oakiuau  v.  Dorchester  Mut.  Fire  Ins.  Co.,  98  Mass.  57. 


92  insurance:  fire,  life,  accident,  etc. 

able  interest,  so  that  insurance  in  the  name  of  the  firm  is  valid 
to  the  full  amount.  The  legal  interest  is  in  the  firm,  though 
the  beneficial  interest  is  in  the  remaining  partner.^ 

§  100.  Duration.  —  In  general,  it  is  essential  that  the  insured 
shall  be  possessed  of  an  interest,  both  at  the  time  when  the 
insurance  is  effected  and  at  the  time  of  the  loss ;  ^  and  so 
strictly  is  this  principle  adhered  to,  that  no  recovery  can  be 
had  even  when  by  the  terms  of  the  policy  the  loss  is  payable 
to  a  third  person,  though  that  third  person  have  at  the  time  of 
the  loss  an  interest  in  the  property  insured.^  And  this  doc- 
trine was  early  applied  to  life  as  well  as  to  marine  and  fire 
policies.*  But  we  shall  see  hereafter  that,  as  to  life  policies, 
this  doctrine  has  undergone  some  modification. 

§  101.  Continuity.  —  It  has  also  been  said  that  the  interest 
should  remain  an  uninterrupted  interest  from  the  time  of  the 
insurance  to  the  time  of  the  loss,  so  that  if  the  insured,  at  any 
time  after  the  policy  is  taken  out,  parts  with  his  title,  though 
afterwards,  and  before  the  loss,  he  repurchase,  yet  the  policy 
will  not  attach,  and  the  insured  will  be  without  remedy.^  But 
in  the  absence  of  any  condition  against  alienation  which  avoids 
the  policy,  it  is  not  easy  to  see  how  the  insurers  can  be  preju- 
diced by  such  an  interruption  of  title,  since  for  so  long  a 
period  at  least  as  is  occupied  by  the  interruption  they  are  with- 
out risk,  and  at  no  time  do  they  incur  any  greater  hazard  than 
they  agree  to  assume,  whether  we  regard  the  property  upon 
which  the  risk  is  taken  or  the  person  in  behalf  of  whom  it  is 
taken.  The  insured  has  violated  no  stipulation  of  the  con- 
tract, the  insurer  has  not  been  prejudiced,  and  that  there  is 
nothing  incompatible  with  the  true  principles  of  insurance  in 
holding  the  insurer  responsible  after  such  an  interruption,  is 
shown  by  the  familiar  practice  of  insuring  stocks  in  trade, 
under  which  the  right  of  the  insured  to  sell  and  repurchase 

1  Phoenix  Ins.  Co.  v.  Hamilton,  Sup.  Ct.  U.  S.  2  Ins.  L.  J.  130. 

2  Lynch  v.  Dalzell,  3  Bro.  P.  C.  497;  Saddlers'  Co.  v.  Badcock,  2  Atk.  534; 
8.  c.  1  Wil.  10;  Howard  v.  Albany  Ins.  Co.,  3  Denio  (N.  Y.),  301;  Fowler  u. 
Indemnity  Ins.  Co.,  26  N.  Y.  422. 

8  Tallnian  v.  Atlantic  Fire  and  Mar.  Ins.  Co.,  29  How.  (N.  Y.  Pr.  R.)  71. 

*  Godsal  V.  Baldero,-9  East,  72. 

8  Cockerell  v.  Cincinnati  Ins.  Co.,  16  Ohio,  148, 


SUBJECT-MATTER   OF    THE   CONTRACT.  93 

the  same  stock,  or  a  substitute,  cannot  be  questioned. ^  And 
in  Rex  v.  Insurance  Companies,^  it  was  held  that,  when  a 
mortgagee  insured  his  interest,  which  was  based  upon  present 
and  contemplated  advances  to  the  mortgagor,  and  during  the 
currency  of  the  policy  the  earlier  advances  were  repaid  and 
new  ones  made,  the  policy  was  a  valid  security  for  such  ad- 
vances, within  the  amount  insured,  as  remained  unpaid  at  the 
time  of  the  loss.^  And  quite  recently,  in  a  case  in  Massachu- 
setts, tlie  case  of  Cockerell  v.  Cincinnati  Insurance  Company 
was  cited  in  argument,  and  its  doctrine  insisted  upon  as  the 
law.  The  facts  were  not  such  as  to  require  a  direct  ruling  on 
the  point,  but  if  they  had  been  there  can  be  no  doubt  that  the 
court  would  have  sustained  the  validity  of  the  policy.  The 
observations  of  the  court  in  the  case  are  so  pertinent,  and 
withal  so  weighty,  that  we  make  no  apology  for  giving  them 
in  full.  "  But  if  it  were  otherwise,"  says  Bigelow,  C.  J.,  who 
gave  the  opinion,  "  and  it  appeared  that  the  sale  of  the  vessel 
was  complete  and  absolute,  so  that  for  a  time  the  insured  had 
parted  with  his  insurable  interest,  his  right  to  recover  on  the 
policy  was  not  gone  for  ever.  It  was  only  suspended  during^ 
the  time  that  the  title  to  the  vessel  was  vested  in  the  vendee, 
and  was  revived  again  on  the  reconveyance  to  the  insured 
during  the  term  specified  in  the  policy.  The  insurance  was 
for  one  year.  There  was  no  stipulation  or  condition  in  the 
policy  that  the  insured  should  not  convey  or  assign  his  interest 
in  the  vessel  during  this  period.  The  contract  of  insurance 
was  absolute,  to  insure  the  interest  of  a  person  named  in  a 
particular  subject  for  a  specified  time ;  for  this  entire  risk  an 
adequate  premium  was  paid,  and  the  policy  duly  attached, 
because  the  assured  at  the  inception  of  the  risk  had  an  insur- 
able interest  in  the  policy.  So,  too,  at  the  time  of  the  loss,  all 
the  facts  necessary  to  establish  a  valid  claim  under  the  policy 
existed.  The  execution  of  the  policy,  the  interest  of  the 
assured  in  the  vessel,  tiie  due  inception  of  the  risk,  a  compli- 

1  Lane  v.  Maine  Mut.  Fire  Ins.  Co.,  3  Fairf.  (Me.)  44;  Wood  v.  Rutland  and 
Addison  Mut.  Fire  Ins.  Co.,  31  Vt.  (2  Shaw)  552. 
^  2  Pliila.  (Penn.)  357. 
^  See  also  2  Am.  Leading  Cases,  463. 


94  insurance:  fire,  life,  accident,  etc. 

ance  with  all  warranties,  expressed  and  implied,  and  the  loss 
by  a  peril  insured  against,  are  all  either  admitted  or  proved. 
Upon  what  legal  ground,  then,  can  it  be  maintained  that  the 
policy  has  become  extinct  ?     No  fact  is  shown  from  which  any 
inference  can  be  made  that  by  the  alienation  of  the  title  to 
the  vessel  during  the  time  named  in  the  policy,  the  risk  of  the 
insurers  upon  the  subsequent  retransfer  of  the  vessel  to  the 
assured  was   in    any   degree   increased   or   aflfected,  or   that 
any  loss,  injury,  or  prejudice  to  the  underwriter  was  occasioned 
by  the  fact  that  the  absolute  title  to  the  vessel  was  temporarily 
vested  in  a  third  person.     On  the  contrary,  such  temporary 
transfer  of   title  would  seem  rather  to   have  inured  to  the 
benefit  of  the  insurers,  because  they  have  received  a  premium 
for  a  risk  from  w^hich  they  were  exempted  during  a  portion  of 
the  time  designated  in  the  policy.     In  the  absence  of  any 
express  stipulation,  as  in  the  policy  declared  on,  no  return 
premium  could  be  claimed  by  the  assured  by  reason  of  any 
temporary  suspension  of  the  work  or  withdrawal  of  the  sub- 
ject insured.   The  policy  had  attached,  and  the  risk  was  entire. 
During  the  time  that  the  vessel  was  owned  by  a  person  other 
than  the  assured,  no  loss  could  happen  which  could  be  covered 
by  the  policy.    The  insured,  having  no  interest,  could  sustain  no 
loss.     If  a  total  loss  occurred  during  the  period,  the  insurable 
interest  would  become  extinct.     Upon  a  retransfer  of  title  to 
the  insured,  the  policy  would  revive  only  to  secure  the  renewed 
interest  thereby  acquired,  and  not  to  render  the  insurers  liable 
for  losses  which  may  have  happened  during  the  intermediate 
period.     The  sole  effect  would  be  to  suspend  the  risk  for  the 
time  during  which,  by  reason  of  the  transfer,  the  assured  had 
no  interest  in  the  subject  insured,  and  to  revive  it  as  soon  as 
the  original  interest  was  revested  in  him.    The  transfer  of  the 
vessel  rendered  the  policy  inoperative  and  not  void.     It  could 
have  no  effect  while  the  insured  had  no  interest  in  the  subject 
insured.    But  when  this  interest  was  revived  or  restored  during 
the  time  designated  in  the  policy,  without  any  increase  or 
change  of  risk  or  other  prejudice  to  the  underwriter,  there 
seems  to  be  no  valid  reason  for  holding  that  the  policy  has 
become  extinct.     Inasmuch  as  neither  the  subject  nor  the  per- 


SUBJECT-MATTER   OF   THE   CONTRACT.  95 

son  insured  is  changed,  and  the  risk  remains  the  same,  the 
intermediate  transfer  is  an  immaterial  fact  which  can  in  no  way 
affect  the  claim  under  the  policy. 

"  This  doctrine  is  not  only  consistent  with  sound  reason,  but 
it  is  in  accordance  with  the  analogies  of  the  law  of  marine 
insurance.  Risks  may  be  temporarily  suspended,  and  subse- 
quently revived,  without  invalidating  the  right  of  the  assured 
to  claim  under  the  policy.  Unseaworthiness,  after  the  policy 
has  attached,  if  imputable  to  the  neglect  or  other  fault  of  the 
assured,  will  suspend,  l)ut  not  destroy,  the  risk.  Restoration 
of  the  navigability  of  the  vessel  will  revive  the  right  of  the 
assured  to  claim  under  his  policy. ^  So  goods  insured  for  a 
voyage  which,  by  the  terms  of  the  policy  are  covered  only 
when  water-borne,  may  be  withdrawn  from  tlie  risk  while  tem- 
porarily placed  on  land,  but  the  policy  upon  them  will  revive 
when,  without  increase  of  risk,  they  are  again  put  on  board 
the  vessel.  In  these  and  like  cases,  the  principle  adopted  is, 
that  tlie  contract  of  insurance  is  not  violated,  or  the  right  of 
the  assured  to  claim  an  indemnity  affected,  by  the  existence 
of  a  state  of  facts  which  does  not  contravene  any  stipula- 
tion in  the  policy,  or  in  any  way  change  or  affect  the  risk,  or 
otherwise  work  any  injury  or  prejudice  to  the  rights  of  the 
insurer."  ^ 

So  a  violation  of  the  conditions  against  over  insurance  or 
sale,  and  upon  principle  any  like  condition,  non-existent  at  the 
time  of  the  loss,  does  not  work  a  forfeiture,  but  only  a  suspen- 
sion of  the  insurance  during  the  violation.^ 

§  102.  Life.  —  Within  the  present  century  it  was  made  a 
serious  question  in  one  of  the  most  learned  courts  of  this 

1  Taylor  v.  Lowell,  3  Mass.  331 ;  1  Phil.  Ins.  §  734. 

'  Worthington  v.  Bearse  et  al.,  12  Allen  (Mass.),  382.  The  learned  judge 
cites  also  Carroll  i'.  Boston  Mar.  Ins.  Co.,  8  Mass.  515  ;  Power  v.  Ocean  Ins. 
Co.,  19  La.  28  ;  Howard  v.  Albany  Ins.  Co.,  3  Denio  (N.  Y.),  301 ;  1  Phil.  Ins. 
§  89.  And  see  also  Hartford  Prot.  Ins.  Co.  v.  Harmer,  2  Ohio,  n.  s.  452 ;  and 
Hooper  v.  Hudson  River  Ins.  Co.,  16  Barb.  (N.  Y.)  413  ;  s.  c.  affirmed  in  Court 
of  Appeals,  17  N.  Y.  424. 

3  New  Eng.  Fire  and  Mar.  Ins.  Co.  r.  Schettler,  38  111.  166 ;  Obermeyer  v. 
Globe  Mat.  Ins.  Co.,  43  Mo.  573 ;  ilitchell  v.  Lycoming  Mut.  Ins.  Co.,  51  Penn. 
402  ;  Powers  v.  Ocean  Ins.  Co.,  19  La.  28;  Lane  v.  Maine  Mut.  Fire  Ins.  Co., 
3  Fairf.  (Me.)  44 ;  Morrison  v.  Tenn.  Mar.  and  Fire  Ins.  Co.,  18  Mo.  262. 


96  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

country,  in  a  case  of  novel  impression,  whether  one  person 
can  have  such  an  interest  in  the  preservation  of  the  life  of 
another  as  to  make  it  the  valid  basis  of  a  contract  of  insur- 
ance. But,  as  upon  well-settled  principles  of  law  all  contracts, 
fairly  made,  upon  a  valuable  consideration,  which  infringe  no 
law,  and  are  not  repugnant  to  the  general  policy  of  the  law, 
or  to  good  morals,  are  valid  and  may  be  enforced,  or  damages 
recovered  for  the  breach  of  them,  it  saw  no  reason  to  except 
the  contract  of  insurance  out  of  this  general  rule.  Prior  to 
this  decision,  the  insurance  of  lives  was  prohibited  in  several 
of  the  countries  of  Europe,  though  it  does  not  appear  that  the 
prohibition  rested  so  much  upon  the  absence  of  an  interest  to 
be  protected,  as  upon  some  vague  notion  that  it  is  indecorous 
to  attempt  to  set  a  price  upon  the  life  of  a  man.^ 

§  103.  Sister  in  Life  of  Brother.  —  But  in  this  very  early  case 
the  court  not  only  found  no  difficulty  in  holding  that  one  person 
may  have  an  insurable  interest  in  the  life  of  another,  but,  in 
determining  under  what  circumstances  that  interest  may  exist, 
laid  down  important  principles  which  have  since  been  generally 
approved,  and  led,  and  are  leading,  to  a  great  enlargement  of 
the  catalogue  of  insurable  interests.  In  that  case  the  policy 
was  effected  by  the  plaintiff  upon  the  life  of  her  brother,  who 
was  about  to  embark  on  a  voyage  to  South  America,  or  else- 
where, from  Boston.  The  insurance  was  for  five  thousand  dol- 
lars for  seven  months,  and  the  premium  paid  was  one  per  cent 
per  month.  The  plaintiff  was  a  young  female,  without  prop- 
erty, and  had  been  supported  and  educated  at  the  expense  of 
the  brother,  who  stood  toward  her  in  loco  parentis.  Nothing 
could  show  a  stronger  affection  of  a  brother,  said  the  court,  for 
a  sister,  than  that  he  should  be  willing  to  give  a  large  sum  to 
secure  her  against  the  contingency  of  his  death,  which  would 
otherwise  have  left  her  in  absolute  want,  and  no  one  could 
hesitate  to  say  that  in  the  life  of  such  a  brother  the  sister  had 
an  interest.  They  were  well  satisfied  that  tlie  interest  of  the 
plaintiff  in  that  case,  in  the  life  of  her  brother,  was  of  a  nature 
to  entitle  her  to  insure  it,  observing  that  the  interest  of  a  child 
in  the  life  of  a  parent,  except  the  insurable  one,  which  may 
I  Lord  V.  Dall,  12  Mass.  115.     Decided  in  1815. 


SUBJECT-MATTER   OF   THE   CONTRACT.  97 

result  from  the  legal  obligation  of  the  parent  to  save  the  child 
from  becoming  an  object  of  charity,^  is  as  precarious  as  that 
of  a  sister  in  the  life  of  an  affectionate  brother.  For  if  the 
brother  may  withdraw  all  support,  so  may  the  father,  except  as 
above  stated.  And  yet  a  policy  effected  by  a  child  upon  the 
life  of  a  father,  who  depended  upon  some  fund,  terminable 
by  his  death,  to  support  the  child,  would  never  be  questioned, 
although  much  more  should  be  secured  than  the  legal  interest 
which  the  child  had  in  the  protection  of  his  father. 

§  104.  Father  in  Life  of  Son.  —  As  to  what  constitutes  an 
insurable  interest  under  a  life  policy  we  may  observe,  as  has 
heretofore  been  observed  with  reference  to  fire  insurances,  that 
the  tendency  of  the  courts  has  been  from  strictness  to  liberal- 
ity. It  was  early  intimated,  if  not  expressly  held,  that  the 
Interest  must  be  a  pecuniary  interest,  and  therefore  a  father 
could  not  insure  the  life  of  his  son.  The  value  of  the  inter- 
est in  such  a  case,  said  the  court,  is  not  a  farthing.^  The  case 
was  that  of  a  minor  son,  upon  whose  arrival  at  his  majority 
depended  the  vesting  of  a  large  sum  of  money  under  a  settle- 
ment. The  insurance  was  for  two  years,  the  minor  being  nine- 
teen and  a  few  months  at  the  time  the  insurance  was  effected, 
and  the  object  was  to  guard  against  the  failure  of  the  settle- 
ment to  vest,  in  case  of  the  death  of  the  minor  before  his 
majority.  As  the  money  was  to  go  to  the  son  if  he  lived, 
doubtless  the  father  had  no  direct  pecuniary  interest  in  that. 
The  plaintiff  pressed  the  point,  however,  on  the  ground  that 
he  had  an  interest  in  the  services  of  his  son,  and  upon  the 
further  ground  that  in  case  of  need  the  son  would  be  bound 
to  support  him.  The  court  seemed  to  rely  upon  Innes  v.  The 
Equitable  Assurance  Company,  cited  by  Mr.  Justice  Bayley  as 
having  been  tried  beford  Lord  Kenyon,^  where  the  plaintiff,  in 

'  The  observation  of  Bayley,  J.,  in  Halford  v.  Kymer,  that  it  was  a  matter 
of  indifference  to  the  father  wliether  he  was  supported  bj'  the  son  or  by  the 
parish,  entirely  overlooked  tlie  ground  of  expectation  arising  out  of  affectiou 
and  filial  duty. 

2  Halford  i-.  Kymer,  10  B.  &  C.  725. 

3  This  case  is  not  reported,  but  it  is  referred  to  and  stated  most  fully  in  Lon. 
Law  Mag.  4,  373,  where  Lord  Tenterden  is  reported  to  have  said  at  the  argu- 
ment in  Halford  v.  Kymer,  that  they  could  not  give  judgment  for  the  plaintiff 
without  flying  in  the  teeth  of  the  case  tried  by  Lord  Kenyon. 

7 


98  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

order  to  show  an  interest  in  the  life  of  his  daughter,  offered  a 
will  by  which  he  was  to  receive  a  certain  sum  of  money  con- 
tingent upon  the  life  of  his  daughter.  The  will  was  proved 
to  be  a  forgery,  however,  and  apparently  the  defendants  had  a 
verdict  on  that  ground.  There  was  no  discussion  of  the  ques- 
tion whether  an  insurable  interest  existed  on  other  grounds, 
but,  as  Lord  Tenterden  says,  it  was  in  effect  admitted  in  that 
case  that  it  was  necessary  to  prove  that  the  father  had  a  pecu- 
niary interest  in  the  life  of  his  daughter. 

§  105.  But  the  law  has  been  held  differently  in  this  country, 
and  it  has  been  determined  that  though  a  father,  as  such,  may 
have  no  insurable  interest,  resulting  merely  from  that  relation, 
in  the  life  of  a  child  of  full  age,  yet  if  that  son  is  a  minor  of 
such  age  as  to  render  valuable  services,  and  to  whom  advances 
have  been  made,  there  can  be  no  doubt  of  the  father's  insurable 
interest  in  his  life.  The  father  is  entitled  to  the  earnings  of  such 
child,  and  may  maintain  an  action  for  their  recovery.  So  he  may 
maintain  an  action  for  the  loss  of  his  services  if  the  child  be 
injured.  Hence  he  has  a  pecuniary  interest  which  the  law 
will  protect  and  enforce.^  Nor  is  it  easy  to  see  why,  upon  the 
principles  laid  down  in  Lord  v.  Dall,  and  stated  in  the  plain- 
tiff's argument  in  Halford  v.  Kymer,^  by  reason  of  the  rela- 
tionship and  its  attendant  rights  and  obligations,  an  aged 
father,  no  longer  capable  of  self-support,  and  actually  sup- 
ported by  his  son  who  has  passed  his  majority,  and  who  both 
by  natural  affection  and  by  law  is  bound  to  contribute  to  his 
support,  has  not  an  insurable  interest  in  the  life  of  that  son. 
It  is  precisely  this  natural  affection,  combined  with  the  legal 
obligation  to  support,  which,  by  universal  consent,  gives  to  the 
child  an  insurable  interest  in  the  life  of  the  father.  A  son 
arrived  at  his  majority  may,  in  point  of  fact,  have  no  need  of 
his  father's  assistance,  but  the  legal  obligation  of  the  parent 
to  save  the  child  from  becoming  an  object  of  public  charity 
gives  to  the  child  an  insurable  interest  in  the  father.  The 
same  legal  obligation  of  the  child  towards  the  father  ought  to 
give  tlie  father  the  like  interest  in  the  life  of  the  child. 

1  Mitchell  V.  Union  Life  Ins.  Co.,  45  Me.  104. 

2  10  B.  &  C.  725. 


SUBJECT-MATTER   OF   THE   CONTRACT.  99 

§  106.  And  to  this  extent  the  following  comparatively  recent 
case  in  Massachusetts  would  seem  to  go,  though  it  was  not 
necessary  so  to  decide  upon  the  facts  in  the  case,  which  were 
as  follows :  — 

On  the  second  day  of  February,  1S49,  the  plaintiff's  intes- 
tate insured  for  seven  years  tlie  amount  of  seven  hundred  dol- 
lars on  the  life  of  a  minor  son  who  was  about  to  proceed  to 
California,  and  who  would  become  of  age  on  the  sixth  day  of 
the  following  January.  The  wages  of  the  son  had  been  taken 
by  the  father  and  appropriated  to  the  support  of  the  family. 
It  was  agreed  between  the  son  and  a  third  person  who  had 
advanced  him  money  with  which  to  prosecute  the  enterprise 
that  that  third  person  should  receive  one-half  his  net  earnings. 
To  this  agreement  the  father  assented  ;  he  also  provided  an 
outfit  for  the  son.  The  son  died  on  board  ship  on  the  first 
day  of  December,  1849,  soon  after  his  arrival  in  California. 
It  was  objected  that  the  father  had  no  pecuniary  interest  at  the 
time  the  policy  was  made,  and  no  insurable  interest  at  the  time 
of  his  son's  death.  "  We  understand,"  said  the  court,  "  that 
the  law  of  Connecticut,  where  the  parties  resided,  is  similar  to 
that  of  Massachusetts,  and  that  by  the  law  of  both  States  a 
father  who  supports,  maintains,  and  educates  a  son  under 
twenty-one  years  of  age,  and  not  emancipated,  is  entitled  to 
the  earnings  of  such  son,  and  may  maintain  an  action  for 
tliem.  Here,  where  the  father  had  in  terms  relinquished  his 
right  to  a  share  in  the  son's  earnings  for  a  valuable  stipulation 
on  the  other  side,  designed  and  intended  to  increase  those  earn- 
ings, by  a  necessary  implication  he  reserved  his  right  to  the 
other  share  of  those  earnings.  According  to  any,  the  strictest, 
rule  of  construction,  the  assured,  we  think,  had  a  direct  and 
pecuniary  interest  in  the  life  of  the  cestui  que  vie,  his  son.  It 
is  argued  that  the  time  which  would  remain  after  his  probable 
arrival  in  California,  before  becoming  of  age,  would  be  so  short 
that  his  earnings,  if  any  thing,  would  be  very  small.  Supposing 
he  was  to  have  a  passage  of  three  or  five  months,  he  might  still- 
have  five  or  six  months  to  work  in  California ;  and  this  being 
a  contract  dealing  with  chances  and  probal)ilities,  and  even 
possibilities,  and  to  be  construed  as  such,  it  may  well  be  sup- 


100  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

posed  that  the  parties  had  it  in  contemplation,  that,  by  work- 
ing a  few  weeks  or  days  in  a  gold  mine,  or  by  a  lucky  hit  in 
a  single  day,  he  might  gain  gold  enough  to  make  his  share 
exceed  the  whole  sum  insured.  But  nearness  or  remoteness 
of  this  chance  is  immaterial ;  the  parties  regulate  this  matter 
for  themselves,  in  fixing  the  sum  to  be  insured  and  the  rate  of 
premium.  It  seems  to  us,  therefore,  that,  according  to  the 
rule  relied  on  by  the  defendants,  the  assured  in  the  present 
case  had  a  direct  and  pecuniary  interest  in  the  life  of  the  son, 
sufficient  to  enable  him  to  maintain  this  action. 

But,  upon  broader  and  larger  grounds,  we  are  of  opinion 
that,  independently  of  the  fact  that  the  son  was  a  minor,  and 
the  assured  had  a  pecuniary  interest  in  his  earnings,  the  as- 
sured had  an  insurable  interest  sufficient  to  maintain  this 
action. 

The  case  in  this  State  must  be  governed  by  the  rules  and 
principles  of  the  common  law,  there  being  no  regulation  of  the 
subject  by  statute  ;  and  the  statute  of  14  Geo.  3,  c.  48,  passed 
about  the  time  of  the  commencement  of  the  Revolution,  never 
having  been  adopted  in  this  State.  All  therefore  which  it 
seems  necessary  to  show,  in  order  to  take  the  case  out  of  the 
objection  of  being  a  wager  policy,  is  that  the  insured  has  some 
interest  in  the  life  of  the  cestui  que  vie ;  that  his  temporal 
affairs,  his  just  hopes,  and  well-grounded  expectations  of  sup- 
port, of  patronage  and  advantage  in  life  will  be  impaired  ;  so 
that  the  real  purpose  is  not  a  wager,  but  to  secure  such  advan- 
tages, supposed  to  depend  upon  the  life  of  another ;  such,  we 
suppose,  would  be  sufficient  to  prevent  it  from  being  regarded 
as  a  wager.  Whatever  may  be  the  nature  of  such  interest, 
and  whatever  the  amount  insured,  it  can  work  no  injury  to  the 
insurers,  because  the  premium  is  proportioned  to  the  amount ; 
and  whether  the  insurance  be  to  a  large  or  small  amount,  the 
premium  is  computed  to  be  a  precise  equivalent  for  the  risk 
taken.  Perhaps  it  would  be  difficult  to  lay  down  any  general 
rule  as  to  the  nature  and  amount  of  interests  which  the  assured 
must  have.  One  thing  may  be  taken  as  settled,  that  every 
man  has  an  interest  in  his  own  life  to  any  amount  at  which  he 
chooses  to  value  it,  and  may  insure  it  accordingly. 


SUBJECT-MATTER   OF   THE   CONTRACT.  lOl 

We  cannot  doubt  that  a  parent  has  an  interest  in  the  life 
of  a  child,  and,  vice  versa,  a  child  in  the  life  of  a  parent ;  not 
merely  on  the  ground  of  a  provision  of  law  that  parents  and 
grandparents,  children  and  grandchildren,  are  bound  to  sup- 
port their  lineal  kindred  when  they  stand  in  need  of  relief, 
but  upon  considerations  of  strong  morals  and  the  force  of 
natural  affection  between  near  kindred,  operating  often  more 
efficaciously  than  those  of  positive  law.^ 

§  107.  Still  it  may  not  be  safe  to  conclude  from  the  cases 
just  stated  to  the  general  propositions  that  a  father  may  insure 
the  life  of  any  minor  child,  and  that  a  sister  may  insure  the 
life  of  any  brother.  In  one  case,-  in  reply  to  the  objection 
that  the  policy  was  unsupported  by  any  insurable  interest, 
evidence  was  offered  that  tiie  father  had  furnished  supplies 
and  money  to  his  son  who  was  about  to  proceed  to  California, 
and  the  fact  of  these  advances  seems  to  have  been  regarded 
by  the  court  as  a  matter  of  significance.  In  another  case,^ 
substantially  the  same  facts  existed,  with  the  additional  fact 
that  the  father  had  usually  received  the  earnings  of  his  son, 
and  had  specially  reserved  a  portion  of  them  during  the  cur- 
rency of  the  policy.  Upon  this  latter  fact  the  court  laid  con- 
siderable stress,  and  held  only  that  in  that  case  the  plaintiff 
had  an  insurable  interest.  In  the  third  case,*  the  court  em- 
phasize the  fact  that  the  sister  had  been  supported  and  edu- 
cated by  the  brother,  and  add  that  no  one  would  hesitate  to 
say  that  in  the  life  of  such  a  brother  the  sister  had  an  interest. 
And  afterwards,""  in  speaking  of  Lord  v.  Dall,  the  same  court 
say  that  that  case  held  that  the  insurable  interest  might  he 
inferred  from  particular  circumstances.  So  that  it  is  by  no 
means  certain  that  were  the  circumstances  different,  as,  for 
instance,  if  the  father  were  to  insure  for  one  year  the  life 

1  Loorais,  Adm'r  v.  Eagle  Life  and  Health  Ins.  Co.,  6  Gray  (Mass.),  396. 
Opinion  per  Shaw,  C.  J.  Hoyt  v.  New  York  Life  Lis.  Co.,  3  Bosw.  (N.  Y. 
Superior  Ct.)  440;  Miller  v.  Eagle  Life  and  Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y. 
C.  P.)  268. 

2  Mitcliell  V.  Union  Life  Ins.  Co.,  45  Me.  104. 

3  Loomis,  Adm'r  v.  Eagle  Life  and  Health  Ins.  Co.,  6  Gray  (Mass.),  396. 
*  Lord  V.  Dall,  12  Mass.  115. 

6  Loomis,  Adm'r  v.  Eagle  Life  and  Health  Ins.  Co.,  ubi  sup. 


102  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

of  an  infant  son,  or  if  the  son  were  to  insure  the  life  of  a  de- 
crepit and  pauper  father,  or  a  sister  were  to  insure  the  life  of 
a  brother  incapable  or  indisposed  to  assist  her,  there  being  in 
either  case  no  well-founded  expectation  of  pecuniary  advantage 
from  the  continuance  of  the  lives,  or  risk  of  loss  from  their 
termination,  it  may  well  be  doubted  if  the  courts  would  see  in 
such  circumstances  any  interest  which  would  support  a  policy. 
The  relationship,  therefore,  seems  to  be  of  little  importance, 
except  as  tending  to  give  rise  to  the  circumstances  which  jus- 
tify the  expectation.  Indeed,  the  doctrine  of  the  latest  of  the 
Massachusetts  cases  before  cited  is  broad  enough  to  cover  a 
case  where  there  is  no  relationship  at  all,  save  one  perhaps 
of  mere  friendship,  if  the  circumstances  are  such  as  to  show 
that  the  loss  of  the  insured  life  will  probably  result  in  pecun- 
iary disadvantage  to  the  persen  procuring  the  insurance. 
Upon  the  whole,  however,  it  yet  remains  to  be  decided 
whether  mere  relationship,  with  its  attendant  rights  and  obli- 
gations, as  between  father  and  son  reciprocally,  is  a  sufficient 
foundation  upon  which  to  rest  an  insurable  interest.  And  in 
a  still  later  case,^  it  is  said  that  "  the  question,  what  is  such 
an  interest  in  the  life  of  another  as  will  support  a  contract  of 
insurance  upon  the  life,  is  one  to  which  a  complete  and  satis- 
factory answer,  resting  upon  sound  principles,  can  hardly  yet 
be  said  to  have  been  given  ; "  and  it  is  added  that  "  as  the  pre- 
mium is  intended  to  be  a  precise  equivalent  for  the  risk  taken, 
it  would  seem  that  the  contract  is  a  just  and  equitable  one 
whether  any  interest  in  the  life  exists  or  not ;  and  tliat  the 
only  essential  inquiry  is,  whether  the  object  of  the  contract 
is  such  as  to  obviate  the  objections  to  a  mere  wager  upon  the 
chances  of  human  life." 

Wife  in  Husband.  —  Of  course,  and  for  similar  reasons,  the 
wife  has  an  insurable  interest  in  the  life  of  her  husband.  And 
it  has  been  held  that  a  divorce  obtained  at  the  instance  of  the 
wife,  for  whose  benefit  the  life  of  the  husband  has  been  in- 
sured, will  not  deprive  the  wife,  who  has  children  and  supports 
them,  of  a  right  to  recover.  The  insurable  interest  remains 
sufficient  to  support  the  policy.     Although  divorced,  the  chil- 

1  Forbes  v.  American  Mut.  Life  Ins.  Co.,  15  Gray  (Mass.),  249. 


SUBJECT-MATTER   OF   THE    CONTRACT.  103 

dreii  whom  she  is  supporting  may  look  to  the  father  for  sup- 
port. That  the  care  and  custody  of  the  children  are  decreed 
to  her  does  not  extinguish  the  obligation  of  the  father  to  pro- 
Tide  for  them.  And  he  also  may  be  required  by  the  court  to 
contribute  by  way  of  alimony,  or  otherwise,  to  the  support  of 
his  former  wife.^  And  it  seems  that  a  woman  living  unlaw- 
fully with  a  man,  as  his  wife,  and  treated  and  supported  by 
him  as  such,  has  an  insurable  interest  in  liis  life.^ 

§  108.  Creditor  in  Debtor.  —  That  a  creditor  has  an  insurable 
interest  in  the  life  of  his  debtor  was  adjudged  in  a  very  early 
case.  The  means  by  which  the  debt  is  to  be  satisfied  may 
very  materially  depend  upon  tlie  continuance  of  the  life  of  the 
debtor,  and  at  all  events  the  death  of  the  debtor  must  in  all 
cases  in  some  degree  lessen  the  chances  of  payment.^  The 
point  was  made  also  in  a  very  early  case  that,  if  the  debtor 
was  an  infant  who  might  interpose  as  against  his  creditor  the 
plea  of  infancy,  this  contingency  took  the  debt  out  of  the  cate- 
gory of  insurable  interests.  But  though  the  point  was  not 
decided,  it  was  strongly  intimated  that  the  debt,  till  avoided, 
must  be  taken  as  the  debt  of  an  adult,  as  against  a  third 
person,  since  the  debtor  only  could  take  the  objection.*  The 
debt  is  not  void,  but  only  voidable,  and  if  for  necessaries  not 
even  that.°  Upon  the  same  principles,  if  the  debt  be  one  to 
which  the  Statute  of  Limitations  might  be  pleaded  at  the  time 
of  the  death  of  the  debtor,  it  nevertheless  constitutes  an  inter- 
est which  will  support  a  policy.  The  debt  still  exists.  It  is  not 
extinguished  by  the  currency  of  the  statute,  as  in  the  case  of 
payment.  It  may  be  revived  by  a  new  promise,  and  indeed 
without  such  promise,  be  enforced  by  action,  unless  the  defence 
of  the  statute  be  interposed.  The  law  does  not  presume  that 
a  new  promise  will  be  refused  or  the  defence  of  the  statute  in- 
terposed.*'   And  there  can  be  no  doubt  that  the  same  would  be 

1  McKee  v.  Phoenix  Ins.  Co.,  28  Mo.  383. 

2  Equitable  Life  Assurance  Soc.  v.  Patterson,  41  Ga.  338. 
s  Anderson  v.  Edie,  Park,  Ins.  432. 

*  Dwyer  V.  Edie,  Park,  Ins.  432. 

5  Givens,  Adm'r  v.  Rivers,  5  Rich.  Eq.  (S.  C.)  274. 

6  Rawls  V.  American  Mut.  Life  Ins.  Co.,  27  N.  Y.  (13  Smith)  282,  affirming 
8.  c.  36  Barb.  (N.  Y.)  357.    And  see  post,  §  117  n. 


104  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

the  case,  though  the  statute  had  run  against  the  debt  at  the 
time  of  the  insurance,  and  for  the  same  reasons. 

§  109.  The  Hfe  of  a  debtor  may  be  insured  in  two  ways. 
The  debtor  may  insure  to  an  amount  beyond  the  debt  for  the 
benefit  of  his  creditor,  and  payable  in  case  of  loss  to  the  cred- 
itor, in  trust,  first  to  pay  the  debt,  and  then  to  pay  the  balance 
to  such  parties  as  the  debtor  may  designate ;  ^  or  the  creditor 
may  insure  the  life  of  his  debtor  to  the  amount  of  the  debt, 
payable  to  himself  in  case  of  loss.  And  the  creditor  may 
insure  the  life  of  one  of  two  joint  makers  of  a  note,  although 
the  other  be  entirely  able  to  pay  the  debt,  and  the  estate  of 
the  insured  be  solvent ;  and  he  may  recover  the  whole  amount 
insured.^  And  if  the  creditor  be  a  firm  and  the  debtor  be  a 
firm,  each  member  of  the  creditor  firm  has  an  insurable  inter- 
est in  the  life  of  each  member  of  the  debtor  firm.^ 

Partner  in  Copartners.  —  A  case  of  some  novelty  in  its  facts 
has  been  before  the  courts  of  New  York,  recognizing  an  insur- 
able interest  in  services  agreed  to  be  rendered.  Three  persons 
entered  into  a  copartnership,  two  of  them  putting  in  the  cash 
capital,  and  the  third,  who  understood  the  business,  putting 
in  his  skill  as  against  the  capital  of  the  other  two.  And  it 
was  held  that  the  two  putting  in  their  capital  had  an  insurable 
interest  in  the  life  of  the  other,  as  his  death  would  deprive 
them  of  his  skill  and  services  contributed  to  the  common  stock 
in  lieu  of  cash  capital.*^ 

Interest  in  Future  Earnings  of  the  Insured  under  a  Contract.  — 
Somewhat  analogous  to  the  relation  of  debtor  and  creditor  is 
that  of  a  party  who  advances  funds  to  another  to  enable  him 
to  prosecute  an  enterprise,  under  the  agreement,  that  the 
party  so  advancing  the  funds  shall  be  entitled  in  consideration 
therefor,  to  a  portion  of  the  profits  of  the  enterprise  accruing 
within  a  certain  time.    Here  there  is  no  debt,  but  only  an  obli- 

1  American  Life  and  Health  Ins.  Co.  v.  Robertshaw,  26  Penn.  (2  Casey)  189. 

2  Morrell  v.  Trenton  Mut.  Life  and  Fire  Ins.  Co.,  10  Cush.  (Mass.)  282. 

3  Rawls  V.  American  Life  Ins.  Co.,  36  Barb.  (N.  Y.)  347 ;  s.  c.  27  N.  Y.  (13 
Smith)  282. 

*  Yalton  V.  National  Loan  Fund  Life  Assurance  Soc,  22  Barb.  (N.  Y.)  9. 
The  case  subseqiiently  went  to  the  Court  of  Appeals  (20  N.  Y.  32),  where  the 
judgment  of  the  court  below  was  afl&rmed. 


SUBJECT-MATTER   OF   THE    CONTRACT.  105 

gation  to  pay  over  a  portion  of  the  profits  earned  witliin  a  cer- 
tain period,  if  any  shall  be  earned.  This  kind  of  contract  was 
frequent  in  the  early  days  of  the  Californian  gold  excitement, 
and  it  has  been  frequently  held,  that  such  a  contract  gave  the 
party  furnishing  the  advance  and  outfit,  an  insurable  interest 
in  the  life  of  the  person  who  was  to  prosecute  the  enterprise.^ 
The  amount  of  the  insurable  interest  in  such  cases  must  be 
left  to  the  determination  of  the  parties.  It  does  not  depend 
at  all  upon  the  amount  of  advances  and  the  cost  of  outfit. 
Of  course  the  amount  of  earnings  or  profits  which  may  be 
earned  in  such  cases  ts  wholly  conjectural,  and  whatever  the 
amount  agreed  upon  by  the  parties  in  good  faith  may  be,  this 
will  be  taken  to  be  the  value  of  the  interest  in  case  of  loss,  as 
upon  a  valued  policy,  which  the  plaintiff  will  be  entitled  to 
recover.  There  seems  to  be  no  limit  to  the  amount  which 
may  be  fixed  as  the  value  of  the  loss.  If  the  party  effecting, 
the  insurance,  under  the  influence  of  exaggerated  expectations, 
is  desirous  to  fix  the  prospective  profits  at  a  larger  sum,  and 
is  willing  to  pay  proportionably  in  the  shape  of  premiums, 
there  seems  to  to  be  no  reason  why  the  insurers  should  not 
accept  the  obligation.  It  is  the  same  thing  to  them,  so  far 
as  the  risk  is  concerned,  whether  they  take  a  small  risk  or  a 
large  one,  except  that,  if  there  is  a  profit  on  the  small  one, 
there  will  be  a  proportionably  greater  profit  on  the  larger 
one.2  It  may  be  presumed,  however,  that,  if  the  valuation 
should  be  fixed  at  so  large  a  sum  as  to  warrant  the  belief  that 
the  transaction  was  merely  a  cover  and  with  intent  to  evade 
the  law,  the  courts  would  hold  such  a  policy  void  as  a 
wager.3  jf  [^  \)q  objected  that  such  an  interest  is  analogous  to 
the  case  of  expected  profits,  and  that  such  are  not  insurable 
unless  insured  specifically,  it  is  to  be  replied  that  an  insurance 

1  Bevin  v.  Connecticut  Mut.  Life  Tns.  Co.,  23  Conn.  244 ;  Morrell  v.  Trenton 
Mut.  Life  and  Fire  Ins.  Co.,  10  Cush.  (Mass.)  282;  Hoyt  v.  New  York  Life  Ins. 
Co.,  3  Bosw.  (N.  Y.  Sup.  Ct.  440;  Miller  v.  Eagle  Life  and  Health  Ins.  Co., 
2  E.  D.  Smith  (N.  Y.  City  C.  P.),  168 ;  Trenton  Mut.  Life  and  Fire  Ins.  Co.  v. 
Johnson,  4  Zab.  (N.  J.)  577. 

2  Ibid. 

8  Miller  v.  Eagle  Life  and  Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y.  C.  P), 
296.     And  see  also  Wainwright  v.  Bland,  1  Moody  &  Rob.  481. 


106  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

upon  a  life  is  not  an  insurace  of  the  life ;  it  is  rather  an  insur- 
ance of  the  benefits  to  result  to  the  insured  from  the  continu- 
ance of  the  life.  These  are  all  that  render  the  life  valuable 
to  him.  No  pecuniary  value  can  be  set  upon  the  life  as  upon 
property.  Life  cannot  be  the  subject  of  valuation  and  sale. 
Labor  a'nd  services,  or  the  proceeds  thereof,  may  be.  A  wife 
recovers  upon  an  insurance  on  her  husband's  life,  in  view  of 
the  benefits  to  result  to  her  from  the  continuance  of  his  life ; 
not  because  the  life  is  of  any  value,  irrespective  of  its  devotion 
to  her  support  and  maintenance.  A  creditor  recovers  upon 
the  death  of  his  debtor,  not  because  the  life  of  the  deceased 
was  worth  the  amount  of  the  debt,  but  because  the  expectation 
of  payment  of  the  debt  is  destroyed  or  impaired  by  the  death. 
The  insurance  upon  a  life  is,  in  itself,  in  the  nature  of  an 
insurance  upon  profits.  The  very  idea  of  a  pecuniary  interest 
•  in  the  life  of  another  involves  a  claim,  not  to  the  life  itself, 
but  to  some  benefit  resulting  from  or  growing  out  of  that  life, 
and  —  except  in  the  case  of  an  annuity,  derivable  from  some 
other  source,  but  to  endure  only  while  the  life  shall  continue  — 
it  involves  also  a  claim  upon  the  profits  or  proceeds  accruing 
from  the  employment  and  efforts  of  the  person  whose  life  is 
the  subject  of  the  insurance.  An  insurance,  therefore,  upon 
the  profits  of  a  life  specifically,  would  involve  no  idea  that  is 
not,  from  the  necessity  of  the  case,  embraced  in  an  insurance 
in  terms  upon  the  life  itself.^ 

Employes  in  Employer.  —  It  is  a  very  common  thing  in 
England  for  a  clerk  to  insure  the  life  of  his  master.^  If  the 
clerk  has  a  contract  for  service  for  a  number  of  years  at  an 
annual  salary,  he  has  an  insurable  interest  in  the  life  of  his 
employers  to  the  amount  which  will  be  payable  to  him  for  the 
unexpired  portion  of  his  term,  provided  he  continue  in  the  ser- 
vice.^ It  so  happened  that  in  the  last  cited  case  the  clerk 
stood  in  the  relation  of  a  debtor  to  his  employer,  and  his 
employer  having  promised  that  while  he  lived  the  clerk  should 

1  Per  Woodruff,  J.,  Miller  v.  Eagle  Life  and  Health  Ins.  Co.,  2  E.  D.  Smith 
N.  Y.  C.  P.),  268. 

2  Per  Mellor,  J.,  in  Hebdon  v.  West,  8  Best  &  Smith,  578. 
8  Hebdon  v.  West,  3  Best  &  Smith,  578. 


SUBJECT-MATTER   OF   THE   CONTRACT.  107 

not  be  called  upon  to  pay,  a  policy  of  insurance  on  the  life  of 
the  creditor  was  taken  out  by  his  debtor  to  the  amount  of  the 
debt.  But  the  court  said  that  this  interest  in  the  life  of  the 
creditor  was  only  an  expectation  that  he  would  not  call  for 
the  debt.  It  was  a  possibility  of  forbearance,  an  attempt 
to  embrace  the  chance  that  the  creditor  would  not  do  what  he 
might  do  the  day  after  the  engagement  was  made,  presenting 
a  contingency  not  easily  susceptible  of  pecuniary  estimation, 
and  they  did  not  think  that  such  a  promise,  without  any  con- 
sideration, or  any  circumstances  to  make  it  in  any  way  bind- 
ing, could  be  considered  a  pecuniary,  or  even  an  appreciable, 
interest.^  So  a  master  has  an  insurable  interest  in  the  life  of  a 
servant,  to  whose  services  he  has  a  legal  claim.- 

§  110.  Interest  of  Assignee.  —  The  general  rule  recognized  by 
the  courts  is,  that  no  one  can  have  an  insurance  upon  the  life 
of  another  unless  he  has  an  interest  in  the  continuance  of  the 
life.  To  hold  otherwise  would  be  contrary  to  the  general 
policy  of  the  law  respecting  insurance,  in  that  it  may  lead  to 
gambling  or  speculating  contracts  upon  the  chances  of  human 
life.  And  although  when  the  contract  between  the  insured 
and  the  insurers  is  expressed  to  be  for  the  benefit  of  another, 
or  is  made  payable  to  another  than  the  representative  of  the 
insured,  or  an  assignment  to  such  other  person  is  assented  to 
by  the  insurers,  the  contract  may  be  sustained ;  yet,  if  the 
assignee  has  no  interest  in  the  life  of  the  subject  of  the  insur- 
ance which  would  sustain  a  policy  to  himself,  the  assignment 
would  only  take  effect  as  a  designation,  by  mutual  agreement 
of  the  contracting  parties,  of  the  person  who  should  be  enti- 
tled to  receive  the  proceeds,  when  due,  instead  of  the  personal 
representatives  of  the  insured.  And  if  it  should  appear  that 
the  arrangement  was  a  cover  for  a  speculating  risk,  contraven- 
ing the  general  policy  of  the  law,  it  would  not  be  sustained. 
The  purpose  of  the  clause  in  the  policy,  forbidding  assign- 
ments without  the  assent  of  the  company,  is  undoubtedly  to 
guard  against  the  increased  risks  of  speculating  insurance. 

1  Hebdon  v.  West,  3  Best  &  Smith,  578. 

2  INliller  v.  Eagle  Life  and  Health  Ins.  Co.,  2  E.  D.  Smith  (X.  Y.  City  C.  P.), 
268. 


108  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

The  insurers  are  entitled  to  the  full  benefit  of  such  a  pro- 
vision, as  a  matter  of  contract;  and,  as  the  policy  of  the  law- 
accords  with  its  purpose,  the  court  will  not  regard  with  favor 
any  rights  sought  to  be  acquired  in  contravention  of  the  pro- 
vision.^ 

§  111.  Trustee.  —  A  peculiar  case,  involving  the  question  of 
what  constitutes  an  insurable  interest,  arose  under  the  follow- 
ing circumstances :  A.,  upon  his  marriage,  gave  a  bond  to 
secure  £5,000  to  his  intended  wife.  Several  years  after  the 
marriage,  A.  being  in  difficulties  and  unable  to  perform  his 
bond,  it  was  arranged  that  his  wife  should,  out  of  her  private 
income,  keep  up  certain  policies  to  be  effected  on  A.'s  life,  in 
which  he  was  to  have  no  further  interest  than  to  carry  out  his 
bond.  In  pursuance  of  this  arrangement  A.  insured  his  life 
by  a  policy,  one  of  the  conditions  of  which  provided  that  poli- 
cies effected  by  persons  on  their  own  lives,  who  should  die  by 
their  own  hands,  shall  be  void  so  far  as  regards  the  execu- 
tors or  administrators  of  the  person  so  dying,  but  should 
remain  in  force  only  to  the  extent  of  any  bond  fide  interest 
acquired  by  any  other  person  under  an  actual  assignment  by 
deed  for  a  valuable  consideration  in  money,  or  by  virtue  of 
any  legal  or  equitable  lien  as  a  security  for  money,  upon  proof 
of  the  extent  of  such  interest  being  given  to  the  directors  to 
their  satisfaction.  The  policy,  together  with  the  bond  for 
.£5,000,  was,  immediately  on  its  being  effected,  handed  over  to 
T.,  as  a  trustee  for  A.'s  wife,  in  whose  hands  they  always 
remained.  A.'s  wife  paid  the  premiums  upon  the  policy  in 
pursuance  of  the  arrangement.  A.  died  by  his  own  hands, 
and  a  claim  was  made  upon  the  insurance  office  by  his  execu- 
tors for  the  amount  of  the  policy,  which  was  resisted.  But  it 
was  held  that  T.  had  a  bona  fide  interest  in  the  policy  by  virtue 
of  an  equitable  lien  as  a  security  for  money  within  the  mean- 
ing of  the  condition,  and  that  the  executors  of  A.  were  there- 
fore entitled  to  recover.^ 

§  112.  Interest  of  Payee  or  Beneficiary.  —  Whether,  where  a 
party  effects  an  insurance  on  his  own  life,  for  the  benefit  of 

1  Stevens,  Adm'r  v.  Warren,  Adm'r,  101  Mass.  566. 

2  Moore  v.  Woolsey,  28  Eug.  L.  &  Eq.  248. 


SUBJECT-MATTER   OF   THE   CONTRACT.  109 

another  who  pays  the  premiums,  the  policy  is  a  valid  one  has 
been  doubted,  but  tlie  weight  of  authority  seems  to  be  in  favor 
of  the  validity.^  In  Forbes  v.  American  Mutual  Life  Insur- 
ance Company ,2  the  insured  took  out  a  policy  upon  liis  own 
life  payable  to  his  sister's  husband,  paying  the  first  premium 
himself,  and  the  subsequent  ones  through  the  husband  as  his 
agent.  The  policy  stipulated  that  "  policies  made  payable  to 
creditors  or  persons  not  belonging  to  the  family  of  the  person 
whose  life  is  insured,  are  subject  to  proof  of  interest."  The 
court  were  inclined  to  the  opinion  that  even  under  these  con- 
ditions the  plaintiff  would  be  entitled  to  recover,  though  the 
point  was  not  decided,  since  it  was  not  raised  by  the  pleadings. 
It  was  only  held  that  there  was  an  interest  to  support  the 
policy.^ 

§  113.  Beneficiary's  Name  must  Appear. —  So  in  England,  under 
statute,  14  Geo.  3,  c.  48,  the  name  of  the  beneficiary  must 
appear  in  the  policy,  as  affirmed  by  the  following  case :  The 
plaintiff  married  a  wife  who  was  a  minor,  and  who  was  enti- 
tled to  a  legacy  on  arriving  at  her  majority.  The  plaintiff 
asked  the  trustees  to  advance  money  in  anticipation,  to  which 
they  consented  if  A.  would  become  surety.  This  A.  consented 
to  do  if  the  plaintiff  would  insure  his  wife's  life.  At  plaintiff's 
suggestion  the  wife  insured  her  life  in  her  own  name,  without 
mention  that  any  one  else  had  an  interest  in  the  policy.  This 
was  held  void  under  the  statute  14  Geor.  3,  c.  48,  which  re- 
quires the  name  of  the  person  interested  in  the  policy,  or  for 
whose  use  or  benefit,  or  on  whose  account  the  policy  is  taken 
out',  as  the  purpose  of  the  policy  was  to  protect  the  surety. 
Although  the  wife  might  have  an  ultimate  interest,  the  interest 
of  the  surety  at  the  time  of  the  insurance  was  clear,  and  it 
should  have  been  so  stated.  And  so  also  should  the  husband's 
name  have  appeared  as  a  beneficiary.^ 

1  Wainwright  v.  Bland,  1  Moo.  &  Rob.  481 ;  s.  c.  1  Mees.  &  Wels.  32;  Lord  v. 
Dall,  12  Mass.  115 ;  Hogle  v.  Guardian  Life  Ins.  Co.,  6  Robt.  (N.  Y.)  567 ;  Val- 
ton  V.  National  Loan  Fund  Life  Assurance  Soc,  22  Barb.  (N.  Y.)  9  ;  s.  c.  oq 
Appeal,  20  N.  Y.  32 ;  Rawls  v.  Amer.  Mut.  Life  Ins.  Co.,  27  N.  Y.  282. 

2  15  Gray  (Mass.),  249. 

'  Stevens  v.  Warren,  101  Mass.  664. 

*  Evans,  Adm'r  v.  Bignold,  20  L.  T.  (n.  8.)  669. 


110  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

§  114.  Life  Policy  generally  a  Valued  PoUcy.  —  A  life  policy  IS 
almost  always  a  valued  policy,^  but  not  necessarily  so.  Thus 
Bruce  v.  Garden  ^  was  the  case  of  an  insurance  by  a  creditor 
who  had  a  running  and  constantly  varying  account  with  his 
delator,  to  secure  liimsclf  against  loss  of  the  balance  which 
might  at  any  time  be  due  him.  Of  course  in  such  a  case  the 
measure  of  damages  is  the  amount  which  may  be  found  to  be 
due  at  the  death  of  the  debtor,  a  loss  which  is  to  be  deter- 
mined by  proof  as  in  other  cases  of  open  policies.  There 
were  several  policies  in  this  case  amounting  to  much  more 
than  the  offices  paid.  What  was  paid  was  the  actual  amount 
of  the  balance  found  due  at  the  time  of  the  decease. 

§  116.  We  have  said  that  the  general  doctrine  was,  that  in 
life  as  well  as  in  fire  and  marine  insurance  there  must  be  an 
interest  at  the  time  of  the  loss  as  well  as  at  the  time  of  insur- 
ance in  order  to  support  the  policy.^  But  more  recently  this 
subject  has  received  a  very  careful  consideration  in  the  Ex- 
chequer Chamber,  resulting  in  the  conclusion  that  the  doc- 
trine for  which  Godsall  v.  Boldero*  has  been  constantly 
referred  to  as  an  authority  —  that  there  must  be  an  insurable 
interest  in  the  holder  of  the  policy  at  the  time  of  tlie  loss  as 
well  as  at  the  time  of  effecting  the  insurance  —  is  not  sound 
law,  as  applicable  to  life  policies.^  Tiie  question  in  this  case, 
it  being  admitted  that  the  plaintiff  had  no  interest  at  the  time 
of  the  death,  was  upon  the  construction  of  the  statute,  14 
Geo.  3,  c.  48 ;  as,  independently  of  the  statute,  there  could  be 
no  doubt  that  a  life  policy,  without  any  interest  to  support  it, 
was  a  perfectly  legal  contract.^  And  so  it  is  to  this  day  in 
Ireland  where  the  statute,  14  Geo.  3,  c.  48,  has  remained 
in  force.'^     "This  contract,"  said   the   court,  per  Parke,  B., 

1  St.  John  V.  Araer.  Mut.  Life  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  419. 

2  20  Law  Times  (n.  s.),  1002;  s.  c.  on  appeal  to  the  Lord  Chancellor,  22  Law 
Times  (n.  s.),  595. 

3  Ante,  §  29.  49  East,  72. 

5  Dalby  v.  India  and  London  Life  Assurance  Co.,  15  C.  B.  365. 

6  Cousins  V.  Nantes,  3  Taunt.  513  ;  Lucena  v.  Crawford,  2  N.  R.  269. 

f  British  Ins.  Co.  v.  Magee,  Cooke  and  Alcock,  182.  The  law  is  otherwise 
in  this  country.  See  Ruse  v.  Mut.  Benefit  Life  Ins.  Co.,  23  N.  Y.  (9  Smith) 
616.    As  this  statute  is  frequently  referred  to  in  the  reports,  it  may  be  conven- 


SUBJECT-MATTER   OF   THE   CONTRACT.  Ill 

after  holding  the  case  under  advisement,  "  is  good  at  common 
law,  and  certainly  not  avoided  by  the  first  section  of  the  14 
Geo.  3,  c.  48.  This  section,  it  is  to  be  observed,  does  not  pro- 
vide for  any  particular  amount  of  interest.  According  to  it, 
if  there  was  any  interest,  however  small,  the  policy  would  not 
be  avoided.  The  question  arises  on  the  third  clause.  It  is 
as  follows  :  And  be  it  further  enacted,  that,  in  all  cases  wliere 
the  insured  hath  interest  in  the  life  or  lives,  event  or  events, 
no  greater  sum  shall  be  recovered  or  received  from  the  insurer 
or  insurers,  than  the  amount  or  value  of  the  interest  of  the 
assured  in  sucli  life  or  lives,  or  other  event  or  events.  Now 
what  is  tlie  meaning  of  this  provision  ?  On  the  part  of  the 
plaintiff  it  is  said  it  means  only,  that,  in  all  cases  in  which 
the  party  insuring  has  an  interest  when  he  effect?  tlie  policy, 
his  right  to  recover  and  receive  is  to  be  limited  to  that  amount ; 
otherwise  under  color  of  a  small  interest,  a  wagering  policy 
might  be  made  to  a  large  amount,  —  as  it  might  if  the  first 
clause  stood  alone.  The  right  to  recover,  therefore,  is  limited 
to  the  amount  of  tlie  interest  at  the  time  of  effecting  the  policy. 
Upon  that  value,  the  assured  must  have  the  amount  of  pre- 
mium calculated  ;  if  he  states  it  truly,  no  difficulty  can  occur  : 
he  pays  in  the  annuity  for  life  the  fair  value  of  the  sum  pay- 

ient  to  have  it  in  full.  It  is  accordingly  here  subjoined.  Statute  14  Geo.  3, 
c.  48,  enacts  :  — 

First,  "  That  no  insurance  shall  be  made  by  any  person  or  persons,  bodies 
politic  or  corporate,  on  the  life  or  lives  of  any  person  or'persons,  or  on  any  other 
event  or  events  whatever,  wherein  the  person  or  persons,  for  whose  use  or  bene- 
fit, or  on  whose  account,  such  policy  or  policies  shall  be  made,  shall  have  no 
interest,  or  by  way  of  gaming  or  wagering ;  and  that  every  insurance  made  con- 
trary to  the  true  intent  and  meaning  of  this  act  shall  be  null  and  void  to  all 
intents  and  purposes  whatsoever." 

Second,  "  That  it  shall  not  be  lawful  to  make  any  policy  or  policies  on  the 
life  or  lives  of  any  person  or  persons,  or  other  event  or  events,  without  insert- 
ing in  such  policy  or  policies,  the  name  or  names  of  the  person  or  persons  inter- 
ested therein,  or  for  what  use,  benofit,  or  on  >vhose  account  such  policy  is  so 
made  or  underwrote." 

Third,  "  That  in  all  cases  where  the  insured  hath  an  interest  in  such  life  or 
lives,  event  or  events,  no  greater  sum  shall  be  recovered  or  received  from  the 
insurer  or  insurers,  than  the  amount  or  value  of  the  interest  of  the  insured  in 
such  life  or  lives,  or  other  event  or  events." 

The  fourth  section  contains  a  proviso  that  this  act  shall  not  extend  to  insur- 
ances bondjide  made  on  ships  or  goods. 


112  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

able  at  death.  If  he  misrepresents,  by  overstating  the  value 
of  the  interest,  it  is  his  own  fault  in  paying  more  in  the  way 
of  annuity  than  he  ought ;  and  he  can  recover  only  the  true 
value  of  the  interest  in  respect  of  which  he  effected  the  policy ; 
but  that  value  he  can  recover.  Thus,  the  liability  of  the 
assurer  becomes  constant  and  uniform,  to  pay  an  unvarying 
sum  on  the  death  of  the  cestui  que  vie,  in  consideration  of  an 
unvarying  and  uniform  premium  paid  by  the  assured.  The 
bargain  is  fixed,  as  to  the  amount,  on  both  sides. 

"  This  construction  is  efiected  by  reading  the  word  '  hath ' 
as  referring  to  the  time  of  effecting  the  policy.  By  the  first 
section  the  assured  is  prohibited  from  effecting  an  insurance 
on  a  life  or  on  an  event  wherein  he  '  shall  have '  no  interest ; 
that  is,  at  the  time  of  assuring.  And  then  the  third  section 
requires  that  he  shall  cover  only  the  interest  that  he  '  hath.' 
If  he  has  an  interest  when  the  policy  is  made,  he  is  not  wager- 
ing or  gaming,  and  the  prohibition  of  the  statute  does  not 
apply  to  his  case.  Had  the  third  section  provided  that  no 
more  than  the  amount  or  value  of  the  interest  should  be 
insured,  a  question  might  have  been  raised,  whether,  if  the 
insurance  had  been  for  a  larger  amount,  the  whole  would  not 
have  been  void ;  but  the  prohibition  to  recover  or  receive  more 
than  that  amount  obviates  any  difficulty  on  that  head. 

"  On  the  other  hand  the  defendants  contend  that  the  mean- 
ing of  this  claim  is,  that  the  assured  shall  recover  no  more 
than  the  value  of  the  interest  which  he  lias  at  the  time  of  the 
recovery,  or  receive  more  than  its  value  at  the  time  of  the 
receipt. 

"  The  words  must  be  altered  materially,  to  limit  the  sum  to 
be  recovered  to  the  value  at  the  time  of  the  death,  or  (if  paya- 
ble at  a  time  after  death)  when  the  cause  of  action  accrues. 
But  there  is  the  most  serious  objection  to  any  of  these  con- 
structions. It  is,  that  the  written  contract,  which,  for  the 
reasons  given  before,  is  not  a  wagering  contract,  but  a  valid 
one,  permitted  by  the  statute,  and  very  clear  in  its  language, 
is  by  this  mode  of  construction  completely  altered  in  its  terms 
and  effect.  It  is  no  longer  a  contract  to  pay  a  certain  sum  as 
the  value  of  the  then  existing  interest,  in  the  event  of  death, 


SUBJECT-MATTER   OP   THE   CONTRACT.  113 

in  consideration  of  a  fixed  annuity  calculated  with  reference 
to  that  sum  ;  but  a  contract  to  pay  —  contrary  to  its  express 
words  —  a  varying  sum,  according  to  the  alteration  of  the 
value  of  that  interest  at  the  time  of  the  death,  or  the  accrual 
of  the  cause  of  action,  or  the  terms  of  the  verdict  or  exe- 
cution ;  and  yet  the  price  or  the  premium  to  be  paid  is  fixed, 
calculated  on  the  original  fixed  value,  and  is  unvarying ;  so 
that  the  assured  is  obliged  to  pay  a  certain  premium  every 
year,  calculated  on  the  value  of  his  interest  at  the  time  of  the 
policy,  in  order  to  have  a  right  to  recover  an  uncertain  sum  ; 
viz.,  that  which  happens  to  be  the  value  of  the  interest  at  the 
time  of  the  death,  or  afterwards,  or  at  the  time  of  the  verdict. 
He  has  not  therefore  a  sum  certain  which  he  stipulated  for 
and  bought  with  a  certain  annuity ;  but  it  may  be  a  much  less 
sum,  or  even  none  at  all. 

"  Tiiis  seems  to  us  so  contrary  to  justice  and  fair  dealing 
and  common  honesty,  that  this  construction  cannot,  we  think, 
be  put  upon  this  section.  We  should  therefore  have  no  hesi- 
tation if  the  question  were  res  Integra,  in  putting  the  much 
more  reasonable  construction  on  the  statute,  that  if  there  is  an 
interest  at  the  time  of  the  policy  it  is  not  a  wagering  policy, 
and  that  the  true  value  of  that  interest  may  be  recovered  in 
exact  conformity  with  the  words  of  the  contract  itself. 

"  The  only  effect  of  the  statute  is  to  make  the  assured  value 
his  interest  at  its  true  amount  when  he  makes  the  contract." 

The  court  then  proceed  to  say  that  Godsall  v.  Baldero  was 
founded  upon  a  mistaken  analogy,  the  language  of  Lord  Mans- 
field in  Hamilton  v.  Mendes,^  upon  which  Lord  Ellenborough 
relied,  having  reference  to  a  marine  policy  which  is  in  its 
terms  a  contract  of  indemnity  only ;  that  while  it  had  been 
referred  to  in  divers  cases  without  calling  it  in  question,  and 
sometimes  with  approbation,^  yet  in  none  of  these  cases  was  it 
material  to  controvert  the  point  in  question  ;  that  in  point  of 
fact,  in  practice,  it  had  been  uniformly  disregarded ;  and  that 

1  2  Burr.  1270. 

2  Vide  Barber  v.  Morris,  1  M.  &  R.  62 ;  Humphrey  v.  Arabin,  2  Lloyd  &  G. 
318;  Henson  v.  Blackwell,  4  Hare,  434,  cor.  Sir  J.  Wigram,  V.  C. ;  Phillips  v. 
Eastwood,  1  Lloyd  &  G.  (Cas.  temp.  Sugden)  281. 

8 


11-i  insurance:  fire,  life,  accident,  etc. 

therefore  they  ought  not  to  be  bound  by  the  authority  of  that 
case.^ 

§  116.  The  injustice  of  the  decision  in  Godsall  v.  Baldero  ^ 
was  so  manifest,  tliat  it  is  not  to  be  wondered  at  that  the  insur- 
ance companies  refused  to  avail  themselves  of  its  proffered 
shelter,  and  that  it  became  practically  a  dead  letter.  But  the 
error  was  not  that  it  proceeded  on  a  mistaken  analogy,  and 
treated  the  contract  under  consideration  like  contracts  in 
marine  and  fire  insurance,  as  a  contract  of  indemnity,  but 
rather  in  a  mistaken  application  of  the  principle.  The  court 
erroneously  assumed  that  if  the  debt  which  constituted  the 
insurable  interest  was  paid,  after  the  death  of  the  debtor  and 
before  action  brought,  the  creditor  was  indemnified.  This 
was  indeed  true  so  far  as  the  original  debt  was  concerned ; 
but  it  was  not  at  all  true  so  far  as  the  new  debt  contracted  by 
the  insurers  to  the  insured  was  concerned.  In  contemplation 
of  law,  and  by  the  understanding  of  the  parties,  the  annual 
payments  which  the  insured  agreed  to  make  were  the  equiva- 
lent, and  a  profit  beside,  of  the  total  sum  which  the  insurers 
agreed  to  pay  at  the  death  of  the  debtor.  So  that,  although 
subsequently  to  that  time,  and  before  suit  brought,  the  original 
debt  was  paid  by  the  debtor's  executor,  yet,  as  the  creditor 
had,  in  contemplation  of  law,  and  according  to  the  under- 
standing of  the  parties,  and  possibly  in  point  of  fact,  in  the 
mean  time  paid  to  the  insurers  sums  of  money,  which  in  the 

1  Professor  De  Morgan  also  (Essay  on  Probabilities,  p.  244  et  seq. ;  and  see 
note  appended  to  the  case  of  Dalby  v.  India  and  London  Life  Assurance  Co.,  %d 
sup.)  criticises  the  doctrine  of  Godsall  v.  Baldero  with  much  force  and  piquancy, 
observing  amongst  other  things  that  "  the  several  principles  on  which  the 
decision  was  founded,  well  carried  out,  as  they  say  in  Parliament,  would  require 
that  the  previous  contracts  of  a  man  who  becomes  insane  should  be  null  and 
void ;  that  the  meat  which  a  man  buys  for  his  dinner  should  be  returnable  to 
his  butcher  under  the  cost,  if  his  friend  should  invite  him  in  the  mean  time ; 
and  in  the  case  before  us,  supposing  that  C.  (the  creditor)  should  have  outlived 
the  term,  and  his  debt  were  paid  as  before,  then  B.  (the  assured)  might  have 
brought  his  action  against  the  office  for  the  return  of  the  premiums ;  alleging 
that,  as  it  turned  out,  the  office  would  have  been  indemnified,  and  therefore 
should  have  been  considered  as  having  run  no  risk."  See  also  Law  v.  Indis- 
putable Life  Policy  Co.,  1  Jurist,  n.  s.  178,  where  Wood,  V.  C,  accepts  and 
applies  the  doctrine  of  Dalby  v,  India  and  London  Life  Assurance  Co. 

2  9  East,  72. 


SUBJECT-MATTER   OF   THE   CONTRACT.  115 

aggregate  amounted  to  a  sum  equal  to  that  which  he  received 
from  the  debtor,  he  would  suffer  a  total  loss  unless  the  in- 
surers should  pay  him  the  amount  of  the  policy.  In  fact, 
upon  the  doctrine  of  indemnity  merely,  correctly  applied,  the 
insurers  should  have  been  held  to  pay.  The  effect  of  tlie 
decision  was,  moreover,  to  make  a  new  contract ;  to  wit,  that 
the  insurers  would  pay  the  insured  the  amount  of  the  debt,  if 
some  one  else  did  not,  —  obviously  a  totally  different  contract 
from  that  which  was  actually  made,  and  one  too  in  which  the 
creditor  must  either  lose  the  original  debt,  or  if  that  was  paid, 
then  he  must  lose  the  amount  which  he  had  paid  by  way  of 
premiums.  Thus  by  the  decision  of  the  court  the  creditor 
could  in  no  case  be  indemnified,  but,  on  the  contrary,  in  every 
case  must  be  the  loser.  The  contract  was  certainly  for  an 
indemnity  in  the  beginning,  and  had  it  been  enforced  accord- 
ing to  its  terms  it  would  have  proved  to  be  an  indemnity  in 
the  end.  Tliis  contract  of  insurance  on  the  life  of  the  debtor 
to  protect  the  creditor  is  closely  analogous  to  the  mortgagee's 
insurance  on  the  house  of  the  debtor  to  protect  his  mortgage. 
In  one  case  the  creditor  insures  on  the  life,  in  the  other,  on 
the  property,  of  the  debtor.  In  each  case  the  contract  is  a 
separate  and  distinct  collateral  contract  which  the  insured  has 
a  right  to  make  for  his  own  benefit,  and  there  seems  to  be  no 
doubt  that  the  mortgagee,  whether  he  insures  as  general  owner 
or  as  mortgagee,  may  recover  the  full  amount  insured,  without 
prejudice  to  his  mortgage  debt,  which,  whether  it  be  paid  or 
unpaid,  is  a  matter  of  no  concern  to  the  insurers.^  If  a  mort- 
gagee insure  for  a  year  the  house  of  his  debtor  to  secure  a 
mortgage  note  payable  in  a  year,  and  there  happens  a  total  loss 
within  the  period,  he  recovers  his  insurance  and  still  holds  his 

1  King  V.  State  Mut.  Fire  Ins.  Co.,  7  Cusli.  (Mass.)  1;  Suffolk  Fire  Ins.  Co. 
r.  Boyden,  9  Allen  (Mass.),  123  ;  Concord  Mut.  Fire  Ins.  Co.  v.  "Woodbury,  45  Me. 
447  ;  Clark  v.  Wilson,  103  Mass.  221.  And  so  the  mortgagee  may  recover  the 
whole  amount  of  his  insurance  if  the  loss  amounts  to  so  much,  although  the 
property  remaining  after  the  fire  is  ample  security  for  the  debt,  or  be  restored  to 
its  original  value.  Rex  v.  Ins.  Co.,  2  Phila.  Kep.  357  ;  Kernochan  v.  New  York 
Bowery  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  1 ;  s.  c.  affirmed,  17  N.  Y. 
428 ;  Motley  i-.  Manfrs.  Ins.  Co.,  29  Me.  337 ;  Foster  et  al.  v.  Eciuitable  Mut. 
Fire  Ins.  Co.,  2  Gray  (Mass.),  226. 


116  insurance:  fire,  life,  accident,  etc. 

note.  So  if  a  creditor  insures  the  life  of  his  debtor  for  a  year 
to  secure  a  note  payable  in  a  year,  and  the  death  happens 
within  the  period,  he  gets  his  insurance  and  still  holds  the 
note.  In  each  case  there  is  indemnity  as  between  the  insurers 
and  the  mortgagee  and  creditor,  though  by  reason  of  their 
relations  with  strangers  to  the  insurers  the  mortgagee  and 
creditor  may  make  an  actual  profit  in  the  end  by  collecting 
their  respective  notes.  If  the  insurer  contracts  to  indemnify 
in  one  case,  so  he  does  in  the  other;  and  neither  is  the  loss 
a  contract  of  indemnity  because  the  insured  by  his  relations 
with  others  may  make  the  double  transaction  a  profitable 
investment  or  speculation.  A  man  insures  his  house  for  a  term 
of  years  to  protect  his  estate  ;  and  he  insures  his  life  for  a 
term  of  years  for  the  same  reason.  If  the  house  be  burned 
the  estate  is  indemnified  for  the  loss  of  property ;  and  if  the 
life  be  lost  the  estate  is  indemnified  for  the  loss  of  faculties 
which  produce  property.  In  either  case  there  is  indemnity 
simply.  In  one  case  the  amount  of  loss  may  or  may  not  be 
open  to  proof.  In  the  other  the  amount  of  loss  is  fixed  by  the 
valuation  in  the  policy  and  the  agreement  of  the  parties.  But 
it  is  none  the  less  an  indemnity  because  it  is  agreed  on.^ 
Mortgagees  and  creditors  may  claim  indemnity  of  the  insur- 
ers with  whom  they  directly  contract,  though  they  may  have 
chances  to  get  something  beyond  that  from  others,  and  in  this 
sense  their  contracts  may,  though  not  with  strict  accuracy, 
be  said  to  be  not  contracts  of  indemnity  merely.  This,  it  is 
apprehended,  is  all  that  is  intended  by  the  court  in  the  case  of 
Dalby  v.  India  and  London  Life  Assurance  Company .^  That 
case  decides  only  that  as  at  common  law  the  contract  of  life 
insurance  may  be  supported  without  any  insurable  interest  in 
the  insured  either  at  the  inception  of  the  contract  or  at  the 
death  of  the  life,  and  as  under  statute  14  Geo.  III.  c.  48,  only 
an  insurable  interest  is  requisite  at  the  inception  of  the  con- 
tract, it  is  not  necessary  that  the  insured  should  have  an  in- 
surable interest  at  the  time  of  the  death.     In  other  words, 

1  St.  John  V.  American  Mut.  Life  Ins.  Go.,  2  Duer  (N.  Y.  Superior  Ct.),  419 ; 
ante,  §  7. 

2  Ubi  supra. 


SUBJECT-MATTER   OF  THE   CONTRACT.  117 

under  that  statute,  the  contract  is  one  of  indemnity  at  its 
incipiency,  but  by  the  common  law,  which  is  not  affected  by 
the  statute,  it  need  not  be  one  of  indemnity ;  that  is,  sup- 
ported by  an  interest,  at  the  time  of  the  death. 

§  117.  The  courts  of  this  country  have,  however,  as  we  have 
seen,!  almost  without  exception  refused  to  adopt  the  doctrine 
of  the  English  common  law  in  support  of  policies  without 
interest,  and  it  remains  to  be  seen  whether  they  will  so  far 
modify  the  rule  as  to  uphold  a  policy  where  the  insured  has 
an  interest  wlien  the  contract  is  made,  but  has  none  when  the 
event  happens  upon  which  the  policy  becomes  payable.  That 
the  insurable  interest  need  not  have  uninterrupted  continuity, 
but  may  revive  after  suspension,  has  before  been  adverted  to. 
In  the  Supreme  Court  of  the  United  States  ^  it  was  recently 
said  that  the  contract  of  life  insurance  was  not  one  of  mere 
indemnity,  and  that  an  insurable  interest  was  only  necessary 
at  the  inception  of  the  contract.  But  the  point  decided  was 
simply  that  that  court  would  not  exercise  its  equity  power 
when  there  was  an  adequate  remedy  at  law ;  and  the  cases 
referred  to  as  supporting  the  dictum,^  with  the  exception  of 
the  English  case,  are  not  authorities,  since  in  all  of  them,  ni 
point  of  fact,  the  interest  existed  at  the  time  of  the  death  as 
well  as  at  the  inception  of  the  contract.  There  are  dicta, 
however,  in  the  New  York  and  New  Jersey  cases  referred  to, 
as  also  in  other  cases,^  which  would  seem  to  support  the  view 
that  a  continuing  interest  in  a  life  policy  is  not  necessary. 
Upon  the  whole,  it  is  not  improbable  that,  when  the  point  is 
distinctly  taken,  it  will  be  held  that  when  the  contract  at  its 

1  Ante,  §  75.  2  Ante,  §  101. 

8  Phoenix  Mut.  Life  Ins.  Co.  of  Hartford  i-.  Bailey,  13  Wall.  (U.  S.)  616. 

4  Dalby  v.  India  and  London  Life  Assurance  Co.,  15  C.  B.  3G5 ;  Loomis  v. 
Eagle  Life  and  Health  Ins.  Co.,  6  Gray  (Mass.),  396;  Lord  v.  Dall,  12  Mass. 
114  ;  Trenton  Life  and  Fire  Ins.  Co.  v.  Johnson,  4  Zab.  (N.  J.)  576  ;  Rawls  v. 
American  Life  Ins.  Co.,  36  Barb.  (N.  Y.)  357  ;  s.  c.  27  N.  Y.  282. 

5  Valton  V.  National  Loan  Fund  Life  Assurance  Co.,  22  Barb.  (N.  Y.)  9 ;  St. 
John  V.  American  Mut.  Life  Ins.  Co.,  13  N.  Y.  31. 

6  But  see  contra,  Mut.  Life  Ins.  Co.  v.  Wager,  27  Barb.  354  ;  Kennedy  v.  New 
York  Life  Ins.  Co.,  10  La.  An.  309;  dissenting  opinion  of  Mr.  Justice  Lee; 
Leonard  i-.  Eagle  Life  and  Health  Ins.  Co.,  4  Liv.  Law  Mag.,  per  Ch.  Walworth 
as  arbitrator. 


118  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

inception  is  based  upon  a  substantial  interest,  and  is  in  good 
faith  entered  into  for  the  protection  of  that  interest,  it  is  not 
objectionable  as  a  wager  contract,  and  may  be  enforced  though 
the  interest  may  have  ceased  at  the  time  of  the  death.  And 
this  is  the  more  probable,  as,  while  such  a  rule  will  keep  the 
door  shut  against  mere  gambling  and  speculation,  it  will  tend 
to  encourage  what  is  now  almost  universally  regarded  as  a 
provident  contract,  securing  not  only  an  indemnity  in  case  of 
loss,  but  the  means  of  presently  increasing  capital,  and  a  not 
disadvantageous  mode  of  investment.  The  conclusion  is,  upon 
all  the  authorities,  that  life  insurance,  like  all  other  kinds  of 
insurance,  is  a  contract  of  indemnity  ;  but  that  that  form  of 
the  contract,  in  some  of  its  phases,  is  not  merely  a  contract 
of  indemnity,  but  includes  that  with  a  possibility  of  something 
more.^  It  can  never  therefore  properly  be  entered  into  except 
for  the  purpose  of  security  or  indemnity ;  ^  though  the  fact 
that  the  contract  may,  under  certain  circumstances,  result  as 
a  profitable  investment,  does  not  vitiate  it,  if  entered  into  in 
conformity  to  the  principles  which  underlie  it ;  and  so  far  as  it 
seeks  any  other  object  than  indemnity  for  loss,  it  departs  from 
the  legitimate  field  of  insurance  and  engrafts  upon  that  con- 
tract a  purpose  foreign  to  its  nature. 

1  Emmet,  J.,  in  Eawls  v.  American  Mut.  Life  Ins.  Co.,  27  N.  Y.  282,  dis- 
sented on  the  ground  that,  before  the  death  of  the  debtor  whose  life  was 
insured,  the  Statute  of  Limitations  having  run  against  the  note  which  constituted 
the  basis  of  insurable  interest  at  the  inception  of  the  contract,  the  interest  had 
ceased,  and  so  the  action  could  not  be  supported. 

2  Ante,  §  2. 


INSURANCE   AGENTS,    THEIR   POWERS   AND   DUTIES.  119 


CHAPTER   y. 

OF   INSURANCE   AGENTS,   THEIR   POWERS   AND    DUTIES. 

§  118.  Agency. — The  contract  of  insurance  is  in  many,  per- 
haps, more  recently,  in  most,  cases  made  through  the  inter- 
vention of  agents.  This  gives  rise  to  a  multitude  of  questions, 
the  sohition  of  which  more  properly  belongs  to  a  treatise  on 
the  law  of  agency.  Some  of  these  questions,  however,  are  so 
intimately  connected  with  the  subject  of  insurance,  having,  so 
to  speak,  grown  out  of  its  peculiarities,  as  to  require  special 
notice  in  this  connection. 

All  incorporated  companies  must  necessarily  act  through 
agents,  and  their  respective  officers  are  specially  appointed 
and  clothed  with  powers,  more  or  less  specific,  to  facilitate  the 
transaction  of  business.  To  these,  in  case  of  emergency,  are 
added  special  or  general  agents,  who  at  home  and  abroad  exer- 
cise very  extensive  powers.  What  is  the  fair  scope  of  the 
authority  of  these  agents,  now  so  numerous,  to  whom  are 
intrusted  the  duties,  partly  or  wholly,  of  soliciting  risks, 
receiving  and  forwarding  applications,  —  being  supplied  with 
blanks  for  that  purpose,  —  receiving  premiums  and  deposit 
notes,  and  delivering  policies  ?  This  question  has  given  rise 
to  some  of  the  most  perplexing  difficulties,  and  to  a  larger 
proportion,  perhaps,  than  any  other  of  the  controversies  in 
courts  of  law.  And  upon  a  superficial  examination  of  the 
cases,  there  would  seem  to  be  an  inextricable  confusion,  if  not 
an  irreconcilable  contradiction  of  opinion.  But  upon  a  more 
careful  examination  there  will  almost  always  be  found  shades 
of  difference  in  the  facts  and  circumstances,  upon  which  appar- 
ently opposite  opinions  are  founded,  sufficient  to  relieve  them 
from  the  element  of  contradiction.  Still,  for  the  very  reason 
that  there  is  in  so  many  cases  in  the  midst  of  a  general  simi- 
larity a  particular  dissimilarity  of  circumstances,  it  is  difficult, 


120  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

not  to  say  impossible,  to  embrace  within  any  formula  of  words, 
rules  that  would  be  sound  and  reliable.  It  will  doubtless  be 
more  satisfactory  to  state  the  questions  which  have  arisen,  and 
are  likely  to  arise,  with  their  judicial  solution,  under  each 
particular  head. 

§  119.  And,  first,  in  soliciting  risks,  with  what  powers  is  the 
agent  clothed  ?  Of  course  it  must  be  desired  and  expected  by 
the  principal  that  the  agent  in  this  particular  will  use  due  dili- 
gence—  the  greater  the  better,  if  not  unauthorized — in  pro- 
curing risks  and  extending  the  business.  This  implies  that 
something  is  to  be  said  of  the  character,  standing,  and  merits 
of  the  company,  and  of  its  desirability  as  a  means  of  protec- 
tion. To  what  extent  is  the  principal  to  be  bound  by  the  state- 
ment of  the  agent  in  the  discharge  of  this  part  of  his  duty  ? 
Not  certainly  for  a  little  exaggerated  eulogy,  or  a  little  extrav- 
agance of  expression,  in  setting  forth  its  attractions.  This  is 
permissible  because  it  is  expected,  and  no  person  of  average 
intelligence  can  be  deceived  thereby.  As  in  the  case  of 
vendor  and  vendee,  the  vendor  is  permitted  to  set  forth  the 
merits  of  the  merchandise  he  offers  to  sell  with  some  degree 
of  coloring. 

§  120.  Application.  —  But  second,  and  most  important  of  all, 
what  is  the  extent  of  the  agent's  power  with  reference  to  the 
duty  of  receiving  and  forwarding  the  application  ?  Can  he  to 
any  extent,  and  if  any,  to  what,  bind  the  company  by  inter- 
vening and  aiding  in  the  filling  up  of  the  application  ?  That 
he  can  so  do,  to  some  extent,  there  can  be  no  reasonable  doubt. 
He  is  appointed  by  the  company  to  facilitate  and  promote  their 
business.  To  this  end  he  is  furnished  with  the  necessary 
blanks,  which,  after  they  are  filled  up,  he  is  to  forward  to  the 
company's  office.  Of  course  this  filling  up  must  be  in  such 
manner  as  to  make  the  application  fit  for  its  purpose,  and 
valid  as  the  basis  of  the  contract.  The  questions  propounded 
therein  are  those  upon  which  information  is  desired.  These 
are  often  very  numerous,  and  not  unfrequently  quite  general 
and  indefinite,  and  susceptible  of  being  answered  briefly  and 
substantially,  or  with  greater  or  less  minuteness  of  detail. 
How  briefly,  and  with  what  degree  of  minuteness,  the  appli- 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  121 

cant  may  not  know.     The   agent  must  be  presumed  to  be 
clothed  with  the  power  to  say  when  the  question  is  satisfacto- 
rily answered,  that  is,  with  sufficient  fulness.    Or  in  answering 
some  of  the  questions  it  may  not  be  easy  to  state  exactly  what 
the  true  answer  is  upon  the  facts.     Viewed  in  dififerent  lights, 
or  from  dififerent  stand-points,  the  same  question  upon  the 
given  facts  may  admit  of  dififerent  answers.    Cannot  the  agent 
say  for  the  company  from  which  stand-point  they  shall  be  re- 
garded, and,  having  become  possessed  of  all  the  facts,  may  he 
not  say  which  answer  ought  to  be  given  ?     Is  the  building  to 
be  insured  a  shop  or  a  store  ?    All  the  facts  being  made  known, 
and  the  answer  being  a  matter  of  doubt,  may  not  the  agent, 
instead  of  incumbering  the  papers  with  a  multitude  of  details, 
agree  for  the  company  that  it  is  either,  according  as  he  thinks 
the  facts  show  it  to  be.     His  experience  ought  to  enable  him 
to  judge  of  the  true  answer,  and  whether  the  details  ought  to 
be  set  out  better  than  the  applicant,  who  wishes  only  to  answer 
truly  and  is  indifferent  as  to  which  answer  shall  be  given.    May 
he  not  without  risk  accede  to  that  answer  which  the  agent 
assures  him  will  be  the  more  proper  and .  satisfactory  ?     There 
must  be,  it  would  seem,  an  incidental  power  lodged  in  the 
agent,  adequate  to  the  explanation  of  the  proper  description 
of  the  property  or  interest  to  be  insured,  the  meaning  of  the 
words  and  phrases  used  in  the  questions,  and  the  application 
of  answers  to  the  subject-matter,  so  far  as  they  may  be  neces- 
sary to  perfect  the  instrument  and  render  it  fit  for  its  purpose 
and  promote  the  usefulness  and  efficiency  of  the  agency.     In 
short,  the  agent  may  do  in  this  behalf  what  could  be  done  at 
the  home  office,  if  the  application  were  filled  up  there  upon 
conference  with  the  officers;  and  that  the  agent  may  have 
answered  some  questions  dififerently  from  what  they  would 
have  been  answered  tliere,  does  not  make  his  act  the  less  bind- 
ing upon  the  company.     The  fair  inference  from  the  fact  of 
appointment  is,  that  the  agent  is  a  suitable  person  and  con- 
versant with  his  business.     The  applicant  naturally  and  right- 
fully so  looks  upon  him.     It  cannot  be  supposed  that  he  is 
80  restricted  and  tied  down  as  to  destroy  his  usefulness  to  the 
company  ;  and  yet  if  agents  so  appointed  are  not  to  be  allowed 


122  insurance:  fire,  life,  accident,  etc. 

to  say  a  word  by  way  of  information  or  explanation,  when 
fairly  and  honestly  attending  to  their  appropriate  business, 
which  shall  attach  to  the  contract  and  bind  the  company,  it  is 
easy  to  see  that  dealing  with  an  agent  can  be  neither  satisfac- 
tory nor  safe ;  and  insurance  companies  would  at  once  find 
their  business  confined  to  the  limited  sphere  of  negotiations 
with  those  only  to  whom  the  home  office  is  accessible,  —  a 
result  which  it  is  fair  to  assume  from  their  history  and  mode 
of  doing  business  they  by  no  means  desire.^ 

It  is,  moreover,  always  worth  while  in  considering  the  ques- 
tion of  the  extent  of  the  authority  of  an  agent  to  look  to  his 
relations  to  the  company  in  point  of  place.  If  he  is  remote 
from  his  principal,  and  so  situated  that  were  he  obliged  to 
refer  questions  of  doubt  which  arise  within  the  general  scope 
of  the  duties  to  which  he  is  appointed,  his  usefulness  and  effi- 
ciency would  be  materially  impaired  by  the  consequent  delay, 
it  is  fair  to  presume  that  a  more  liberal  exercise  of  discretion 
is  permissible  to  him  than  to  an  agent  having  the  same  general 
powers,  but  residing  so  near  to  his  principal  that  reference 
may  be  practicable  and  consistent  with  the  success  of  the 
agency. 

§  121.  And,  in  the  third  place,  what  is  the  extent  of  the 
authority  of  such  agents  in  the  matter  of  the  receipt  of  pre- 
miums, whether  in  money  or  in  notes,  &c. ;  and,  in  general, 
in  binding  the  company  by  terms  and  conditions  not  known  to 
them,  except  constructively,  and  by  waiving  terms  and  condi- 
tions stated  in  the  policy,  and  subject  to  which  alone,  as  a 
general  rule,  they  are  willing  to  assume,  and  do  assume,  the 
responsibilities  of  the  contract. 

With  these  few  general  observations,  designed  to  direct 
attention  to  the  various  questions  likely  to  arise,  and  perhaps 
to  indicate  to  some  extent  what  is  conceived  to  be  the  spirit 
and  drift  of  the  law,  we  shall  now  proceed  to  call  attention  to 
the  several  causes  which  may  serve  to  illustrate  these  sugges- 
tions. 

§  122.  Agent  of  Insured.  —  The  agent  of  the  insured  to 
effect  insurance  is  to  all  intents  and  purposes  regarded  in  the 

1  Malleable  Iron  Works  v.  Phoenix  Ins.  Co.,  25  Conn.  465. 


INSURANCE   AGENTS,    THEIR   POWERS   AND    DUTIES.  123 

same  light  as  the  principal,  and  whatever  he  does  pertaining 
to  the  matter  in  his  charge  will  be  deemed  the  act  of  his  con- 
stituent. His  concealment,  or  his  representation,  even  of  a 
fact  not  known  to  his  principal,  is  imputable  to  the  latter ;  so 
that  when  a  negligent  or  fraudulent  agent  of  one  who  applies 
for  insurance  intervenes  between  him  and  an  innocent  insurer, 
the  party  who  employs  the  agent  must  bear  the  consequences 
of  the  neglect  or  fraud,  upon  the  principle,  so  familiar  in  all 
courts  of  justice,  that  when  one  of  two  innocent  persons  must 
suffer  by  the  fraud  or  negligence  or  unauthorized  act  of  a  third, 
he  who  clothed  the  third  with  power  to  deceive  or  injure  must 
be  the  one.  If  either  party  must  suffer  by  the  act  of  the 
agent,  it  must  be  the  party  whose  agent  he  is.^  The  rule 
seems  to  be  less  strict  in  cases  of  other  contracts.^ 

§  123.  Persons  referred  to  for  information  are  agents  only 
to  a  limited  extent.  They  are  authorized  in  behalf  of  their 
principal  to  answer  interrogatories,  whether  verbal  or  written, 
so  far  as  it  is  agreed  that  they  shall  be  questioned,  and  the 
principal  is  responsible  if  such  referee  does  not  answer  cor- 
rectly, but  the  referee  is  not  authorized  to  volunteer  informa- 
tion not  asked  for ;  and  if  he  does  this  the  principal  is  not 
responsible.^ 

Reference  to  the  surgeon's  report  for  answers  to  interroga- 
tories about  the  health  of  the  applicant  converts  the  report 
into  answers  as  if  by  the  applicant,  and  any  misrepresentation 
or  concealment  there  is  as  fatal  as  if  by  the  applicant  person- 
ally."*   It  behooves  however  all  referees,  so  far  as  authorized,  to 

1  Fitzherbert  v.  Mather,  1  T.  R.  12;  Nicoll  v.  American  Ins.  Co.,  3  W.  &  M. 
(U.  S.  C.  C.)  529;  Carpenter  v.  American  Ins.  Co.,  1  Story  (U.  S.  C.  C),  57; 
Smitli  r.  Empire  Ins.  Co.,  25  Barb.  (N.  Y.)  497;  Gladstone  ;;.  King,  1  M.  &  S'. 
35 ;  Lynch  v.  Dunsford,  14  East,  394 ;  Draper  v.  Charter  Oak  Ins.  Co.,  2  Allen 
(Mass.),  569. 

2  Cornfoot  v.  Fowke,  18  L.  J.  n.  s.  (Exch.)  297.  Lord  Abinger,  however,  dis- 
senting, in  a  very  able  opinion. 

'  Swete  r.  Fairlie,  6  C.  &  P.  1,  per  Ld.  Denman,  C.  J. ;  Huckman  v.  Fernie, 
3  M.  &  W.  505 ;  Rawlins  v.  Desborough,  2  M.  &  Rob.  228 ;  Everett  v.  Des- 
borough,  5  Bing.  503  ;  Maynard  v.  Rhodes,  1  C.  &  P.  360  ;  Rose  v.  Star  Ins.  Co., 
2  Irish  Jur.  o.  s.  206.  See  also  Rawls  v.  American  Mut.  Life  Ins.  Co.,  27  N.  Y. 
294. 

*  Smith  V.  JEtaa.  Life  Ins.  Co.,  N.  Y.  Ct.  of  Appeals,  1872,  2  Ins.  L.  J.  116. 


124  insurance:  fire,  life,  accident,  etc. 

answer  carefully  all  such  general  questions,  as,  for  instance, 
whether  there  are  any  other  circumstances  which  would  affect 
the  risk,  or  are  important  for  the  company  to  know,  as  may 
be  put  to  them  ;  and  if  the  person  interrogated  is  in  doubt 
whether  a  particular  fact  known  to  him  is  material  or  impor- 
tant, it  is  safest  to  communicate  it,  as  his  principal  will  be 
responsible  for  whatever  in  fact  may  be  found  by  the  jury  to  be 
material,  without  regard  to  his  judgment  upon  that  point.^ 
But  in  Wheelton  v.  Hardisty  ^  it  was  held  that,  when  the  policy 
contains  no  express  condition  that  the  insured  shall  be  held 
responsible  for  the  misrepresentations  or  concealments  of  the 
"  life  "  or  the  referee,  and  is  made  on  a  declaration  that  the  in- 
sured believes  the  statements  of  the  "  life  "  and  the  referee  to 
be  true,  they  are  not  his  agents,  and  he  is  only  responsible 
for  the  truth  of  his  statement  as  to  his  belief,  and  not  for  their 
fraudulent  misstatements.  In  Scotland,  however,  the  assured 
is  bound  by  the  statements  of  the  "  life."  ^ 

§  124.  An  agent  having  general  authority  to  insure  the  prop- 
erty of  his  principal  has  no  authority  to  effect  an  insurance 
in  a  mutual  company  whereby  he  makes  his  principal  an  in- 
surer of  others.^  The  agent  employed  to  effect  insurance,  it 
scarcely  need  be  said,  is  responsible  to  his  principal  for  every 
negligence  in  the  performance  of  his  duties.  That  the  under- 
taking was  gratuitous  is  no  defence,  if  it  was  actually  entered 
upon  ;  ^  though  perhaps  the  breach  of  a  mere  gratuitous  promise 
to  undertake  would  not  be  actionable:  So  is  he  for  neglect 
to  make  reasonable  efforts  to  insure  when  it  is  his  duty  to 
obtain  insurance  if  he  can  ;  ^  and  effecting  insurance  with 
irresponsible  parties  has  been  held  to  be  negligence.'^  The 
measure  of  damages  in  such  case  is  the  amount  which  the 
irresponsible  insurers  ought  to  have  paid.^ 

1  Lindenau  v.  Desborough,  8  B.  &  C.  586  ;  s.  c.  3  M.  &  R.  45. 

2  8  E.  &  B.  232. 

5  Forbes  v.  Ed.  Life  Assurance  Co.,  10  Ct.  of  Sess.  Cas.  451. 
*  White  V.  Madison,  26  N.  Y.  117. 

5  Wallace  v.  Tellfair,  2  T.  R.  188,  n. ;  Wilkinson  v.  Coverdale,  1  Esp.  76. 

6  Smith  V.  Lascelles,  2  T.  R.  187  ;  Smith  v.  Cologan,  2  T.  R.  188,  n.  (a). 

7  Hunell  V.  Bullard,  3  F.  &  S.  445. 

8  Smith  V.  Price,  2  F.  &  F.  748. 


INSURANCE  AGENTS,   THEIR   POWERS   AND   DUTIES.  125 

§  125.  Agent  must  be  disinterested.  —  It  is,  of  course,  ele- 
mentary law  that  an  agent  must  not  be  personally  interested 
adversely  to  his  principal,  so  that  an  agent  for  receiving  appli- 
cations ceases  to  be  an  agent  so  long  as  he  acts  in  a  matter  in 
which  his  personal  interest  is  concerned.  If  he  applies  for 
insurance  on  his  own  property,  as  to  that  property  he  is  no 
agent  of  the  company.  He  cannot,  by  the  familiar  rule  of  law, 
as  agent  represent  antagonistic  interests.^  He  cannot  be  the 
agent  of  both  parties  in  the  same  transaction.  If  he  so  act, 
the  contract  may  be  avoided  by  either  party .^ 

§  126.  Agent's  Authority,  what  it  appears  to  be.  —  The  author- 
ity of  an  agent  must  be  determined  by  the  nature  of  his  busi- 
ness. It  cannot  be  limited  by  special  private  instructions, 
unless  there  is  something  in  the  nature  of  the  business,  or  the 
circumstances  of  the  case,  to  indicate  that  the  agent  is  acting 
under  such  special  instructions.  The  agent's  act  must  appear 
to  be  an  act  in  furtherance  of  the  business  of  his  principal. 
If  he  is  known  to  have  charge  of  a  special  branch  of  his  prin- 
cipal's business,  his  powers  can  only  be  exercised  in  the  prose- 
cution of  that  branch.  An  agent  to  make  contracts  has  larger 
powers  than  an  agent  to  receive  applications  to  be  forwarded 
to  his  principal.  Stock  companies  have  larger  powers  than 
mutual  companies.  So  with  their  agents.  A  general  agent, 
in  the  strict  legal  sense,  is  one  who  has  all  the  powers  of  his 
principal  as  to  the  business  in  which  he  is  engaged,  —  an  extent 
of  authority  not  often  conferred  in  insurance.  In  that  business 
an  agent  is  termed  a  general  agent  ratlier  with  reference  to 
the  geographical  extent  of  his  authority,  in  contradistinction 
to  a  local  agent,  who  may  have  original  powers,  though  exer- 
cising them  within  more  restricted  limits ;  and  the  general 
agent  may  appoint  local  and  sub  agents,  which  a  local  agent 
cannot.^  But  there  seems  to  be  no  very  well  defined  distinc- 
tion between  the  powers  of  general  agents,  local  agents,  and 

1  Bentley  v.  Columbian  Ins.  Co.,  17  N.  Y.  421,  affirming  s.  c.  19  Barb.  (N.  Y.) 
595 ;  New  York  Central  Ins.  Co.  v.  National  Protection  Ins.  Co.,  4  Kern.  (N.  Y.) 
85,  reversing  s.  c.  20  Barb.  (N.  Y.)  468  ;  Utica  Ins.  Co.  v.  Toledo  Ins.  Co.,  17 
Barb.  (N.  Y.)  132. 

2  Ibid. 

3  Rossiter  v.  Trafalgar  Ass.  Assoc,  27  Beav.  377. 


126  insurance:  fire,  life,  accident,  etc. 

sub-agents,  and  tlierefore  they  may  become,  in  any  case,  a 
question  of  fact  for  the  jury.^  A  general  agent  of  a  foreign 
company,  appointed  under  a  statute,  to  receive  service  of  pro- 
cess, except  as  to  such  matters  as  facihtate  suits  against  the 
principal,  has  no  larger  powers  than  are  conferred  by  the  com- 
mon law  of  agency.- 

A  person  authorized  to  accept  risks,  to  agree  upon  and  set- 
tle the  terms  of  insurance,  and  to  carry  them  into  effect  by 
issuing  and  renewing  policies,  must  be  regarded  as  the  general 
agent  of  the  company.^ 

And  the  possession  of  blank  policies  and  renewal  receipts, 
signed  by  the  president  and  secretary,  is  evidence  of  such 
general  agency.* 

Authority  to  do  a  particular  act  carries  with  it  the  authority 
to  make  available  the  ordinary  means  by  which  the  act  may  be 
accomplished.  If  the  president  of  an  insurance  company  be 
authorized  by  the  by-laws  to  "  adjust  and  pay  losses,"  he  may 
indorse  notes  held  by  the  company  and  deliver  them  in  pay- 
ment.^ And  though  by  the  charter  or  by-laws  the  powers  of 
officers  may  be  restricted,  they  may  bind  the  company  though 
they  exceed  their  powers,  especially  if  such  excess  is  known 
and  acquiesced  in.^ 

A  secretary,  authorized  to  answer  all  "  communications  in 
behalf  of  tlie  company,"  may  bind  the  company  by  his  admis- 
sions in  such  correspondence  as  to  the  sufficiency  of  a  notice 
of  loss.'''  So  authority  to  settle  the  terms  upon  which  a  change 
in  the  risk  may  be  made  carries  with  it  the  right  to  waive  a 
forfeiture  by  reason  of  a  change  in  the  risk.^  So  special  au- 
thority to  settle  for  a  loss  carries  with  it  the  riglit  to  extend 
the  time  limited  by  the  conditions  of  the  policy,  within  which 

1  Markey  v.  Mut.  Benefit  Life  Ins.  Co.,  103  Mass.  78;  Koelges  v.  Guard.  Life 
Ins.  Co.,  10  Abb.  n.  s.  176. 

2  Ibid. 

3  Post  V.  iEtna  Ins.  Co.,  43  Barb.  (N.  Y.)  351. 

4  Carroll  v.  Charter  Oak  Ins.  Co.,  40  Barb.  (N.  Y.)  292. 

5  Baker  v.  Cotter,  45  Me.  230. 

6  Ibid. 

^  Troy  Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  20. 

*  North  Berwick  Co.  v.  New  England  Fire  and  Mar.  Ins.  Co.,  52  Me.  836. 


INSURANCE   AGENTS,    THEIR   POWERS    AND    DUTIES.  127 

the  statement  of  the  loss  is  to  be  made.^  But  authority  to 
take  applications  and  surveys,  to  receive  premiunas  and  give 
certificates  of  insurance,  subject  to  the  approval  of  the  direct- 
ors, does  not  give  authority  to  make  a  contract  not  subject  to 
such  approval.^  It  is  to  be  observed,  however,  that  the  decided 
inclination  of  the  courts  is  to  extend,  rather  than  restrict, 
the  power  of  agents  as  to  all  that  they  may  say  or  do  touching 
the  contract.^ 

§  127.  Agents  of  Stock  and  Mutual  Companies.  —  In  general, 
it  may  be  said  that  the  agents  and  officers  of  companies  organ- 
ized with  a  capital  stock  divided  into  shares  have  greater 
powers  in  determining  what  shall  be  the  terms  of  the  contract 
and  in  waiving  a  compliance  with  its  stipulations  than  those 
of  companies  organized  on  the  mutual  principle,  in  which  the 
by-laws  are  made  to  fix  and  regulate,  by  the  same  stipulations 
in  every  policy,  the  rights  of  all  the  assured  alike.'^  And  it 
will  be  seen  as  we  proceed,  that  while  some  courts,  as  those 
of  Massachusetts  and  New  Jersey,  with  a  view  to  promote 
the  safety  and  efficiency  of  such  companies,  have  confined  the 
powers  of  the  agents  and  officers  of  mutual  insurance  com- 
panies strictly  within  the  limits  marked  out  by  their  charters 
and  by-laws  as  interpreted  in  the  liglit  of  the  purposes  for  which 
such  companies  were  established,  others,  looking  rather  to  the 
protection  and  safety  of  those  who  are  dealing  with  such  offi- 
cers and  agents,  have  shown  a  perhaps  increasing  inclination 
to  give  a  liberal  construction  to  those  provisions  of  the  char- 
ters and  by-laws  which  tend  to  limit  such  powers. 

§  128.  May  bind  the  Company  by  Parol  Contract.  —  It  has 
been  at  length  settled  by  numerous  decisions,  as  we  have 
already  seen,^  that  the  officers  of  a  company  may  make  a  valid 
contract  of  insurance  even  by  parol,  and  may  bind  the  com- 
pany which  they  represent  by  an  agreement  to  insure  as 
effectually  as  by  a  policy  issued  in  due  form,  even  where  the 

1  Lycoming  County  Mut.  Ins.  Co.  v.  SchoUenberger,  4i  Penn.  St.  259. 

2  Ins.  Co.  V.  Johnson,  23  Penn.  St.  72. 

3  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222. 

4  Brewer  v.  Chelsea  Mut.  Fire  Ins.  Co.,  14  Gray  (Mass.),  203. 
°  Ante,  §  14  et  seq. 


128  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

charter  of  the  company  requires  that  every  contract,  bargain, 
policy,  or  other  agreement  shall  be  in  writing,  signed  by  the 
president,  and  sealed  with  the  corporate  seal.  But  the  exer- 
cise of  such  powers  will  not  bind  the  company  unless  clearly 
within  the  scope  of  the  agent's  authority  and  of  the  powers  of 
the  company.  While  a  parol  agreement  to  issue  a  policy  would 
be  valid,  a  merely  collateral  promise  or  representation  which 
does  not  involve  the  execution  of  a  policy  would  not  be,  as  is 
shown  by  the  following  case.  The  plaintiff,  through  a  broker, 
applied  to  the  defendants  for  insurance  to  a  definite  amount, 
and  was  informed  that  it  would  be  taken.  The  defendants 
subsequently  sent  to  the  broker  their  own  policy  for  a  part, 
and  the  policies  of  three  other  companies  for  the  residue,  exe- 
cuted by  an  agent  for  the  latter  companies.  The  broker  on 
receiving  the  policies  wrote,  in  the  absence  of  his  principals, 
to  the  defendants,  to  say  that  he  doubted  whether  the  three 
latter  policies  would  be  accepted,  alleging  as  a  reason  that  the 
agent  had  not  a  good  reputation  for  settling  losses,  and  adding, 
"  I  don't  know  whether  it  is  your  custom  to  guarantee  the 
offices  you  insure  in  or  not.  If  you  do,  I  may  prevail  on  " 
the  plaintiff  "  to  hold  the  policies."  The  secretary  of  the 
defendants,  in  reply,  wrote  :  "  In  handing  the  policies  "  to  the 
plaintiff,  "  you  can  say  that,  if  the  boat  is  not  insured  in 
offices  satisfactory  to  him,  we  will  have  them  cancelled  ;  but, 
though  they  are  not  reinsurances,  yet,  in  case  of  loss,  we  will 
feel  ourselves  bound  for  a  satisfactory  adjustment.  We  deem 
the  companies  good,  and  if  any  parties  can  settle  with  them, 
we  can."  On  the  faith  of  this  letter  the  transaction  was 
closed,  and  one  of  the  substituted  companies  having  failed, 
and  a  loss  having  occurred,  a  special  action  was  brought 
against  the  defendants,  which  resulted  unfavorably  to  the 
plaintiff,  on  the  ground  that  such  a  contract  was  not  within 
the  scope  of  the  secretary's  authority,  because  not  vstrictly 
within  the  scope  of  the  powers  granted  to  the  corporation.^ 

§  129.   General   Agent    of    Stock    Company,    pending   Negotia- 
tions. —  The  power  of  an  agent  of  a  stock  company  held  out 

1  Constant  v.  The  Allegheny  Ins.  Co.,  3  Wall.  Jr.  (U.  S.  C.  C.) ;  s.  c.  1  Am. 
Law  Reg.  n.  s.  116. 


I 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  129 

by  the  company  to  the  public  as  such,  and  entrusted  with  poli- 
cies in  blank,  signed  by  the  president  and  secretary,  and  to  be 
filled  up,  indorsed,  countersigned,  and  issued  by  the  agent,  is 
plenary  as  to  the  amount  and  nature  of  the  risk,  the  rate  of 
premium,  and  generally  as  to  the  terms  and  conditions  of  the 
contract ;  and  he  may  make  such  memoranda  and  indorse- 
ments modifying  the  general  provisions  of  the  policy,  and  even 
inconsistent  therewith,  as  in  his  discretion  seem  proper,  before 
the  policy  is  delivered  and  accepted,  or  even  after,  if  this  be 
his  habit  known  to  the  office. ^  Having  the  authority  to  make 
an  original  contract  upon  terms  similar  to  those  contained 
in  the  policies,  signed  in  blank,  entrusted  to  him,  and  being 
clothed  with  such  general  powers,  he  may  before  the  delivery 
modify  the  terms  and  conditions  so  as  to  make  the  company 
liable  for  loss  by  special  cause,  from  liability  for  which  the 
general  printed  terms  of  the  policy  would  exempt  them,  and 
allow  the  insured  to  keep  articles,  use  modes  of  heating, 
and  carry  on  branches  of  manufacture,  prohibited  by  the 
printed  terms  of  the  policy,  without  risk  of  forfeiture.  He 
may  also  insert  by  memorandum  or  indorsement  a  description 
of  the  property  insured  inconsistent  with  the  description  of  the 
same  contained  in  the  application,  and  such  change  will  be 
effectual  to  protect  the  insured,  altliough  the  policy  itself  pro- 
vides that  all  the  conditions  named  in  the  survey  or  application 
are  to  be  fully  complied  with,  and  such  survey  and  description 
shall  be  deemed  to  be  a  part  of  the  policy  and  a  warranty  on 
the  part  of  the  insured.^  These  acts  of  the  agent,  it  is  to  be 
observed,  are  such  as  are  done  in  the  process  of  negotiation,^ 
and  while  the  contract  is  yet  incomplete.  When  once  the 
contract  is  perfected,  the  power  conferred  by  the  agenqy  as  to 
this  is  in  many  respects  exhausted.^  But  the  agent's  powers 
to  deal  with  facts  and  circumstances  arising  after  the  comple- 
tion of  the  contract  are  by  no  means  so  extensive.^ 

1  Gloucester  Manuf.   Co.  v.  Howard  Fire  Ins.  Co.,  5  Gray  (Mass.),  498 j 
Brockelbank  v.  Sugrue,  5  C.  &  P.  21. 

2  Ibid. 

3  Post,  §  144. 

*  Healey  v.  Imperial  Fire  Ins.  Co.,  5  Nev.  268. 
6  See  post,  §§  131,  138. 

9 


130  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  130.  Authority  to  insure  Property  located  beyond  his  Dis- 
trict. —  And  such  an  agent  authorized  to  effect  insurance  "  for 
a  particular  city  and  its  vicinity,"  may  nevertheless  insure 
property  located  beyond  the  geographical  limits  of  his  agency, 
and  within  those  of  another  agent.  His  private  instructions 
cannot  affect  the  relations  between  the  insured  and  the  insur- 
ers. Besides,  it  would  seem  that  the  restriction  applied  rather 
to  the  sphere  within  which  the  agent  should  act,  than  to  the 
property  which,  while  acting  within  prescribed  limits,  he  might 
insure,  although  located  beyond  those  limits.^  And  such  an 
agent  may  also  bind  his  principal,  even  though  he  act  contrary 
to  his  instructions,  if  what  he  actually  does  is  fairly  deducible 
from  his  authority  as  general  agent,  the  instructions  which  he 
violated  not  being  known  to  the  insured.  And  the  delivery  by 
such  agent  of  a  policy  to  which  the  insured  is  fairly  entitled  in 
execution  of  a  subsisting  agreement  is  good,  although  before 
its  delivery  the  insurers  notify  the  insured  that  they  will  not 
be  bound  by  it,  and  that  they  have  revoked  the  authority  of 
the  agent  to  act  for  them.^  If  such  agent  fails  in  his  duty  to 
his  principal  it  is  no  fault  of  the  insured. ^  And  any  mistake 
of  omission  or  commission  made  in  the  description  of  the 
property  insured  or  otherwise,  he  having  the  means  of  know- 
ing the  truth,  and  not  being  misled  by  the  insured,  can- 
not be  availed  of  by  the  company  to  the  prejudice  of  the 
insured.* 

§  131.  Upon  the  same  ground,  verbal  notice  to  the  agent 
that  gunpowder  is  at  the  time  of  insurance,  and  will  thereafter, 
be  kept  on  the  premises  for  sale,  is  notice  to  the  company ; 
and  if  after  such  notice  a  policy  be  issued  containing  a  pro- 
vision that  if  gunpowder  is  so  kept,  without  written  permission 
in  the  policy,  the  policy  shall  be  void,  it  is  a  waiver  of  the 
condition.^     Though  it  was  said  in  the  same  case  that  the 

1  Lightbody  v.  North  American  Ins.  Co.,  23  Wend.  (N.  Y.)  18. 

^  Ibid. ;  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517. 

3  Gloucester  Manuf.  Co.  v.  Howard  Fire  Ins.  Co.,  5  Gray  (Mass.),  497. 

*  Ayers  v.  Home  Ins.  Co.,  21  Iowa,  185  ;  Emery  v.  Piscataqua  Fire  and  Mar, 
Ins.  Co.,  52  Me.  322 ;  New  England  Fire  and  Mar.  Ins.  Co.  v.  Schettler,  38  111. 
166. 

6  Peoria  Mar.  and  Fire  Ins.  Co.  v.  Hall,  12  Mich.  202. 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  131 

agent  cannot  give  a  partner  who  insures  the  partnership  prop- 
erty in  his  own  name  only,  under  the  belief,  induced  by  the 
expressed  opinion  of  the  agent  to  that  effect,  that  such  insur- 
ance would  cover  the  copartnership  interest,  a  specific  article 
of  property,  a  claim  against  the  company  for  more  than  his 
own  interest,  as  his  opinion  as  to  the  legal  effect  of  the  con- 
tract does  not  bind  the  company  ;  ^  it  has  been  distinctly  held  to 
the  contrary  in  recent  well-considered  cases  in  Pennsylvania,^ 
and  in  Illinois.^  If,  however,  one  party  who  owns  a  building 
joins  with  another  party  who  owns  the  personal  property 
within  the  building,  in  an  application,  which  is  filled  up  and 
forwarded  by  the  agent  of  the  company,  to  whom  all  the  facts 
are  known,  and  a  policy  is  issued  purporting  to  insure  the  par- 
ties as  joint  owners  of  the  real  and  personal  estate,  the  insur- 
ers will  be  estopped  to  deny  that  the  title  is  a  joint  one.^  So, 
if  the  general  agent  makes  a  mistake  as  to  the  character  of 
the  insurable  interest  of  the  applicant,  the  facts  being  cor- 
rectly stated  to  him,  and  sets  it  down  as  an  absolute,  instead 
of  a  qualified,  interest,  which  it  really  is,  the  company  is  es- 
topped to  deny  that  the  interest  is  truly  stated.^  So  if  the 
agent  express  the  opinion  that  certain  outstanding  judgments 
do  not  amount  to  an  incumbrance,  this  error  of  opinion  will  be 
imputable  to  the  company ;  and  a  statement  that  there  is  no 
incumbrance  will  not  avoid  the  policy,  notwithstanding  the 
policy  provides  that  if  the  agent  of  the  company  assumes  to 
violate  any  of  its  conditions,  such  violation  shall  be  construed 
to  be  the  act  of  the  insured  and  shall  render  void  the  policy. 
"  If,"  such  is  the  vigorous  language  of  Mr.  Chief  Justice 
Woodward,  "  the  agent  returned  that  there  were  no  incum- 
brances when  he  had  been  informed  that  there  were  judgments 
and  a  lease,  he  may  have  violated  the  '  conditions,'  but  no 
company  has  a  right  to  select  and  send  out  agents  to  solicit 
patronage  and  business  for  its  benefit,  and  then  to  saddle  their 

1  Peoria  Mar.  and  Fire  Ins.  Co.  v.  Hall,  12  Mich.  202. 

2  Manhattan  Ins.  Co.  v.  Webster,  9  P.  F.  Smith  (Penn.),  227. 

3  Aurora  Fire  Ins.  Co.  v.  Eddy,  55  111.  222. 

*  Peck  V.  New  London  Co.  Mut.  Fire  Ins.  Co.,  22  Conn.  675. 
5  Atlantic  Ins.  Co.  v.  Wright,  22  lU.  462. 


132  insurance:  fire,  life,  accident,  etc. 

blunders  upon  its  customers.  If  the  assured  combine  with 
the  agent  to  cheat  the  company,  we  protect  the  company;^ 
but  if  the  assured  has  covenanted  for  nothing,  and  has  been 
guilty  of  no  misrepresentation,  concealment,  or  fraud,  the 
company  had  better  pay  his  loss,  than  to  attempt  to  make  him 
responsible  for  the  blunders  of  their  agent."  ^  And  to  the 
suggestion  that,  the  insured  being  a  member  of  a  mutual 
insurance  company,  the  agent  was  his  agent,  the  learned  judge 
replied :  "  The  charters  of  these  mutual  companies  do  make 
the  assured  members,  but  I  take  it  membership  does  not 
begin  till  the  contract  is  complete  and  the  policy  issued.  As 
to  all  preliminary  negotiations,  the  agent  acts  only  on  behalf  of 
the  company."  ^  So  if  the  agent  express  the  opinion  that  an 
accidental  omission  of  which  he  is  informed  will  make  no 
difference.* 

§132.  Agent's  Knovrledge,  Know^ledge  of  Principal.  —  Facts 
material  to  the  risk,  made  known  to  the  agent  before  the  policy 
is  issued,  are  constructively  known  to  the  company,  and  can- 
not be  set  up  to  defeat  a  recovery  on  the  policy.^  So  the  issue 
of  a  policy,  after  verbal  notice  to  the  agent  of  an  existing 
incumbrance,  is  a  waiver  of  the  written  notice  required  by 
the  terms  of  the  contract.^  And  it  has  even  been  held  that 
the  knowledge  by  an  agent  of  the  assignment  of  a  policy,  prior 
to  the  declaration  of  bankruptcy,  is  notice  to  the  company 
sufficient  to  prevent  the  policy  from  passing  to  the  assignee  in 
bankruptcy.'''  But  consent  of  an  agent  for  securing  applica- 
tions to  an  assignment  will  not  bind  the  company,  when  the 
very  form  of  the  assignment  on  the  policy  implies  that  it 
requires  the  consent  of  an  officer  of   the  company.^     And 

1  Referring  to  Smith  v.  Ins.  Co.,  post,  §  149. 

2  Columbian  lus.  Co.  v.  Cooper,  50  Penn.  St.  331.  3  Ibid. 
<  Fire  and  Mar.  Ins.  Co.  v.  Chesnut,  50  111.  111. 

&  People's  Ins.  Co.  v.  Spencer,  53  Penn.  St.  353 ;  Liddle  v.  Market  Fire  Ins. 
Co.,  4  Bosw.  (N.  Y.)  179;  Beal  v.  Park  Ins.  Co.,  16  Wis.  241 ;  Kelley  v.  Troy 
Fire  Ins.  Co.,  3  Wis.  254;  Hough  v.  City  Fire  Ins.  Co.,  29  Conn.  10;  Keenun  v. 
Mo.  State  Mut.  Ins.  Co.,  12  Iowa,  126  ;  Combs  v.  Hannibal  Savings  and  Ins. 
Co.,  43  Mo.  148;  Plumb  r.  Cattaraugus  Mut.  Ins.  Co.,  18  N.  Y.  392;  post,  §  152, 

6  Ames  V.  N.  Y.  Union  Ins.  Co.,  14  N.  Y.  (4  Kern.)  253. 

'  Gale  V.  Lewis,  16  L.  J.  n.  s.  (Q.  B.)  119. 

8  Stringham  v.  St.  Nicholas  Ins.  Co.,  3  Keyes  (N.  Y.),  280. 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  133 

especially  will  the  agent  bind  the  company,  if  the  applicant 
be  compelled  by  the  rules  of  the  company,  either  to  apply  to 
the  agent  to  make  the  survey,  or  to  make  it  himself,  strictly 
in  accordance  with  certain  requirements,  and  the  agent  is  so 
applied  to ;  ^  or  if  the  company  depends  upon  its  own  knowl- 
edge of  the  facts  furnished  by  its  agent  after  a  personal 
examination.^ 

§  133.  Representations  of  Agent.  —  The  agent  of  a  stock 
company,  appointed  under  its  by-laws  to  solicit  risks,  receive 
and  transmit  applications,  receive  back  and  deliver  policies, 
and  receive  notes  for  the  premiums  on  marine  risks,  and  cash 
for  those  on  fire  risks,  whose  services  are  paid  for  by  the  com- 
pany by  a  commission  on  the  premiums  received  by  him,  and 
who  is  specially  authorized  by  the  president  and  secretary  to 
state  to  applicants  for  insurance,  who  inquire  upon  the  sub- 
ject, that  the  capital  of  the  company  is  all  paid  in  and  invested 
according  to  law,  may  also  bind  the  company  by  his  repre- 
sentations as  to  the  condition  of  the  company  and  its  ability 
to  fulfil  its  contracts.^ 

And  it  seem's  that  the  local  agent  of  a  mutual  company  is 
presumed  to  be  authoVized  to  make  answers  to  inquiries  as  to 
the  standing,  pecuniary  or  otherwise,  of  the  company  he  repre- 
sents,* though  not  as  to  the  territorial  limits  within  which  the 
company  takes  risks,^  unless  the  assured  has  notice  that  the 
company  will  not  be  bound  by  any  such  statements,  or  other 
statements  not  contained  in  the  application.^  But  not  every  such 
statement  will  bind  the  company.  Thus  an  agent  appointed  to 
"  transact  business  "  for  the  insurers,  "  and  for  those  who  are 
insured  or  make  application  to  be  insured  "  by  them,  has  no 
authority  to  bind  the  company  by  a  promise  that  the  insured 

1  Roth  V.  City  Ins.  Co.,  6  McLean  (U.  S.  C.  Ct.),  324. 

2  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Schell,  29  Penn.  31 ;  Com.  Ins. 
Co.  V.  Ives,  Sup.  Ct.  111.  1871  ;  1  Ins.  L.  J.  822. 

3  Fogg  et  al.  V.  Griffin  et  al.,  2  Allen  (Mass.),  1;  Williams  et  al.  v.  Pew,  ib. ; 
Jones  V.  Dana,  21  Barb.  (N.  Y.)  395. 

4  Devendorf  I).  Beardsley,  23  Barb.  (N.  Y.)  656. 

5  Hackney  v.  Alleghany  Co.  Mut.  Ins.  Co.,  4  Barr  (Penn.),  185;  post,  §  148. 
«  Shawmut  Mut.  Fire  Ins.  Co.  v.  Stevens,  9  Allen  (Mass.),  332;  Chase  v. 

Hamilton  Mut.  Ins.  Co.,  20  N.  Y.  52. 


134  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

shall  not  be  called  upon  to  pay  any  assessment  on  his  premium 
note ;  nor  will  his  highly  colored  statements  as  to  the  actual 
pecuniary  condition  and  future  prospects  of  the  company, 
not  absolutely  and  materially  fraudulent,  but  allowable  within 
the  fair  range  of  embellishment  and  chaffer  in  the  matter 
of  bargain,  vitiate  the  policy  which  the  insured  has  been 
induced  to  accept  under  such  promises  and  representations, 
unless  calculated  in  the  opinion  of  the  jury  to  impose  upon  a 
careful  and  prudent  man.  If  the  representations  are  of  such 
a  character  that  they  would  vitiate  other  contracts,  they  will 
vitiate  the  contract  of  insurance,  not  otherwise.  The  strin- 
gent rules  applied  to  misrepresentations  by  the  insured  in 
obtaining  insurance,  apply  only  to  statements  materially  affect- 
ing the  risk,  and  do  not  apply  to  the  misrepresentations  of  the 
insurers  in  procuring  parties  to  insure.^  In  this  case  a  re- 
luctant and  hesitating  defendant  was  told  by  the  agent  that 
the  company  had  a  great  sum  of  money  in  its  treasury, 
enough  to  pay  all  the  losses  for  five  years ;  that  if  he  would 
pay  five  dollars  that  would  be  all  he  would  have  to  pay ;  and 
that  there  would  be  a  dividend  among  those  insifred  at  the  end 
of  five  years.  He  was  thus  induced  to  pay  the  five  dollars 
and  take  the  policy.  Instead  of  the  dividend  came  a  series  of 
assessments,  which  he  resisted  on  the  ground  that  the  policy 
was  void  by  reason  of  the  misrepresentations  whereby  he  was 
induced  to  accept  it.  Some  observations  of  the  learned  judge, 
Redfield,  C.  J.,  are  worthy  of  a  place  here. 

"  To  what  extent  the  agent's  representations,  in  effecting 
insurances,  will  bind  the  company,  is  a  question  of  more  diffi- 
culty. For  although  he  is  undoubtedly  a  general  agent  for 
transacting  a  particular  department  of  the  business  of  the  com- 
pany, in  a  limited  district,  still  his  power  to  bind  the  company 
is  certainly  not  unlimited.  The  authority  of  a  general  agent 
is  restricted  to  the  range  of  his  employment  and  the  acts  and 
representations  which  a  prudent  and  ordinarily  sagacious  and 
experienced  person  might  expect  him  to  do,  or  to  be  authorized 
to  make,  on  behalf  of  his  principal.  The  representation  claimed 
in  the  present  case  was  a  remarkable  one,  and  one  not  very 

1  Farmers'  Mut.  Fire  Ins.  Co.  v.  Marshall,  29  Vt.  23. 


INSURANCE   AGENTS,   THEIR   POWERS    AND    DUTIES.  135 

well  calculated  to  impose  upon  men  much  experienced  in  the 
manner  of  transacting  the  business  of  such  companies.  But 
so  large  a  proportion  of  the  people,  especially  in  the  remote 
rural  districts  of  the  State,  are  almost  wholly  ignorant  upon 
these  points,  and  are,  in  consequence,  so  readily  made  the 
victims  of  interested  solicitors  on  behalf  of  the  numerous 
insurance  companies,  who  are  found,  I  believe,  always  ready 
and  urgent  to  insure  one  against  all  the  calamities  of  life,  that 
courts  ought  not,  perhaps,  to  require  any  very  rigid  rules  of 
circumspection  in  these  matters  from  wholly  inexperienced 
persons.  It  seems  to  us  altogether  a  question  of  fact,  whether 
a  given  representation  was  really  calculated  to  impose  u[)on  a 
careful  and  prudent  man.  And  in  a  case  where  that  question 
should  become  important  it  would  be  proper,  when  raised  by 
counsel,  to  submit  it  to  the  jury. 

"  But  it  seems  to  us  that  the  representation  of  the  agent  in 
this  case  or  stipulation,  if  we  so  consider  it,  is  not  of  the  class 
which  will  avoid  the  policy,  if  it  would  not  equally  avoid  a 
written  contract  upon  any  other  subject.  It  is  undoubtedly 
true  that,  in  regard  to  representations  and  concealments 
affecting  materially  the  risk,  both  in  marine  and  fire  insur- 
ance, policies  may  be  avoided,  when  in  other  contracts  such 
representations  certainly  would  not  have  that  effect.  The  law 
of  insurance  has  been  regarded  as  specially  requiring  the 
utmost  good  faith.  Hence  all  representations  inserted  in  the 
policy,  or  contained  in  the  application,  and  expressly  referred 
to  in  the  policy,  as  part  of  it,  are  denominated  warranties,  and 
must  be  strictly  complied  with  or  the  policy  is  avoided.  And 
in  regard  to  representations  and  concealments  which  are  mate- 
rial, and  directly  affect  the  risk,  whether  on  the  part  of  the 
assured  or  the  insurer,  unless  tlie  representations  are  substan- 
tially true,  the  policy  is  void,  although  such  representations 
are  merely  by  parol,  and  made  at  and  before  the  time  of  effect- 
ing the  insurance,  and  not  inserted  in  the  policy  ;  they  being 
regarded  as  substantial  fraud  in  regard  to  a  policy  of  insur- 
ance, while  in  regard  to  ordinary  contracts  similar  repre- 
sentations would  perhaps  be  held  as  within  the  fair  range  of 
allowable  embellishment  and  chaffer  in  the  matter  of  bargain ; 


136  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

or,  if  in  the  nature  of  express  warranties,  would  be  held  to  have 
been  waived,  by  not  being  inserted  in  the  written  contract." 

And  in  Pennsylvania  it  has  been  held,  that  the  agents  of  a 
mutual  insurance  company  cannot  prejudice  the  rights  of  the 
company  by  misrepresentations  as  to  the  places  where  risks 
were  located ;  as  that  the  company  did  not  take  risks  in 
cities.^ 

§  134.  Authority  in  the  Matter  of  Premiums.  —  Where  the  agent 
is  authorized  to  accept  the  payment  of  premiums,  he  may  exer- 
cise his  discretion  as  to  the  mode  of  payment.  He  may,  for 
instance,  accept  a  check,  instead  of  the  money  ;  ^  or  Confed- 
erate States  notes,  while  the  notes  had  a  value,  and  the  govern- 
ment had  a  de  facto  existence ;  ^  or,  if  a  check  is  offered,  his 
request  to  let  the  money  lie,  coupled  with  a  promise  to  call  for 
it  when  he  wants  it,  will  amount  to  a  waiver  of  the  condition 
that  the  premium  shall  be  paid  before  the  insurance  shall  be- 
come binding.^  And  the  same  is  true  whether  a  check  is 
oflfered  or  not."  So,  if  the  agent  requests  the  insured  to  keep 
the  money  till  the  policy  arrives,^  or  agrees  to  be  himself 
responsible  to  the  company  for  the  premium,  accepting  the 
insured  as  his  personal  debtor  for  the  amount,  or  encourages 
delay.''' 

§  135.  And  upon  a  receipt  for  the  premium  and  the  actual 
payment  thereof  to  the  local  agent,  authorized  by  the  company 
to  make  insurances  binding  upon  them  from  the  date  of  the 
payment  to  him,  provided  they  should  approve  the  rate  of  pre- 
mium charged  and   be  otherwise  satisfied  with  the  risk,  it 

1  Hackney  v.  Alleghany  Mut.  Ins.  Co.,  4  Barr  (Penn.),  185;  post,  §  148. 

2  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  390. 

3  Robinson  v.  International  Life  Assurance  Soc,  42  N.  Y.  (3  Hand)  54. 

*  New  York  Central  Ins.  Co.  v.  National  Protection  Ins.  Co.,  20  Barb.  (N. 
Y.)  468;  Bodine  v.  Exchange  Fire  Ins.  Co.,  2  Ins.  L.  J.  23. 

5  Goit  V.  National  Prot.  Ins.  Co.,  2-5  Barb.  (N.  Y.)  189. 

6  Hallock  V.  Commercial  Ins.  Co.,  2  Dutch.  (N.  J.)  268. 

'  Sheldon  v.  Conn.  Mut.  Life  Ins.  Co.,  25  Conn.  207  ;  Bouton  v.  American 
Mut.  Life  Ins.  Co.,  25  Conn.  542;  Post  v.  il':tna  Ins.  Co.,  43  Barb.  (N.  Y.)  351. 
B\it  contra,  Bellville  Mut.  Ins.  Co.  v.  Van  Winkle,  1  Beasley  (N.  J.),  333 ;  Catoir 
V.  Am.  Life  Ins.  and  Trust  Co.,  33  N.  J.  (4  Vroom)  487.  In  Wall  v.  Home  Ins. 
Co.,  8  Bosw.  (N.  Y.  Superior  Ct.)  597,  it  was  held  that  an  agent  for  issuing  poli- 
cies and  receiving  premiums  could  not  waive  a  forfeiture  for  non-payment  of 
premium. 


INSURANCE   AGENTS,    THEIR   POWERS   AND    DUTIES.  137 

appearing  that  the  rate  charged  was  the  usual  one  for  that 
class  of  risks,  a  bill  in  equity  for  relief,  the  company  liaving 
heard  of  the  loss  and  refused  to  issue  a  policy,  was  sustained 
on  the  ground  that  the  company  could  not  be  permitted  to 
repudiate  the  contract  of  their  agent,  and  arbitrarily  refuse 
the  risk  because  a  loss  had  intervened.  The  neglect  of  the 
agent  to  forward  the  premium  is  imputable  to  the  company.^ 

So  where  an  agreement  was  made  with  an  insurance  com- 
pany's agent  for  insurance,  and  a  receipt  taken  by  the  insured 
for  the  premium,  which  however  was  not  then  paid,  stating 
that  the  insurance  would  take  effect  on  the  day  of  its  date. 
Ten  days  afterwards  the  property  was  burned,  and  on  the  fol- 
lowing day  the  insured,  without  disclosing  the  fact  of  the  fire, 
paid  the  premium  to  the  agent,  who,  in  ignorance  of  the  fact 
of  loss,  forwarded  the  application  to  the  company,  together 
with  the  premium.  A  policy  was  returned  in  due  form  to  the 
agent,  who,  having  meanwhile  heard  of  the  loss,  declined  to 
deliver  the  policy,  and  tendered  back  the  premium.  In  an 
action  setting  forth  the  above  facts,  the  plaintiff  was  held  enti- 
tled to  damages  for  the  loss  sustained,  the  contract  being  com- 
plete when  the  policy  was  forwarded  to  the  agent,  and  taking 
effect  from  the  date  of  the  receipt.^  So  such  an  agent  may 
give  permission  to  the  insured  to  remove  the  property  insured 
to  another  locality.^ 

§  136.  May  waive  Forfeiture  by  Receipt  of  Premium.  —  In  an 
action  upon  a  life  policy  it  appeared  that  the  insured  had  by 
taking  up  his  residence  abroad  violated  a  provision  of  the  policy 
which  made  it  void  if  the  assured  without  license  from  the 
insurers  should  go  beyond  the  limits  of  Europe.  The  insured, 
however,  notified  the  local  agent  of  the  insurers,  at  the  place 
where  he  effected  the  insurance  originally,  of  his  change  of 
residence,  and  asked  before  he  paid  any  further  premiums  if 
such  change  would  vitiate  his  policy,  to  which  the  agent  replied 
that  it  would  not  if  the  premiums  were  regularly  paid.   There- 

1  Perkins  v.  Washington  Ins.  Co.,  4  Cowen  (N.  Y.),  645,  reversing  s.  c. 
6  Johns.  Cli.  (N.  Y.)  485. 

2  Wliittaker  v.  Farmers'  Union  Fire  Ins.  Co.,  29  Barb.  (N.  Y.)  319. 

3  New  England  Fire  and  Mar.  Ins.  Co.  v.  Schettler,  33  111.  1G6. 


138  insurance:  fire,  life,  accident,  etc. 

upon  the  premiums  were  paid,  and  continued  to  be  paid  regu- 
larly for  several  years  to  the  local  agent  and  his  successor, 
who  had  knowledge  of  the  facts ;  but  neither  of  the  agents 
informed  their  principal  of  the  change  of  residence,  though 
regularly  forwarding  the  premiums  as  received.  It  was  con- 
tended that  the  agent  was  acting  beyond  the  scope  of  his 
authority  in  assuring  the  insured  that  such  change  of  resi- 
dence would  not  invalidate  the  policy,  if  the  premiums  con- 
tinued to  be  paid,  and  that  the  notice  of  the  change  to  the 
agents  was  not  notice  to  their  principal.  But  the  court  said 
that  the  party  paid  and  the  agent  received  the  premiums  upon 
the  faith  and  condition  that  the  policy  was  to  be  considered 
valid  and  subsisting ;  that  as  the  agents  were  duly  constituted 
for  the  purpose  of  receiving  premiums  as  well  as  for  other 
purposes,  it  was  their  duty,  and  not  that  of  the  insured,  to 
communicate  to  the  home  office  the  circumstances  under  which 
these  premiums  had  been  paid,  and  the  representations,  terms, 
and  conditions  under  which  they  were  paid ;  that  the  insurers 
must  be  deemed  to  have  constructive  notice  of  the  change  of 
residence,  and  that  upon  the  payment  and  receipt  of  the  pre- 
miums by  them  they  became  as  much  bound  as  if  the  pre- 
miums had  been  paid  directly  at  the  home  office,  and  had  been 
received  there  with  a  full  knowledge  of  the  change  of  residence 
of  the  insured. 1  In  Acie  v.  Fernie,^  it  was  held  that  an  agent 
to  collect  premiums  could  not,  by  accepting  a  premium  after 
forfeiture  of  the  policy  for  non-payment,  bind  the  company  so 
as  to  waive  the  forfeiture,  although  the  company  had  charged 
the  agent  with  the  amount  of  the  premium  on  account,  in 
accordance  with  an  understanding  that  this  should  be  done  at 
the  expiration  of  fifteen  days  after  the  premium  became  due. 
But  the  weight  of  autliority  seems  to  be  the  other  way.^ 

§  137.   Limitation  of  Agent's  Authority  by  Terms  of  Policy. — 

1  Wing  V.  Harvey,  27  Eng.  L.  &  Eq.  141.  See  also  Miner  v.  Pliocnix  Ins.  Co., 
27  Wis.  693;  Supple  v.  Cann,  9  Irish  Law,  n.  s.  1265  ;  Gloucester  Manuf.  Co. 
f.  Howard  Fire  Ins.  Co.,  5  Gray  (Mass.),  497;  Hodsdon  v.  Guard.  Life  Ins. 
Co.,  97  Mass.  144 ;  North  Berwick  Co.  v.  N.  E.  Fire  and  Mar.  Ins.  Co.,  52  Me. 
336. 

2  2  Mees.  &  Wels.  151. 
»  Ante,  §§  134,  135. 


INSURANCE   AGENTS,    THEIR   POWERS   AND   DUTIES.  139 

Of  course  if  the  insured  stipulate  in  his  application  that  the 
insurer  shall  not  be  bound  by  any  act  done  or  statement  made 
to  or  by  the  agent,  not  contained  in  the  application,  he  cannot 
shelter  himself  under  a  plea  of  equitable  estoppel,  by  reason 
of  the  agent's  fraud  or  negligence.  The  knowledge  by  the 
agent  of  a  fact  not  stated  in  the  application  in  that  case  be- 
comes entirely  immaterial,  unless  possibly  when  the  statement 
of  the  fact  may  hare  been  fraudulently  prevented  by  the 
agent. ^  And  equally,  of  course,  such  a  general  agent  has  no 
power  to  bind  the  company  in  a  case  where,  had  all  the  facts 
transpired  without  the  intervention  of  an  agent,  the  company 
would  not  be  bound.  Tlius,  where  a  proposal  was  received 
on  the  morning  after  a  fire,  information  of  which  reached  the 
agent  in  the  afternoon,  who  on  the  following  day  countersigned 
and  delivered  a  policy,  it  was  held  that  the  policy  was  invalid, 
as  there  was  no  contract  to  insure  prior  to  the  loss,  the  pro- 
posal not  then  having  been  accepted  nor  even  received.^  Nor 
can  such  an  agent  make  a  contract,  in  which  he  himself  has 
an  interest,  valid  against  the  company  ;  ^  nor,  where  he  assigns 
his  own  policy,  accept  notice  of  the  assignment.*  And  as  there 
is  no  legal  presumption  that  offices  clothe  their  agents  with 
power  to  fix  the  terms  of,  or  perfect  the  contract,  and  as  the 
question  of  the  agents'  authority  is  always  one  of  fact,  it  is 
always  advisable  in  treating  with  them  to  resolve  all  doubts  as 
to  their  powers  against  their  authority.  A  company  may  even, 
allow  its  agent  to  advertise  his  office  as  a  "  branch  office ; " 
yet  if  the  application  shows  that  the  policy  is  to  be  issued  at 
the  home  office,  and  the  premium  is  to  be  paid  when  the  policy 
is  presented  to  the  applicant,  a  receipt  for  the  premium,  signed 
by  the  agent,  and  delivered  when  the  application  is  forwarded 

1  Shawmut  Mut.  Fire  Ins.  Co.  v.  Stevens,  9  Allen  (Mass.),  332;  Chaser. 
Hamilton  Ins.  Co.,  20  N.  Y.  (6  Smith)  52;  Lockner  v.  Home  Mut.  Ins.  Co.,  17 
Miss.  (2  Bennett)  247.  These  cases  are  distinguished  from  Plumb  v.  Catta- 
raugus Co.  Mut.  Ins.  Co.,  18  N.  Y.  (4  Smith)  392,  and  similar  cases  before  cited, 
ante,  §  132.     In  that  case  there  was  no  such  stipulation. 

2  Bentley  v.  Columbia  Ins.  Co.,  17  N.  Y.  (8  Smith)  421. 

3  Ibid. 

*  Ex  parte  Hennessy,  1  Con.  &  Law.  559. 


140  insurance:  fire,  life,  accident,  etc. 

to  the  company,  will  not  fix  the  liability  of  the  latter,  although 
it  recites  that  the  money  received  is  "  for  insurance."  ^ 

§  138.  Authority  after  Negotiations  are  concluded,  —  But  un- 
less expressly  delegated  or  sanctioned  by  known  and  permitted 
usage,  tliis  power  of  moulding  the  terms  of  the  contract  does 
not  extend  to  dealing  with  facts  and  circumstances  arising  after 
the  contract  has  been  perfected.  And  it  behooves  tlie  applicant 
for  insurance,  unless  he  has  the  most  satisfactory  evidence 
that  the  agent  with  whom  he  is  negotiating  has  general  and 
unrestricted  powers,  to  examine  carefully  into  the  extent  of 
his  authority ;  for  the  law  holds  him  bound  to  know,  not  only 
whether  the  agent  is  a  general  or  special  one,  but,  if  special, 
what  are  the  limitations  upon  his  authority.  If  it  were  not  so, 
there  would  be  no  distinction  between  a  general  and  a  special 
agent,  and  all  restrictions  and  limitations  on  an  agent's  author- 
ity would  be  nugatory.  A  principal  would  in  all  cases  be  at 
the  mercy  of  his  agent,  however  carefully  he  might  have 
restricted  his  authority.  An  agent  therefore  to  receive  and 
forward  applications,  to  countersign  policies,  to  collect  pre- 
miums, and  bind  the  company  on  special  hazards  for  ten  days, 
is  not  the  agent  of  the  company  to  receive  notice,  and  fix  addi- 
tional premium  affecting  its  rights  under  a  policy  already 
issued ;  as  where  the_|iolicy  provides  that  when  premises  are 
vacated  the  policy  shall  be  void  unless  immediate  notice  be 
given  to  the  company  and  an  additional  premium  paid.^  So 
though  the  agent  have  power  to  adjust  losses  he  cannot  waive  a 
forfeiture.^ 

§  139.  Mutual  Insurance  Agents.  —  And  substantially  the 
same  general  principles  have  been  applied  in  most  of  the 
courts  in   this  country^  in  reference  to  agencies  of  mutual 

*  Linford  v.  Provincial  Horse  and  Cattle  Ins.  Co.,  10  Jur.  n.  s.  1066. 
-  Harrison  v.  City  Fire  Ins.  Co.,  9  Allen  (Mass.),  231. 

3  Piioenix  Ins.  Co.  v.  Lawrence  et  al.,  4  Met.  (Ky.)  9  ;  Tate  v.  Citizens'  Mut. 
Ins.  Co.,  13  Gray  (Mass.),  79.  And  see  post,  §  145.  See  also  Bartholomew  v. 
Merchants'  Ins.  Co.,  25  Iowa,  507. 

*  Mutual  fire  insurance  seems  not  to  have  had  much  vogue  In  England.  The 
courts  of  Massachusetts,  and  to  some  extent  those  of  Rhode  Island,  Pennsyl- 
vania, and  New  Jersey,  hold  tiiat  agents  of  mutual  insurance  companies  have 
less  extensive  powers.     See  post,  §  145  el  seq. 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  141 

insurance  companies,  which  we  have  seen  have  been  applied 
to  agencies  of  stock,  or,  as  they  are  sometimes  called,  proprie- 
tary companies,  upon  the  general  ground  that  incorporated 
companies,  as  well  mutual  as  others,  when  business  is  neces- 
sarily conducted  through  agents,  should  be  required  to  see 
that  their  officers  and  agents  not  only  know  what  their  powers 
and  duties  are,  but  that  they  do  not  habitually  and  upon  sys- 
tem transcend  those  powers,  else  third  persons  who  have  no 
means  of  access  to  the  by-laws  and  resolutions  which  govern 
the  body  corporate,  and  no  means  of  judging  in  the  particu- 
lar instance  whether  the  officer  is  or  is  not  transcending  his 
powers,  cannot  deal  with  them  with  any  degree  of  safety.  A 
mutual  insurance  company,  for  instance,  whose  rules  prohibit 
the  assignment  of  a  policy,  "  unless  by  the  consent  of  the 
company,  manifested  in  writing,"  but  whose  uniform  practice 
has  been  to  signify  that  consent  by  an  indorsement  thereof  on 
the  policy,  signed  by  the  secretary,  without  any  formal  note  or 
direction  with  reference  to  the  matter,  will  not  be  permitted 
to  deny  that  such  is  a  consent  of  the  company.  They  must  be 
held  responsible,  as  against  strangers  at  least,  on  the  ground 
of  a  tacit  assent  and  approval,  for  the  known  act  of  their 
secretary.  It  might  be  different  if  the  act  were  of  such  a 
nature  that  by  strict  vigilance  and  scrutiny  it  could  not  be 
known,  and  was  not  in  fact  known. ^  So  the  consent  of  an 
agent  to  further  insurance  indorsed  on  the  policy,  such  being 
shown  to  be  his  practice  known  to  the  company,  is  equivalent 
to  the  consent  of  the  directors  subscribed  by  the  secretary, 
required  by  a  provision  of  the  charter  of  the  company .^  And 
any  customary  exercise  of  authority  known  to  the  principal, 
and  not  repudiated,  will  bind  the  principal.^ 

§  140.  Agent  of  Company  not  Agent  of  Applicant,  though 
made  so  by  a  By-law  of  the  Company.  —  The  local  agent  of  a 
mutual  insurance  company  authorized  to  receive  and  forward 
applications,  is  not  necessarily  the  agent  of  the  applicant  also. 

1  Conover  v.  The  Mut.  Ins.  Co.  of  Albany,  1  Comst.  (N.  Y.)  290,  affirming 
8.  c.  SDenio  (N.  Y.),  254. 

2  Peck  V.  New  London  Co.  Mut.  Fire  Ins.  Co.,  22  Conn.  575. 

3  Brockelbank  v.  Sugrue,  5  C.  &  P.  21. 


142  insurance:  fire,  life,  .accident,  etc. 

And  if  at  the  time  of  the  application  the  latter  states  facts 
material  to  the  risk,  and  the  agent  neglects  to  communicate 
them  to  the  company,  in  consequence  of  which  a  policy  is 
issued  in  ignorance  of  the  fact,  the  neglect  is  not  imputable 
to  the  applicant  so  as  to  make  him  responsible  as  for  a  con- 
cealment. And  that  the  agent  was  instructed  to  regard  him- 
self as  the  agent  of  the  applicant  rather  than  of  the  company, 
these  instructions  not  being  known  to  the  applicant,  does  not 
alter  the  case.^  And  an  agent  duly  appointed  by  the  local  agent, 
in  pursuance  of  a  custom  known  to  and  approved  by  the  com- 
pany, to  solicit  and  forward  to  him  applications  for  insurance, 
stands  in  the  same  relation  to  the  company  as  to  such  mis- 
takes.2 

And  the  same  is  true  where  the  agent  assumes  to  fill  up 
the  application  from  actual  observation,  and,  while  giving  a 
full  description  of  the  property,  neglects  to  mention  matters 
material  to  the  risk,  which,  however,  were  open  to  his  obser- 
vation. This  is  no  concealment  or  withholding  of  informa- 
tion on  the  part  of  the  insured.  And  the  company  would  be 
bound  by  the  agent's  over-estimated  value  of  the  property  not 
induced  by  the  applicant.^ 

So  if  the  agent  neglects  to  state  in  the  application  the  fact 
of  an  existing  incumbrance  which  is  truly  stated  to  him  by 
the  applicant,  notwithstanding  the  application,  by  a  memo- 
randum in  the  margin,  required  the  applicant  to  state  whether 
the  property  is  incumbered,  by  what,  and  to  what  amount, 
and  if  not,  to  say  so  ;  and  although  the  by-laws  make  the 
person  taking  the  survey  the  agent  of  the  applicant.  He  is 
still  the  agent  of  the  company,  and  as  such  it  is  so  far  bound 
by  his  acts  that  it  cannot  set  up  his  negligence  as  a  conceal- 
ment on  the  part  of  the  insured.^ 

§  141.  Agent  may  by  his  Acts  estop  his  Principal.  —  Indeed 
such  an  agent  may  so  conduct  his  business  as  to  estop  the 
company  he  represents  from  denying  the  truth  of  the  state- 

^  Bebee  v.  The  Hartford  Mut.  Fire  Lis.  Co.,  25  Conn.  51. 
2  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517. 
5  Cumberland  Valley  Mut.  Prot.  Co.,  29  Penn.  St.  (5  Casey)  31. 
*  Masters  v.  Madison  Co.  Mut.  Ins.  Co.,  11  Barb.  (N.  Y.  S.  C.)  624;  Colum- 
bian Ins.  Co.  V.  Cooper,  60  Penn.  St.  331 ;  ante,  §  131. 


INSURANCE    AGENTS,  •  THEIR   POWERS   AND   DUTIES.  143 

ments  made  in  the  application  ;  as  by  assuming  to  fill  up  and 
forward  an  application,  signed  by  himself  as  agent  of  the 
applicant,  but  without  authority  to  do  so.  Thus  where  the 
agent  was  requested  by  the  applicant  to  copy  the  answers 
which  he  was  upon  the  point  of  making  in  another  application 
for  insurance  upon  the  same  property,  but  instead  of  waiting 
till  he  received  such  answers  to  copy,  forwarded  to  his  com- 
pany an  old  application  for  insurance  upon  the  same  property, 
corrected  by  himself  to  suit  what  he  supposed  to  be  the 
change  of  circumstances,  thus  sending  an  application  which  • 
he  was  not  authorized  by  the  applicant  to  send  ;  he  was  held  to 
be  the  agent  of  the  company  so  far  as  to  estop  them  from  deny- 
ing the  contract,  and  from  setting  up  its  mistakes  as  misrep- 
resentations working  a  forfeiture.  He  was  at  least  the  agent 
of  the  company  for  forwarding  the  application,  and  his  mis- 
conduct in  that  regard  was  imputable  to  his  principal,  and 
could  not  be  allowed  to  prejudice  the  rights  of  the  applicant 
who  did  not  know  of  it,  and  supposed,  and  had  a  right  to 
suppose,  he  was  insured  upon  the  basis  of  the  application 
which  he  actually  did  send  to  the  agent,  but  which  the  agent 
did  not  forward.  And  the  court  would  not  compel  the  in- 
sured to  go  to  a  court  of  equity  for  relief,  feeling  authorized  as 
a  court  of  law  to  apply  precisely  the  same  rules  of  equitable 
waiver  and  estoppel  as  are  applied  in  courts  of  equity.^ 

But  if  an  agent  to  whom  the  assured  by  letter  applies  for 
insurance  fills  up  an  application,  and  signs  thereto  the  name 
of  the  assured,  though  without  his  knowledge,  and  tlie  insured 
afterwards  receives  a  policy  with  a  copy  of  the  application  an- 
nexed, the  application  being  expressly  made  part  of  the  con- 
tract, and  the  contract  providing  that  by  accepting  the  policy 
the  insured  becomes  responsible  for  the  truth  of  the  state- 
ments contained  in  the  application,  the  fact  that  the  original 
statement  was  made  by  the  agent,  and  without  the  knowledge 
of  the  assured,  will  not  avail  to  prevent  a  forfeiture  by  reason 
of  a  material  false  statement.^ 

I  Wilson  I'.  Conway  Mut.  Fire  Ins.  Co.,  4  R.  I.  141.  And  see  also  Denny  v. 
Conway  Stock  and  Mut.  Fire  Ins.  Co.,  13  Gray  (Mass.),  492;  Ames  v.  N.  Y. 
Union  Ins.  Co.,  14  N.  Y.  258. 

•  Eichardson  v.  Maine  Ins.  Co.,  46  Me.  894. 


144  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

§  142.  Their  Knowledge  and  their  Mistakes  those  of  the  Prin- 
cipal. —  And  such  agent's  knowledge  of  the  existence  of  a  fact 
material  to  the  risk,  as  for  instance  a  steam-boiler  in  the  build- 
ing, but  not  mentioned  in  the  application,  is  the  knowledge  of 
tlie  company,  and  precludes  them  from  excepting  to  the  defect 
in  the* application.^ 

And  material  errors  made  by  the  agent  in  the  surveys  and 
measurements,  such  as  if  made  by  the  applicant  would  amount 
to  a  breach  of  warranty,  cannot  be  set  up  by  the  company  in 
defence  to  an  action  for  a  loss  under  the  policy.  The  mis- 
statement is  in  law  the  misstatement  of  the  company ;  and 
although  the  writing  must  be  held  to  express  the  contract  of 
the  parties,  and  cannot  be  varied  by  parol  evidence,  yet  when 
the  insurance  company  who  made  this  statement  attempts  to 
show  that  it  is  false,  for  the  purpose  of  showing  a  breach  of 
the  warranty,  it  may  justly  be  estopped  to  deny  what  it  has 
once  asserted.2 

So  if  the  agent  of  the  company,  there  being  no  written  appli- 
cation, gives  a  description  of  the  property,  from  his  own 
knowledge  obtained  by  personal  examination,  which  descrip- 
tion is  inserted  in  the  policy,  and  it  is  denied  that  the  property 
destroyed  was  covered  by  the  policy,  the  company  will  not  be 
allowed  to  take  advantage  of  any  inaccuracy  in  the  language 
of  the  description,  there  being  no  evidence  of  any  attempt  to 
mislead  on  the  part  of  the  assured.^ 

§  143.  Agent's  Power  to  weiive  and  estop.  —  It  has,  in  fact, 
been  very  generally  held  that  knowledge  by,  or  notice  to,  the 
agent,  of  the  inaccuracy  of  a  statement  in  the  application  upon 
which  a  policy  is  issued  after  such  notice  or  knowledge,  binds 
the  company,  and  prevents  them  from  availing  themselves 
of  the  inaccuracy  in  defence,  some  of  the  cases  regarding 
the  facts  as  amounting  to  a  waiver,  and  others  as  working  an 
estoppel  in  pais.  And  this  is  true  even  thougli  the  policy  pro- 
vide that  when  the  application  is  made  through  an  agent  of 

1  Campbell  v.  Merchants'  and  Farmers'  Mut.  Ins.  Co.,  37  N.  H.  35 ;  ante, 
§132. 

2  Plumb  V.  Cattaraugus  Co.  Mut.  Ins.  Co.,  18  N.  Y.  (4  Smith)  392;  Howard 
Ins.  Co.  V.  Bruner,  23  Penn.  St.  (11  Harris)  50. 

8  Meadowcraft  v.  Standard  Fire  Ins.  Co.,  61  Penn.  91.     And  see  ante,  §  132. 


INSURANCE   AGENTS,   THEIR   POWERS   AND   DUTIES.  145 

the  company  the  applicant  shall  be  responsible  for  such  agent's 
representations.^ 

And,  indeed,  the  tendency  of  the  courts  generally  is  daily 
becoming  more  decided  to  hold  that  such  an  agent  may  waive 
any  of  the  conditions  of  the  policy  and  bind  the  company  by 
such  waiver,  and  that  his  promises  and  acts,  both  of  omission 
and  commission,  representations,  statements,  and  assurances, 
made  within  the  scope  of  his  agency,  and  after  knowledge  of 
a  breach  of  condition  or  of  the  inaccuracy  of  the  statements  in 
the  application,  if  relied  upon  by  the  insured,  who  is  himself 
without  fault,  may  be  set  up  by  the  insured,  either  on  the  ground 
of  waiver  or  of  estoppel,  in  answer  to  a  claim  of  forfeiture.^ 

The  local  agent  of  an  insurance  company  authorized  to 
issue  and  renew  policies,  and  receive  premiums,  may  consent 

1  Miller  v.  Mut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216 ;  Clark  v.  Union  Mut.  Fire 
Ins.  Co.,  40  N.  H.  333  ;  Peck  v.  New  London  Co.  Mut.  Fire  Ins.  Co.,  22  Conn. 
575;  Hodgkins  v.  Montgomery  Co.  Mut.  Ins.  Co.,  34  Barb.  213;  Patten  v. 
Merchants'  and  Farmers'  Mut.  Fire  Ins.  Co.,  40  N.  H.  375 ;  Campbell  v.  Mer- 
chants' and  Farmers'  Mut.  Ins.  Co.,  87  N.  H.  35 ;  Marshall  v.  Columbia  Mut. 
Ins.  Co.,  7  Fost.  (N.  H.)  157;  Prot.  Ins.  Co.  v.  Harmer,  2  Ohio  (N.  Y.),  452; 
Howard  Fire  Ins.  Co.  v.  Bruner,  23  Penn.  St.  50;  Rex  v.  Insurance  Companies, 
2  Phila.  (Penn.)  357;  Kelley  v.  Troy  Fire  Ins.  Co.,  3  Wis.  254;  Masters  w. 
Madison  Co.  Mut.  Ins.  Co.,  11  Barb.  (N.  Y.)  624;  Plumb  v.  Cattaraugus  Co. 
Mut.  Ins.  Co.,  18  N.  Y.  (4- Smith)  392.  And  see  also  New  Castle  Fire  Ins. 
Co.  V.  Macmoran  et  al.,  3  Dow,  255,  where  it  seems  to  have  been  taken  for 
granted  that  such  was  the  law.  Perry  Co.  Ins.  Co.  v.  Stewart,  19  Penn.  St.  45; 
Ames  V.  N.  Y.  Union  Ins.  Co.,  14  N.  Y.  258 ;  Somers  v.  Atheneum  Fire  Ins. 
Co.,  9  L.  C.  61;  Michael  v.  Mut.  Ins.  Co.  of  Nashville,  10  La.  737;  Roth  v.  City 
Ins.  Co.,  6  McLean,  U.  S.  324 ;  Rowley  v.  Empire  Ins.  Co.,  40  N.  Y.  557 ; 
Franklin  v.  Atlantic  Ins.  Co.,  40  Me.  559  ;  Beal  v.  Park.  Ins.  Co.,  16  Wis.  241. 
The  cases  of  Kennedy  v.  St.  Lawrence  Co.  Mut.  Ins.  Co.,  10  Barb.  (N.  Y.)  285;  , 
Sexton  V.  Montgomery  Co.  Mut.  Ins.  Co.,  9  ib.  191;  apd  Jennings  v.  Chenango 

-Co.  Mut.  Ins.  Co.,  2  Denio  (N.  Y.),  75,  to  the  contrary,  cannot  be  reconciled 
with  the  later  cases  in  the  New  York  courts. 

2  Columbia  Ins.  Co.  v.  Cooper,  50  Penn.  St.  331 ;  Franklin  v.  Atlantic  Fire 
Ins.  Co.,  42  Mo.  456;  Keeler  v.  Niagara  Ins.  Co.,  16  Wis.  523;  Viale  v.  Germa- 
nla  Ins.  Co.,  26  Iowa,  9 ;  Boehen  v.  Williamsburg  Ins.  Co.,  35  N.  Y.  131 ;  May 
V.  Buckeye  Mut.  Ins.  Co.,  25  Wis.  291 ;  Peoria  M.  and  F.  Ins.  Co.  v.  Hall,  12 
Mich.  202.  By  statute  in  New  Hampshire  it  is  provided,  in  relation  to  the 
insurance  companies  of  that  State,  that  when  applications  are  taken  by  an 
agent  the  policy  shall  not  be  void  by  reason  of  any  error,  mistake,  or  misrepre- 
sentation not  intentionally  and  fraudulently  made.  Laws  1855,  c.  1662,  §  6. 
The  law  has,  however,  no  effect  upon  foreign  insurance  companies.  Campbell 
V.  Merchants'  and  Farmers'  Mut.  Ins.  Co.,  ubi  sup. 

10 


146  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

to  a  change  of  title,^  or  he  may  waive  a  forfeiture  by  reason  of 
change  of  title,  by  the  acceptance  of  the  premium  and  the 
issue  of  a  renewal  receipt,  with  full  knowledge  of  the  change 
of  title. 2 

§  144.  And  to  these  numerous  and  respectable  authorities 
the  Supreme  Court  of  the  United  States  has  recently  added 
the  weight  of  its  deliberate  approval.^  That  court  holds  the  fol- 
lowing language :  "  This  question  has  been  decided  differently 
by  courts  of  the  highest  respectability  in  cases  precisely  analo- 
gous to  the  present.  It  is  not  to  be  denied  that  the  application, 
logically  considered,  is  the  work  of  the  assured,  and  if  left  to 
himself  as  to  such  assistance  as  he  might  select,  the  person  so 
selected  would  be  his  agent,  and  he  alone  would  be  responsible. 
On  the  other  hand,  it  is  well  known  —  so  well  that  no  court 
would  be  justified  in  shutting  its  eyes  to  it  —  that  insurance 
companies  organized  under  the  laws  of  the  State,  and  having  in 
that  State  their  principal  business  office,  send  their  agents  all 
over  the  land,  with  directions  to  solicit  and  procure  applications 
for  policies,  furnishing  them  with  printed  arguments  in  favor 
of  the  value  and  necessity  of  life  insurance,  and  of  the  special 
advantages  of  the  corporation  which  the  agent  represents. 
They  pay  these  agents  large  commissions  on  the  premiums 
thus  obtained,  and  the  policies  are  delivered  at  their  hands  to 
the  assured.  The  agents  are  stimulated  by  letters  and  instruc- 
tions to  activity  in  procuring  contracts ;  and  the  party  who  is 
in  this  manner  induced  to  take  out  a  policy  rarely  sees  or 
knows  any  thing  about  the  company  or  its  officers  by  whom  it 
is  issued,  but  looks  to,  and  relies  upon,  the  agent  who  has 
persuaded  him  to  effect  insurance,  as  the  full  and  complete 
representative  of  the  company  in  all  that  is  said  or  done  in 
making  the  contract.  Has  he  not  a  right  to  so  regard  him  ? 
It  is  yet  true  tliat  the  reports  of  judicial  decisions  are  filled 
with  the  efforts  of  these  companies,  by  their  counsel,  to  estab- 
lish the  doctrine  that  they  can  do  all  this,  and  yet  limit  the 
responsibility  of  the  acts  of  these  agents  to  the  simple  receipt 

1  111.  Mut.  Fire  Ins.  Co.  v.  Stanton  (1872),  2  Ins.  L.  J.  29. 

2  Miner  v.  Phoenix  Ins.  Co.,  27  Wis.  693 ;  s.  c.  1  Ins.  L.  J.  41. 
'  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222. 


INSURANCE   AGENTS,   THEIR   POWERS   AND    DUTIES.  147 

of  the  premium  and  delivery  of  the  policy  ;  the  argument  being 
that,  as  to  all  other  acts  of  the  agent  he  is  the  agent  of  the 
insured.  This  proposition  is  not  without  support  in  some  of 
the  earlier  decisions  on  the  subject ;  and,  at  a  time  when 
insurance  companies  waited  for  parties  to  come  to  them  to 
seek  assurance,  or  to  forward  application  on  their  own  motion, 
the  doctrine  had  a  reasonable  foundation  to  rest  upon.  But 
to  apply  such  a  doctrine  in  its  full  force  to  the  system  of  sell- 
ing policies  through  agents,  which  we  have  described,  would 
be  a  delusion  and  a  snare,  leading,  as  it  has  done  in  numerous 
instances,  to  the  grossest  frauds,  of  which  the  insurance  com- 
panies receive  the  benefit,  and  the  parties  supposing  them- 
selves insured  are  the  victims.  The  tendency  of  the  modern 
decisions  in  this  country  is  steadily  in  the  opposite  direction. 
The  powers  of  the  agent  are,  primd  facie,  coextensive  with  the 
business  entrusted  to  his  care,  and  will  not  be  narrowed  by 
limitations  not  communicated  to  the  persons  with  whom  he 
deals.^  An  insurance  company,  establishing  a  local  agency, 
must  be  held  responsible  to  the  parties  with  whom  they  trans- 
act business  for  the  acts  and  declarations  of  the  agent,  within 
the  scope  of  his  employment,  as  if  they  proceeded  from  the 
principal.^ 

"  In  the  fifth  edition  of  American  Leading  Cases,  after  a  full 
consideration  of  the  authorities,  it  is  said :  '  By  the  interested 
or  officious  zeal  of  the  agents  employed  by  the  insurance  com- 
panies in  the  wish  to  outbid  each  other  and  procure  customers, 
they  not  un frequently  mislead  the  insured  by  a  false  or  erro- 
neous statement  of  what  the  application  should  contain,  or, 
taking  the  preparation  of  it  into  their  own  hands,  procure  his 
signature  by  an  assurance  that  it  is  properly  drawn  and  will 
meet  the  requirements  of  the  policy.  The  better  opinion 
seems  to  be  that,  when  this  course  is  pursued,  the  description 
of  the  risk  should,  though  nominally  proceeding   from  the 

1  Bebee  v.  Hartford  Ins.  Co.,  25  Conn.  51 ;  Lycoming  Ins.  Co.  v.  SchoUen- 
berger,  8  Wright  (Penn.),  259;  Beal  v.  Park  Ins.  Co.,  16  Wis.  241;  Davenport 
V.  Peoria  Ins.  Co.,  17  Iowa,  276. 

2  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517 ;  Horwitz 
V.  Equitable  Ins.  Co.,  40  Mo.  557 ;  Ayres  v.  Hartford  Ins.  Co.,  17  Iowa,  176 ; 
Howard  Ins.  Co.  v.  Brunei,  11  Har.  (Penn.)  50. 


148  insurance:  fire,  life,  accident,  etc. 

assured,  be  regarded  as  the  act  of  the  insurers.'  ^  The  modern 
decisions  fully  sustain  this  proposition,  and  they  seem  to  us 
founded  in  reason  and  justice,  and  meet  our  entire  approval. 
This  principle  does  not  admit  oral  testimony  to  vary  or  contra- 
dict that  which  is  in  writing,  but  it  goes  upon  the  idea  that 
the  writing  offered  in  evidence  was  not  the  instrument  of  the 
party  whose  name  is  signed  to  it ;  that  it  was  procured  under 
such  circumstances  by  the  other  side  as  estops  that  side  from 
using  it  or  relying  on  its  contents  ;  not  that  it  may  be  con- 
tradicted by  oral  testimony,  but  that  it  may  be  shown  by  such 
testimony  that  it  cannot  be  lawfully  used  against  the  party 
whose  name  is  signed  to  it."  And  in  a  very  recent  case  in 
Iowa,2  l\^Q  broad  proposition  is  affirmed  that  "  an  insurance 
company  transacting  business  through  an  agent  having  author- 
ity to  solicit,  make  out,  and  forward  applications,  to  deliver 
policies  when  returned,  and  to  collect  and  transmit  premiums, 
is  aifected  by  the  knowledge  acquired  by  such  agent  when 
engaged  in  procuring  an  application,  and  bound  by  his  acts 
done  at  such  time  with  respect  thereto." 

In  order,  however,  that  statements  made  to  the  company's 
agent,  but  misunderstood  or  not  set  down  by  him  in  the  appli- 
cation, may  protect  the  insured  from  the  consequences  of  mis- 
representation, it  should  appear  that  they  were  made  at  the 
time  when  the  application  was  taken,  and  in  connection  there- 
with ;  statements  made  at  a  prior  and  fruitless  interview  can- 
not have  that  effect.^ 

§  145.  Courts  of  Massachusetts  and  Rhode  Island  more 
Strict.  —  But  the  courts  of  Massachusetts  and  Rhode  Island, 
notwithstanding  the  admitted  hardship  of  the  case,  have 
refused  to  yield  to  the  strong  equity  of  the  claim  of  the 
assured  under  like  circumstances.  Looking  upon  the  attempt 
to  show  by  parol  evidence  that  the  facts  untruly  stated,  or 
carelessly  or  incautiously  omitted,  were  known  to  the  insurers 
or  their  agent  when  the  policy  was  issued,  as  a  direct  violation 
of  the  rule  that  parol  evidence  cannot  be  admitted  to  con- 

1  Vol.  ii.  p.  947  ;  Eowley  v.  Empire  Ins.  Co.,  36  N.  Y.  650. 

2  Miller  v.  Mut.  Benefit  Life  Ins.  Co.,  31  Iowa,  216. 
'  Boggs  et  al.  v.  American  Ins.  Co.,  30  Mo.  63. 


INSURANCE   AGENTS,   THEIR  POWERS   AND   DUTIES.  149 

tradict  or  vary  the  terms  of  a  written  agreement,  they  have 
persistently  excluded  such  evidence,  even  in  cases  where  the 
insurers  were  notified  by  the  insured,  and  assented  to  the 
omission.  Thus,  a  failure  to  mention  in  the  application 
the  fact  that  part  of  the  premises  insured  was  used  as  a  grist- 
mill, the  same  being  included  in  a  memorandum  of  special 
hazards,  the  neglect  to  mention  which  involved  a  forfeiture  of 
all  rights  under  the  policy,  was  held  to  be  fatal  to  the  claim 
of  the  assured,  though  the  agent  was  fully  authorized  to  make 
contracts  of  insurance,  without  reference  to  the  company  for 
its  sanction,  and  examined  the  property,  saw  the  grist-mill, 
agreed  and  suggested  what  was  material  to  be  stated,  and  in 
fact  filled  up  the  application  himself.^  And  the  same  doctrine 
has  been  repeatedly  held  where  the  insurers  themselves  had 
knowledge  of,  and  assented  to,  the  fact  which  was  afterwards 
allowed  to  be  set  up  as  a  defence  to  the  claim  of  the  insured. ^ 
They  hold  with  equal  strictness  that  agents  of  mutual  insur- 
ance companies  employed  by  them  to  procure  and  forward 
applications,  and  authorized  to  receipt  for  premiums,  although 
it  is  their  custom  to  fill  up  the  applications,  and  make  such 
explanations  as  may  be  necessary,  are  nevertheless  generally 
to  be  regarded  as  the  agents  of  the  applicants  also,  at  least  so 
far  as  to  make  the  applicants  responsible  for  the  statements 
contained  in  the  application.  The  mistake  of  the  agent  is  their 
mistake ;  and  though  in  point  of  fact  the  answer  or  statement 
was  truthfully  and  accurately  made  to  the  agent,  and  if  set 
down  as  given  would  have  been  correct,  yet  if,  by  inadver- 
tence or  infirmity,  it  is  untruly  set  down,  a  court  of  law  must 
hold  the  applicant  to  the  terms  of  his  contract,  and  cannot 
admit  evidence  to  show  that  it  was  really  different  from  what 
it  appears  to  be.^ 

1  Lee  V.  Howard  Fire  Ins.  Co.,  3  Gray  (Mass.),  583. 

2  Bennett  v.  Union  Mut  Fire  Ins.  Co.,  7  Cusli.  (Mass.)  173. 

3  Holmes  et  al.  v.  Tiie  Charlestown  Mut.  Fire  Ins.  Co.,  10  Met.  (Mass.)  211; 
Jenkins  v.  The  Quincy  Mut.  Fire  Ins.  Co.,  7  Gray  (Mass.),  370;  Wilson  v.  Con- 
way Mut.  Fire  Ins.  Co.,  4  R.  I.  141 ;  Barrett  et  als.  v.  The  Union  Mut.  Fire  Ins. 
Co.,  7  Cush.  (Mass.)  175;  Kibbe  r.  Hamilton  Mut.  Ins.  Co.,  11  Gray  (Mass.), 
163 ;  Abbott  v.  Shawmut  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  213.  In  Pennsyl- 
vania also  a  tendency  to  the  same  strictness  has  been  shown.     Smith  v.  Ins. 


150  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

And  in  a  later  case,  the  same  court,  where  the  premium 
had  actually  been  paid  to  the  agent  of  the  company,  but  was 
not  paid  over  or  tendered  to  the  company  until  eight  days 
after  the  date  of  the  policy,  and  after  the  loss,  the  policy  pro- 
viding that  every  agent  forwarding  applications,  or  receiving 
premiums,  is  the  agent  of  the  applicant  and  not  of  the  com- 
pany, reaffirms  the  doctrine  of  the  above  cases,  and  denies  the 
authority  of  the  agents  and  officers  of  a  mutual  insurance 
company  to  waive  the  by-laws  and  provisions  which  relate  to 
the  substance  of  the  contract,  adopted  by  the  members  of  such 
company  for  their  mutual  protection.^  Nor  has  such  an  agent 
authority  to  perfect  the  contract,  in  behalf  of  the  company, 
especially  if  the  receipt  specifies  that  the  premium  is  to  be 
refunded  if  tlie  office  does  not  approve ;  a  sufficiently  clear 
intimation,  it  would  seem,  of  the  agent's  want  of  authority  to 
make  the  contract.^  Nor  is  the  delivery  of  a  new  premium 
note  to  him  by  the  assignees,  after  an  alleged  transfer  of  the 
policy,  where  the  validity  of  the  assignment  depends  upon 
the  question  whether  the  company  at  the  time  of  their  assent 
had  knowledge  of  the  delivery  of  the  note,  a  delivery  to  the 
company  so  as  to  affect  them  with  knowledge  of  the  fact.^ 
Nor  can  an  agent  to  take  and  transmit  policies,  to  whom  the 
insured  surrenders  his  policy  for  cancellation,  bind  the  com- 
pany by  his  promise  to  deliver  up  the  premium  note,  although 
the  policy  be  actually  cancelled.  The  cancellation  of  the 
policy  does  not  relieve  the  note  from  liability  to  assessment 
for  losses  prior  to  the  surrender,  and  the  agent  is  clothed  with 
no  authority  to  give  up  the  securities  of  the  company.^  It  is 
doubtful  whether  the  company  itself  could  surrender  the  note 

Co.,  24  Penn.  St.  320.  But  see  contra,  a  quite  recent  case,  Spring  Garden  Ins. 
Co.  V.  Scott,  Phila.  Leg.  Int.  IMarch  14, 1870,  and  post,  §  148  et  seq.  And  in  Ken- 
tucky, Prot.  Ins.  Co.  v.  Hall,  15  B.  Mon.  (Ky.)  411. 

1  Mulrey  v.  The  Sliawmut  Fire  Ins.  Co.,  4  Allen  (Mass.),  116.  In  the  cases 
above  cited  from  the  10th  of  Met.  and  7th  of  Cush.  it  is  intimated  that  equity 
miglit  relieve  in  such  a  case ;  and  so  it  undoubtedly  will.  See  also  Wilson  v. 
Conway  Mut.  Fire  Ins.  Co.,  4  R.  I.  141. 

2  N.  Y.  Union  Mut.  Ins.  Co.  v.  Johnson,  23  Penn.  St.  (11  Harris)  72. 
'.  Fogg  et  als.  v.  Middlesex  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  337. 
<  Marblehead  Mut.  Fire  Ins.  Co.  v.  Underwood,  3  Gray  (Mass.),  210. 


INSURANCE    AGENTS,   THEIR   POWERS   AND   DUTIES.  151 

under  such  circumstances.  This  might  be  tantamount  to  a 
wilful  omission  of  the  note  in  calculating  the  assessment,  and 
if  so,  it  would  vitiate  the  assessment. 

But  if  the  agent  sends  in  an  application  which  was  never 
authorized,  instead  of  a  defective  application  which  was  au- 
thorized, the  company  will  be  bound  as  if  no  application  was 
ever  made,  if  the  policy  be  issued  upon  the  first,  or,  if  upon  the 
last,  then  they  will  be  bound  if  the  defective  application  be 
good  so  far  as  it  goes.^  The  applicant  is  bound  by  an  appli- 
cation which  he  authorizes,  though  he  may  not  know  its 
contents.^ 

§  146.  So  as  to  the  Power  of  Officers  of  Mutual  Companies.  — 
And  in  that  State  the  officers  of  mutual  insurance  companies 
are  held  to  the  strictest  compliance  with  the  requirements  of 
the  by-laws,  and  limited  to  the  exercise  of  such  powers  as  are 
thereby  conferred.  Mutual  insurance,  it  is  truly  observed,  is 
essentially  different  from  stock  insurance,  and  much  of  the 
litigation  that  has  grown  out  of  this  species  of  insurance  has 
been  owing  to  inattention  to  this  difference.  Its  original 
design  was  to  provide  cheap  insurance  by  means  of  local  asso- 
ciations, the  members  of  which  should  insure  each  other. 
Such  associations  are  in  their  nature  adapted  only  to  local 
business.  They  need  many  by-laws  and  conditions  that  are 
not  required  in  stock  companies  ;  and  it  is  necessary  and 
equitable  that  each  person  who  gets  insured  in  them  should 
become  subject  to  the  same  obligations  towards  his  associates 
that  he  requires  from  them  towards  himself.  If  the  officers 
have  discretionary  power  as  to  the  terms  of  the  contract,  or 
even  as  to  its  form,  it  is  obvious  that  different  parties  may 
become  members  upon  different  terms  and  conditions,  and 
thus  the  principle  of  mutuality  will  be  completely  abrogated. 
When  the  company  have  once  determined  the  forms  in  which 
their  policies  shall  be  made,  and  the  conditions  upon  which 
they  are  willing  to  contract,  it  is  nothing  less  than  a  violation 
of  duty  for  the  officers  to  undertake  to  bind  the  companies 
they  represent  by  other  and  inconsistent  contracts,  parol  or 

1  Blake  v.  Exchange  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265. 

2  Draper  v.  Charter  Oak  Ins.  Co.,  2  Allen  (Mass.),  569. 


152  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

otherwise.^  Hence  where  the  by-laws  of  a  company  provide 
that  subsequent  insurance  obtained,  and  subsequent  altera- 
tions made,  without  the  consent  in  writing  of  their  president, 
shall  avoid  the  policy,  the  verbal  consent  of  the  president  is 
unauthorized.^  Nor  when  the  by-laws  require  that  the  pre- 
mium shall  be  paid  before  the  policy  shall  take  effect,  has  any 
officer  the  power  to  bind  the  company  by  an  agreement  that 
notwithstanding  the  non-payment  of  the  premium  the  policy 
shall  be  effected.^  Nor  to  estop  the  company  by  a  representa- 
tion that  insurance  has  been  obtained,  when  in  fact  the  pre- 
mium has  not  been  paid.^  For  the  same  reason,  where  the 
charter  provides  that  an  applicant  shall  deposit  his  note 
before  he  receive  a  policy,  no  officer  can  waive  the  condition 
by  an  assurance  that  the  risk  shall  commence  immediately 
and  before  the  policy  is  issued.^  The  same  rule,  however, 
does  not  apply  where  the  provision  for  the  prepayment  of  the 
premium  is  not  a  condition,  or  by  law  or  otherwise  a  part  of 
the  policy,  but  is  a  merely  collateral  agreement  appended  to 
the  application.  In  such  case  the  prepayment  of  the  premium 
may  be  waived  by  any  officer  or  agent  the  general  scope  of 
whose  duties  gives  him  a  right  to  act  in  the  premises.^ 

§  147.  This  Rule  Applicable  only  to  By-laws  -which  are  of  the 
Essence  of  the  Contract.  —  But  the  courts  of  Massachusetts 
make  a  distinction  between  by-laws  and  provisions  which  go  to 
the  substance  and  essence  of  the  contract  and  those  which  do 
not.  Of  the  latter  class  are  stipulations  as  to  preliminary 
proof  of  loss.  As  these  relate  only  to  the  form  or  mode  in 
which  the  liability  of  the  company  shall  be  ascertained  and 
proved,  and  must  necessarily  be  submitted  to  the  officers  of 
the  corporation,  who  must  pass  upon  their  sufficiency  ;  and  as, 
furthermore,  in  ascertaining  and  settling  losses,  they  frequently 
act  upon  personal  investigations  made  by  themselves  or  their 
agents,  thereby  obtaining  knowledge  which  renders  the  pre- 

1  Evans  v.  Trimountain  Mut.  Fire  Ins.  Co.,  9  Allen  (Mass.),  329. 

2  Hale  V.  Mechanics'  Mut.  Ins.  Co.,  6  Gray  (Mass.),  1G9. 

**  Brewer  v.  Chelsea  Mut.  Fire  Ins.  Co.,  14  Gray  (Mass.),  203. 
*  Baxter  v.  The  Same,  1  Allen  (Mass.),  294. 

5  Belleville  Mut.  Ins.  Co.  v.  Van  Winkle,  1  Beasley  (N.  J.),  333. 

6  Sheldon  v.  Conn.  Mut.  Life  Ins.  Co.,  25  Conn.  207. 


INSURANCE   AGENTS,   THEIR   POWERS   AND    DUTIES.  153 

liminary  proof  wholly  immaterial,  it  is  held  to  be  within  the 
scope  of  their  authority  to  say  when  the  proof  is  sufficient, 
and  if  they  deem  it  expedient,  to  dispense  with  the  literal  re- 
quirements of  the  by-laws  in  this  particular. ^  But  a  mere 
statement  by  an  agent,  after  notice  to  him  of  loss,  "  that  the 
matter  would  be  all  right  with  the  company,"  does  not  relieve 
the  party  insured  from  the  necessity  of  making  his  prelim- 
inary proof.^  Nor  will  the  mere  fact  that  the  agent  resided 
at  the  place  of  the  fire  and  personally  knew  all  the  circum- 
stances attending  it.^ 

§  148.  In  Pennsylvania,  also,  the  distinction  between  mutual 
and  stock  companies  is  regarded  as  essential.  In  the  case  of 
Hackney  v.  The  Alleghany  Mutual  Insurance  Company ,"*  the 
question  of  the  responsibility  of  mutual  insurance  companies 
for  the  unauthorized  and  false  declarations  of  their  agents  arose 
under  the  following  facts.  The  agent  of  the  company  bore  a  cer- 
tificate of  the  fact  of  his  agency,  signed  by  the  president  of  the 
company,  and  authorizing  him  "  to  receive  applications  for 
insurance  and  the  premium  thereon."  In  defence  it  was  pro- 
posed to  prove  that  at  the  time  the  agent  requested  the  plain- 
tiff in  error  to  become  a  member,  he  represented  that  the 
company  was  not  insuring  in  the  city  of  Pittsburgh  and  other 
large  cities,  and  that  upon  this  representation  the  premium 
note  was  given.  But  the  court  held  that  the  evidence  was 
rightly  rejected,  as  the  declarations  of  the  agent  were  not 
within  the  scope  of  his  authority,  which  extended  only  to 
receiving  applications  and  premiums.  And  had  the  declara- 
tion been  made  by  the  president  himself  it  would  not  have 
been  binding  upon  the  company  ;  for,  say  the  court,  "  there  is 
no  such  privity  among  the  corporators  or  the  officers  of  the 
company  as  to  make  the  admission  of  either  binding  upon  all.^ 

1  Priest  et  als.  v.  The  Citizens'  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  605.  The 
case  of  Davis  v.  North  River  Ins.  Co.,  7  Cowen  (N.  Y.),  462,  does  not  advert  to 
this  distinction,  and  cannot  now  be  regarded  as  sound  law.  And  tlie  same  may 
be  said  of  McEvers  v.  Lamoine,  1  Hoff.  Ch.  (N.  Y.)  172. 

2  Bogle  V.  North  Carolma  Mut.  Ins.  Co.,  7  Jones'  Law  (N.  C),  373. 
8  Smith  V.  Haverliill  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  297. 

4  4  Barr  (Penn.),  185. 

5  5  Day,  309. 


154  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

If  such  verbal  conversations  were  admitted  in  evidence  against 
the  written  engagements  of  the  corporators,  their  policies 
would  be  worthless,  and  the  utility  of  mutual  insurance  com- 
panies at  an  end." 

§  149.  In  the  same  State  it  has  also  been  held,  upon  grounds 
which  would  seem  to  be  sufficient  without  relying  upon  the  dis- 
tinction, that  where  the  insurance  is  in  a  mutual  office,  and  the 
agent  of  the  office  fills  up  the  application,  itself  expressly  made 
a  warranty,  and,  with  the  knowledge  of  the  assured,  states  what 
is  by  both  of  them  known  to  be  material  and  untrue,  as,  that 
there  is  a  chimney  and  stove  well  secured,  with  the  pipe  pass- 
ing through  a  crock  well  secured,  when,  in  fact,  there  is  neither 
chimney  nor  stove,  the  misstatement  will  be  fatal ;  nor  will  it 
be  excused  by  an  agreement,  not  communicated  to  the  com- 
pany, between  the  agent  and  the  assured,  that,  before  a  fire 
should  be  kept  in  the  building,  a  chimney  should  be  erected 
and  the  stove  pipe  secured  as  represented.  Such  an  agreement 
the  agent  clearly  has  no  authority  to  make.^  In  this  case  the 
case  of  Howard  Insurance  Company  v.  Bruner  ^  was  referred 
to  and  distinguished.  "  That,"  said  the  court,  "  was  not  a 
mutual  company.  The  agent  who  wrote  out  the  description, 
instead  of  being  limited  to  a  mere  reception  of  applications, 
was  clothed  with  large  powers,  settled  the  terms  of  insurance, 
and  countersigned  and  issued  the  policies  without  referring 
applications  to  the  company.  Under  the  circumstances  .  .  . 
we  held  that  the  written  survey  was  the  act  of  the  agent,  and 
that  the  assured  was  not  to  be  prejudiced  by  the  omission  of 
facts  which  he  stated  but  which  the  agent  omitted  to  set 
down."  Reference  was  also  made  to  Susquehanna  Insurance 
Company  v.  Perrine,^  in  which  the  applicant  was  held  respon- 
sible for  the  omissions  of  the  agent,  stress  being  laid  upon  the 
fact  that  the  company  was  a  mutual  one,  and  by  one  of  its  by- 
laws made  the  applicant  responsible  for  the  agent's  accuracy 
in  making  the  survey.  Yet  in  that  case,  Gibson,  C.  J.,  said : 
"  A  regulation  established  by  a  by-law  is  not  obligatory  on 

i  Smith  V.  Cash  Mut.  Fire  Ins.  Co.,  24  Penn.  St.  (12  Harris)  320. 
2  11  Har.  (Penn.)  50. 
8  7  W.  &  8.  348. 


I 


INSURANCE   AGENTS,   THEIR  POWERS   AND   DUTIES.  155 

a  stranger ;  and,  if  the  plaintiff  were  such,  he  would  not  be 
affected  by  the  blunder  of  the  company's  surveyor,  notwith- 
standing the  terms  of  application  prescribed  by  the  conditions 
of  insurance ; "  a  doctrine  which  is  in  harmony  with  Howard 
Insurance  Company  v.  Bruner.^ 

§  150.  But  in  Pennsylvania,  where  insurance  was  effected 
by  the  agent  of  a  stock  company  upon  "  barley  and  malt  in 
assured's  malt-house  and  brewery,"  subject  to  the  condition 
that  if  the  risk  was  increased  without  notice  to  the  company, 
and  an  indorsement  of  consent  on  the  policy,  the  policy  should 
be  of  no  force,  and  notice  was  given  before  the  execution  of 
the  policy  to  the  agent  of  the  company,  that  the  insured 
intended  to  distil  and  store  whiskey  in  the  buildings  contain- 
ing the  property  insured,  during  the  currency  of  the  policy, 
it  was  held,  that  although  there  was  no  indorsement  of  the 
consent,  the  company  had,  through  notice  to  its  agent,  knowl- 
edge that  distilling  had  been  added  to  the  business  of  brewing 
before  the  policy  issued,  and  consequently  this  was  one  of  the 
risks  which  they  intended  to  insure  against,  and  therefore  no 
indorsement  was  necessary .- 

§  151.  General  Agent  with  unlimited  Powers.  —  And  a  general 
agent,  there  being  no  limitation  of  his  authority,  may  even 
by  an  oral  agreement  extend  the  scope  of  a  policy  already 
issued,  so  as  to  make  it  cover  property  not  embraced  in  the 
policy  when  issued,  such  policy  being  an  open  one,  and  in- 
tended to  cover  property  of  a  certain  character,  which  might 
be  at  risk  at  different  times,  the  property  being  of  the  general 
character  of  that  insured  in  the  original  policy.  And  his  oral 
agreement  will  bind  the  company,  although  the  policy  pur- 
ports to  be  upon  property  "  as  per  indorsements  to  be  made 
thereon,"  and  there  is  no  indorsement  of  the  property  which 
the  agent  verbally  agrees  to  insure.^  And  he  may  correct  an 
error  in  the  policy  after  its  issue.^ 

1  11  Harris,  50.  In  fact  the  latter  case  was  tried  before  that  distinguished 
judge,  and  the  ruling  excepted  to  and  sustained  was  his  ruling.  See  also  ante, 
§  132,  and  Moliere  v.  Penn.  Fire  Ins.  Co.,  5  Rawle,  342. 

2  Peoples'  Ins.  Co.  v.  Spencer,  53  Penn.  St.  353.     And  see  ante,  §  148. 

3  Kennebec  Co.  v.  Augusta  Ins.  and  Banking  Co.,  6  Gray  (Mass.),  204. 
*  "Warren  v.  Peoria  Mar.  and  Fire  Ins.  Co.,  14  Wis.  318. 


156  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

So  a  general  agent  for  a  foreign  insurance  company,  resi- 
dent in  Massachusetts,  appointed  under  the  statute  requiring 
a  general  agent  upon  whom  service  of  process  may  be  made, 
and  having  the  general  charge  of  the  business  in  the  State,  has 
power  to  waive  the  conditions  of  the  policy  as  to  preliminary 
proof  of  loss.^ 

And  such  an  agent  may  waive  a  condition  making  the  valid- 
ity of  the  policy  dependent  on  the  prepayment  of  the  pre- 
mium.2  So  he  may  waive  a  breach  of  the  conditions  of  the 
policy  requiring  notice  of  other  insurance,  by  delivering  a  re- 
newal receipt,  signed  by  the  president  and  secretary,  and 
accepting  the  premium  after  knowledge  of  the  breach,  though 
the  receipt  by  its  terms  is  not  to  be  effectual  unless  counter- 
signed by  the  agent ;  ^  and  he  may  give  credit  for  the  renewal 
premium,  or  take  a  note  therefor,  and  bind  the  company  by 
parol,  though  he  hold  such  receipt,^  and  waive  a  requirement 
that  the  policy  to  be  valid  must  be  countersigned  by  him.^ 

§  152.  Notice  to  Agent  when  Notice  to  Principal.  —  If,  when 
notice  to  the  company  is  required  of  any  particular  fact,  the 
notice  be  given  to  the  board  of  directors,  or  to  any  officer  or 
agent  of  the  company  whose  duty  by  the  by-laws,  resolutions, 
and  usages  of  the  company,  or  of  the  business,  or  to  any  per- 
sons from  whose  relation  to  the  company  third  persons  might 
fairly  infer  such  duty,  it  was,  upon  receiving  such  notice,  to 
communicate  it  to  the  company,  this  will  be  a  sufficient  com- 
pliance with  the  requirement.*^  Notice  to  an  agent  appointed 
to  receive  and  forward  applications  and  premiums  is  sufficient ; 
and  it  need  be  verbal  only,  unless  required  by  the  terms  of  the 
policy  to  be  in  writing.'^     And  notice  to  an  agent,  at  the  time 

1  Eastern  Railroad  Co.  v.  Relief  Ins.  Co.,  105  Mass.  570. 

2  Boehen  v.  Williamsburgh  City  Ins.  Co.,  35  N.  Y.  131. 
8  Carroll  v.  Charter  Oak  Ins.  Co.,  40  Barb.  (N.  Y.)  292. 

*  Post  V.  ^tna  Ins.  Co.,  43  Barb.  351 ;  Franklin  Fire  Ins.  Co.  v.  Massey,  33 
Penn.  221. 

5  Myers  v.  Keystone  Mat.  Life  Ins.  Co.,  27  Penn.  St.  268. 

6  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222;  ante,  §  144;  Peck 
V.  New  London  Co.  Mut.  Ins.  Co.,  22  Conn.  575. 

■J  McEwen  v.  Montgomery  Co.  Mut.  Ins.  Co.,  5  Hill  (N.  Y.),  101 ;  Sexton  v. 
Montgomery  Co.  Mut.  Ins.  Co.,  9  Barb.  (N.  Y.)  101 ;  Schenck  v.  Mercer  Co. 
Mut.  Ins.  Co.,  4  Zabr.  (N.J.)  447. 


INSURANCE  AGENTS,   THEIR  POWERS   AND   DUTIES.  157 

of  effecting  the  insurance,  of  subsequent  insurance,  is  notice 
to  the  company  under  a  provision  of  the  contract  that  notice 
of  subsequent  insurance  shall  be  given  to  the  company. ^  But 
after  the  completion  and  delivery  of  the  policy,  then  the  agent 
merely  to  receive  applications  and  make  surveys  cannot  bind 
the  company  by  approving  such  insurance.^  But  mere  knowl- 
edge of  the  fact  of  such  insurance  on  the  part  of  the  agent 
is  not  equivalent  to  notice  to  the  company ;  ^  nor  is  such 
knowledge  a  waiver  of  the  notice.^  And  it  is  not  notice, 
within  the  meaning  of  a  proviso  that  notice  shall  be  given  to 
the  agent  or  secretary  of  alterations  increasing  the  risk.^ 
Knowledge  of  prior  insurance  in  the  same  office  is  notice  of 
other  insurance.^  But  a  personal  examination  by  the  presi- 
dent and  one  of  the  directors  of  a  company  after  a  fire,  is 
equivalent  to  notice  of  the  loss  to  the  company,  such  officers 
having  thus  acquired  all  the  knowledge  that  would  be  desired 
from  the  required  noticed 

§  153.  In  Pennsylvania,  however,  the  knowledge  and  con- 
sent of  the  agent  to  subsequent  insurance  has  been  held  to  be 
not  that  of  the  company.  Thus  where  it  was  stipulated  in  the 
policy,  that  insurance  should  not  be  obtained  upon  the  prop- 
erty to  an  amount  beyond  two-thirds  of  its  value,  the  obtain- 
ing insurance  beyond  that  amount  was  held  to  work  a  forfeiture, 
unless  the  company,  after  notice,  waived  the  forfeiture ;  and  it 
was  also  held  not  to  be  within  the  authority  of  an  agent  em- 
powered only  to  make  surveys,  receive  applications,  examine 
into  the  circumstances  of  loss,  approve  assignments,  and  receive 
assessments,  to  accept  notice,  and  by  his  consent,  after  the  issue 

1  New  England  Fire  and  Mar.  Ins.  Co.  v.  Schettler,  38  111.  166. 

2  Wilson  V.  Genessee  Mut.  Ins.  Co.,  4  Kern.  (N.  Y.)  418,  reversing  s.  c.  16 
Barb.  (N.  Y.)  511. 

3  Schenck  v.  Mercer  Co.  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  447;  Mellen  v.  Ham- 
ilton Fire  Ins.  Co.,  5  Duer  (N.  Y.),  101 ;  8.  c.  affirmed,  17  N.  Y.  609 ;  Ayres  v. 
Hartford  Fire  Ins.  Co.,  17  Iowa,  170. 

*  Forbes  v.  Agawam  Mut.  Ins.  Co.,  9  Cush.  (Mass.)  470. 

*  Sykes  v.  Perry  Co.  Mut.  Ins.  Co.,  34  Penn.  St.  79  ;  Robinson  v.  Mercer  Co. 
Mut.  Fire  Ins.  Co.,  3  Dutch.  (N.  J.)  134. 

6  Rowley  v.  Empire  Ins.  Co.,  36  N.  Y.  550. 

7  Roumage  v.  Mechanics'  Fire  Ins.  Co.,  1  Green  (N.  J.),  110.  And  see  also 
ante,  §  143. 


158  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

of  the  policy,  to  waive  the  forfeiture ;  and  his  approval  there- 
fore could  be  of  no  avail  to  the  insured.  It  is  on  the  principle 
of  estoppel,  and  not  of  authority,  the  waiver  takes  place.  The 
knowledge  of  a  mere  agent,  unauthorized  to  represent  the  com- 
pany beyond  the  specific  powers  committed  to  him,  cannot  be 
the  ground  of  estoppel  in  a  matter  unconnected  with  the  exer- 
cise of  his  powers.  This  can  only  take  place  when  the  knowl- 
edge, lying  at  the  foundation  of  the  estoppel,  comes  home  to 
those  officers  who  exercise  the  corporate  powers  of  the  com- 
pany, or  to  an  agent  whose  powers  relate  to  the  very  subject 
out  of  which  the  estoppel  arises. ^  Otherwise  if  notice  is  given 
before  the  policy  issues.^  So  in  Massachusetts,  notice  to  an 
agent  of  alienation  or  assignment  is  not  notice  to  the  com- 
pany, nor  has  the  agent  power  to  waive  such  notice,  if  required 
by  the  policy,  nor  to  bind  the  company  by  his  opinion  that 
notice  is  not  necessary .^ 

§  154.  Sub-agents  and  Clerks.  —  Where  insurers  issue  their 
policies  in  blank,  to  be  valid  only  when  countersigned  by  their 
duly  authorized  agents,  and  appoint  a  firm  of  several  persons 
to  act  as  their  general  agents  for  a  particular  State,  and  refer 
to  them  as  having  charge  of  the  appointment  of  agents  within 
that  State,  a  sub-agent  appointed  by  one  of  the  members  of 
the  firm,  having  a  branch  office  at  a  place  other  than  the  chief 
place  of  business  of  the  firm,  will  thereby  acquire  the  power 
to  countersign  the  policies.  And  a  policy  so  countersigned 
will  bind  the  company,  notwithstanding  that  prior  to  the  issue 
of  the  policy  the  firm  holds  a  power  of  attorney  from  the 
insurance  company  empowering  them  to  "  receive  moneys  and 
to  countersign  and  issue  policies,"  and  a  like  power  of  attorney 
was  forwarded  to  the  members  of  the  firm  who  appointed  the 
sub-agent,  some  months  after  the  appointment.  These  powers 
of  attorney  do  not  concern  the  public  to  whom  tliey  are  un- 
known. They  are  rather  in  the  nature  of  private  instructions, 
binding  between  the  principal  and  agent,  but  without  effect  as 
against  the  public,  who  have  treated  with  the  agents,  on  the 

1  Mtchell  V.  Lycoming  Mut.  Ins.  Co.,  51  Penn.  St.  402. 

2  Peoples'  Ins.  Co.  v.  Spencer,  63  Penn.  St.  353. 

3  Tate  V.  Citizens'  Mut.  Pire  Ins.  Co.,  13  Gray  (Mass.),  79. 


INSURANCE   AGENTS,   THEIR   POWERS   AND    DUTIES.  159 

assumption  that  they  actually  had  the  power,  which  they  exer- 
cised and  were  known  by  their  principals  to  have  exercised.^ 
So  the  clerk  of  an  agent  whose  acts  have  been  recognized  by 
the  company  and  accepted,  may  bind  the  company  by  his  con- 
sent to  a  part  payment  of  the  premium.^  Under  a  like  stipula- 
tion it  has  been  held  in  Kentucky  that  the  signature  by  a  third 
person  "  for  the  agent,"  is  not  a  compliance  with  the  stipula- 
tion, and  such  a  policy  is  void.^  And  generally  agents  of 
insurance  companies  authorized  to  contract  for  risks,  receive 
and  collect  premiums,  and  deliver  policies,  may  confer  upon  a 
clerk  or  subordinate  to  exercise  the  same  powers.  The  ser- 
vice is  not  of  such  a  personal  character  as  to  come  under  the 
maxim,  delegatus  noji  potest  delegare.^ 

§  155.  Agents  of  Accident  Insurance  Companies.  —  Certain 
kinds  of  accident  insurance  —  as  of  railway  passengers  —  are 
effected  by  means  of  the  purchase  and  sale  of  tickets  issued 
by  the  companies  to  their  agents,  and  sold  by  them  or  those 
in  their  employ  like  merchandise,  the  sale  and  delivery  of  the 
ticket  by  the  agent  or  his  employe  on  the  one  hand,  and  the 
payment  of  the  premium  by  the  purchaser  on  the  other,  con- 
summating the  contract.  And  the  contract  holds  good  whether 
the  purchaser  obtains  his  ticket  from  the  company  directly  or 
indirectly  from  any  person  having  authority  mediately  from 
the  company.^ 

1  Bowman  v.  U.  S.  Casualty  Ins.  Co.,  N.  Y.  Ct.  of  Appeals,  affirming  s.  c.  in 
N.  Y.  Sup.  Ct.  1869,  cited  in  Bliss,  Life  and  Ac.  Ins.  488 ;  Kennebec  Co.  v. 
Augusta  Ins.  and  Banking  Co.,  6  Gray  (Mass.),  20-1. 

'^  Bodine  v.  Exchange  Fire  Ins.  Co.,  2  Ins.  L.  J.  23;  N.  Y.  Com.  of  App.  Sept. 
1872. 

*  Lynn  v.  Burgoyne,  10  B.  Mon.  (Ky.)  400. 

*  Bodine  v.  Exchange  Fire  Ins.  Co.,  N.  Y.  Com.  of  App.  2  Ins.  L.  J.  23. 
6  Brown  v.  Railway  Passenger  Ass.  Co.,  45  Mo.  221. 


160  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 


CHAPTER    VI. 

OF   WARRANTIES.^ 

§  156.  Definition  of  "Warranty.  —  In  all  contracts  of  insur- 
ance, certain  statements  are  made,  certain  stipulations  are 
entered  into,  and  certain  provisos,  conditions,  and  by-laws  are 
introduced  or  referred  to,  in  a  more  or  less  explicit  manner. 
As  a  general  rule,  if  these  statements,  stipulations,  &c.,  are  con- 
tained in,  or  expressly  made  a  part  of,  the  policy,  they  become 
warranties,  and  are  so  denominated  in  the  law  of  insurance. 
We  say  as  a  general  rule,  because  we  shall  see  as  we  advance 
in  this  chapter  that  there  are  important  exceptions.  "  An  ex- 
press warranty  is  a  stipulation  inserted  in  writing  on  the  face 
of  the  policy,  on  the  literal  truth  or  fulfilment  of  which  the 
vahdity  of  the  entire  contract  depends."  This  is  the  definition 
given  by  Arnould,^  which  has  met  with  general  acceptance.  By 
a  warranty  the  insured  stipulates  for  the  absolute  truth  of  the 
statement  made,  and  the  strict  compliance  with  some  prom- 
ised line  of  conduct,  upon  penalty  of  forfeiture  of  his  right  to 
recover  in  case  of  loss  should  the  statement  prove  untrue,  or 
the  course  of  conduct  promised  be  unfulfilled.  A  warranty 
is  an  agreement  in  the  nature  of  a  condition  precedent,  and 
like  that,  must  be  strictly  complied  with.^ 

1  Though  we  have  treated  the  several  subjects  of  warranty,  representation, 
and  concealment  in  separate  chapters,  it  will  be  seen  that  these  subjects  are  so 
nearly  allied,  that  cases  illustrative  of  each  have  much  in  common;  and  if  it 
were  material  it  would  be  difficult  to  determine  under  which  chapter  to  arrange 
them.  For  the  most  part,  a  case  in  either  chapter  will  illustrate  the  others,  as 
the  several  subjects  are  almost  invariably  discussed  together.  And  each  sub- 
ject will  be  further  illustrated  by  cases  cited  when  we  come  to  treat  of  the 
several  conditions,  stipulations,  and  provisions  of  the  contract. 

2  1  Ins.  577. 

'  Daniels  et  als.  v.  Hudson  River  Fire  Ins.  Co.,  12  Cush.  (Mass.)  416  ;  Eipley 
V.  ^tna  Fire  Ins.  Co.,  30  N.  Y.  136 ;  Campbell  v.  N.  E.  Mut.  Life  Ins.  Co.,  98 
Mass.  381. 


WARRANTIES.  161 

Whether  the  fact  stated,  or  the  act  stipulated  for,  be  mate- 
rial to  the  risk  or  not,  is  of  no  consequence,  the  contract  being 
that  tlie  matter  is  as  represented,  or  shall  be  as  promised  ; 
and  unless  it  prove  so,  whether  from  fraud,  mistake,  negli- 
gence, or  other  cause,  not  proceeding  from  the  insurer,  the 
insured  can  have  no  claim.^ 

Indeed,  one  of  the  very  objects  of  the  warranty  is  to  pre- 
clude all  controversy  about  the  materiality  or  immateriality  of 
the  statement.  The  only  question  is,  has  the  warranty  been 
kept  ?  There  is  no  room  for  construction  ;  no  latitude ;  no 
equity.  If  the  warranty  be  a  statement  of  facts,  it  must  be 
literally  true  ;  if  a  stipulation  that  a  certain  act  shall  or  shall 
not  be  done,  it  must  be  literally  performed.^  A  learned  judge 
and  author  declares  it  to  be  unfortunate  that  so  strict  a  rule 
has  been  established,  and  intimates,  what  is  no  doubt  entirely 
true,  that  courts  are  not  at  all  inclined  to  go  beyond  the  prece- 
dents to  support  a  warranty.^ 

No  particular  form  of  words  is  necessary  to  constitute  a 
warranty.  Any  statement  or  stipulation  upon  the  literal  truth 
or  fulfilment  of  which  depends  the  validity  of  the  contract, 
whether  appearing  as  a  condition  or  warranted,  or  however 
otherwise,  amounts  to  a  warranty.*  But  no  particular  form  of 
words  will  make  a  statement  or  stipulation  a  warranty,  where 
it  is  apparent  that  it  is  not  the  intention  of  the  parties  to 
make  the  validity  of  the  contract  depend  on  the  literal  truth 
or  fulfilment  of  the  statement  or  stipulation.^  Nor  will  all  the 
statements  made  in  an  application  which,  by  reference,  becomes 
part  of  the  policy,  or,  by  agreement,  is  to  have  the  force  and 

1  Newcastle  Fire  Ins.  Co.  v.  MacMorran,  3  Dow,  P.  C.  255;  Sayles  v.  North 
Western  Ins.  Co.,  2  Curtis  (C.  C.  U.  S.),  612 ;  Witherell  v.  Marine  Ins.  Co.,  49 
Me.  200;  Pawson  v.  Watson,  Cowp.  785;  Anderson  v.  Fitzgerald,  24  Eng.  L.  & 
Eq.  1 ;  4  H.  of  L.  Cas.  484. 

2  Kipley  v.  vEtna  Fire  Ins.  Co.,  30  N.  Y.  163;  Hibbert  v.  Pigon,  Park,  Ins. 
389;  s.  c.  Marsh.  Ins.  272,  per  Lord  Mansfield  ;  Anderson  v.  Fitzgerald,  4  H.  of 
L.  Cas.  484 ;  s.  c.  24  Eng.  L.  &  Eq.  1. 

3  Per  Duer,  J.,  Westfall  v.  Hudson  Eiver  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Supe- 
rior Ct.),  490. 

*  Scales  V.  Scanlan,  6  Irish  Law,  367. 

5  Wheelton  v.  Hardisty,  8  E.  &  B.  232;  Kingsley  et  al.  v.  New  England  Mut. 
Fire  Ins.  Co.,  8  Cush.  (Mass.)  393. 

11 


162  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

effect  of  a  warranty,  therefore  necessarily  become  warranties, 
since  some  other  clause  in  the  policy  may  qualify  the  refer- 
ence. Thus  where  a  "  stock  of  merchandise  "  is  insured,  and 
the  insured  warrants  the  truth  of  his  statements  in  regard  to 
the  "  condition,  situation,  and  value  of  the  property  insured," 
this  does  not  include  statements  as  to  the  occupancy  of  the 
building  in  which  the  insured  property  is  located. ^ 

§  157.  Warranties  are  distinguished  into  two  kinds  :  affirm- 
ative, or  those  which  allege  the  existence  at  the  time  of  in- 
surance of  a  particular  fact,  and  avoid  the  contract  if  the 
allegation  be  untrue ;  and  promissory,  or  those  which  require 
that  something  shall  be  done  or  omitted  after  the  insurance 
takes  effect  and  during  its  continuance,  and  avoid  the  contract 
if  the  thing  to  be  done  or  omitted  be  not  done  or  omitted  ac- 
cording to  the  terms  of  the  warranty.^ 

§  158.  "What  constitutes  a  part  of  the  Contract  —  Papers  an- 
nexed and  referred  to.  —  Questions  sometimes  arise  as  to 
whether  the  statements  and  stipulations  are  embraced  in,  or 
constitute  part  of,  the  policy.  Usually  the  application,  pro- 
posals, conditions  annexed,  and  by-laws  are  referred  to  in  the 
policy  itself,  and  by  express  terms  made  part  of  it ;  or  they 
are  declared  to  be  the  basis  upon  which  it  is  made,  or  the 
policy  is  declared  to  be  issued  upon  the  faith  thereof.  When 
this  is  the  case,  of  course  there  is  no  room  for  doubt.  When, 
however,  this  is  not  the  case,  it  becomes  a  question  of  the  first 
importance  to  determine  whether  they  are,  or  are  not,  part  of 
the  policy ;  for  if  they  are  not,  then  they  are  not  warranties, 
but  only  representations,  as  to  the  truth  of,  and  compliance 
with  which,  there  is  much  less  strictness  required,  as  will  be 
presently  shown. 

It  is  sufficient  if  they  appear  anywhere  upon  the  face  of 
the  policy,  though  not  written  in  the  body  of  it,  as  upon  the 
margin,^  or  written  across  it ;  *  though  they  are  not  necessarily 

1  Howard  Fire  and  Mar.  Ins.  Co.  v.  Cormick,  24  111.  455.  And  see  post,  §  161 
et  seq. 

2  Borradaile  v.  Hunter,  5  M.  &  G.  639 ;  Jennings  v.  Chenango  Co.  Mut.  Ins. 
Co.,  2  Denio  (N.  Y.),  78;  Stout  v.  City  Fire  Ins.  Co.,  12  Iowa,  371. 

3  Bean  v.  Stupart,  Doug.  11 ;  Patch  v.  Phoenix  Mut.  Lite  Ins.  Co.,  Sup.  Ct. 
Vt.  1872 ;  2  Ins.  L.  J.  86. 

*  Kenyon  v.  Berthon,  Doug.  12,  n. 


WARRANTIES.  163 

warranties  because  they  appear  upon  the  face  of  the  policy.^ 
And  where  a  policy  printed  upon  one-half  of  a  sheet  was 
delivered,  and  upon  the  other  half  of  the  sheet  were  the  "  con- 
ditions of  insurance,"  these  conditions,  so  annexed,  were  held 
to  be  primd  facie  a  part  of  the  policy,  although  no  express 
reference  was  made  to  them  in  the  body  of  the  policy.^  But 
a  paper  containing  particular  statements  relating  to  the  sub- 
ject-matter of  insurance  attached  to  the  policy  at  the  time  it 
is  executed  is  no  part  of  the  policy.^  Nor  is  an  unattached 
paper  folded  up  and  enclosed  in  the  policy  containing  similar 
particulars.*  And  an  indorsement  on  the  back  of  an  accident 
policy,  showing  the  classification  of  risks  assumed  by  the  com- 
pany, with  a  preliminary  statement  explanatory  of  the  rights 
of  the  different  classes,  can  be  regarded  as  part  of  the  contract 
only  so  far  as  it  is  specifically  referred  to  in  the  policy  as  con- 
stituting a  part  of  it ;  and  a  reference  to  the  classification  will 
not  import  the  preliminary  explanatory  statement  into  the  con- 
tract.^ So,  printed  by-laws  on  the  back  of  a  policy  are  not  part 
of  the  contract,  unless  referred  to  and  made  part  of  it.*^  And 
a  reference  to  another  paper  as  an  application  or  survey,  or  as 
containing  representations,  or  in  language  not  indicating  that 
it  is  the  intent  to  make  the  application  part  of  the  contract, 
does  not  make  it  a  warranty.'^  In  Kentucky,^  it  is  held  that 
reference  to  a  paper  for  a  more  particular  description,  and  as 
forming  part  of  the  contract,  will  not  make  it  part  of  the  con- 

1  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381. 

2  Murdock  v.  Chenango  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  210;  Eob- 
erts  V.  Chenango  County  Mut.  Ins.  Co.,  3  Hill  (N.  Y.),  501. 

3  Bize  V.  Fletcher,  Doug.  13,  n. 

*  Pawson  V.  Barnevelt,  Doug.  13,  n. ;  Same  v.  Watson,  Cowp.  785.  In  Sillen 
V.  Thornton  (3  E.  &  B.  868),  a  description  of  the  property  contained  in  a  paper 
attached  to  the  policy,  and  referred  to  as  attached  thereto,  was  treated  as  a  part 
of  the  policy,  tiiough  the  point  was  not  discussed.  But  this  was  a  liberality  of 
construction  in  favor  of  the  insurers  which  is  inconsistent  with  the  later  deci- 
sions. In  that  case,  however,  the  decision  woidd  doubtless  have  been  the  same 
had  the  attachment  been  treated  as  a  representation. 

5  Adm'rs  of  Stone  v.  U.  S.  Casualty  Co.,  34  N.J.  (5  Vroom)  371. 

6  Kingsley  v.  New  England  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  398. 

"^  Snyder  v.  Farmers'  Ins.  and  Loan  Co.,  16  Wend.  (N.  Y.)  481 ;  Houghton  v 
Manuf.  Mut.  Fire  Ins.  Co.,  8  Met.  (Mass.)  114. 

8  Kentucky  and  Louisville  Mut.  Ins.  Co.  v.  Southard,  8  B.  Men.  (Ky.)  634 


164  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

tract,  —  the  effect  of  the  reference  being  to  confine  the  parties 
to  the  truth  of  the  matter  of  description  only.  This  is  going 
farther  perhaps  than  is  sound  in  principle  or  would  be  safe  in 
practice.^  But  the  courts  are  disinclined  to  make  a  paper  by 
reference  a  warranty  and  part  of  the  contract  unless  clearly 
obliged  to.- 

§  159.  Application  and  Survey,  T?ylien  Parts  of  Contract.  — 
As  a  rule,  when  the  application  is  referred  to  as  forming  a  part 
of  the  contract,  the  statements  therein  contained  are  held  to 
have  the  force  and  effect  of  warranties.  But  as  the  application, 
whether  embracing  the  survey,  which  in  general  is  but  a  plan 
or  description  of  the  premises,  showing  with  more  or  less  com- 
pleteness its  condition  and  surroundings,  or  having  the  latter 
attached  to  it  actually  or  by  reference,  contains  merely  the 
data  upon  which  the  real  contract  is  based,  and  may  be  by 
parol  only,  if  the  policy  contains  no  stipulation  making  its 
statements  warranties,  they  will  have  the  force  and  effect  of 
representations  only.^  A  mere  reference  to  an  application  or 
survey,  in  general  terms,  does  not  make  its  contents  warran- 
ties. To  effect  this  there  must  be  other  language  used  suffi- 
cient to  indicate  that  it  was  the  intention  to  make  the  paper 
referred  to  a  part  of  the  contract.'*  And  the  same  is  true 
although  there  be  added  to  the  general  terms  of  reference  the 
statement  that  the  reference  is  for  a  more  full  description.^ 
And  though  the  application  be  referred  to  in  such  terms  as  to 
import  it  into  the  contract,  if  its  statements  be'also  referred 
to  as  "  representations,"  they  will  have  that  character  notwith- 
standing they  are  made  part  of  the  contract.®  So  if  the  refer- 
ence, by  a  fair  construction,  appear  to  be  for  another  purpose 

1  See  the  next  section. 

-'  Sayles  v.  North  Western  Ins.  Co.,  2  Curtis  (U.  S.  C.  Ct.),  610. 

*  Columbia  Ins.  Co.  v.  Cooper,  50  Penn.  331 ;  Denny  v.  Conway  Stock  and 
Mut.  Ins.  Co.,  13  Gray  (Mass.),  492. 

*  Delonguemare  v.  Tradesmen's  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  589; 
Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  (N.  Y.)  72;  Wall  v.  Howard  Ins.  Co.,  14 
Barb.  (N.  Y.)  383  ;  Sheldon  v.  Hartford  Fire  Ins.  Co.,  22  Conn.  235  ;  Common- 
wealth Ins.  Co.  V.  Monninger,  18  Ind.  352. 

5  Sugden  v.  Farmers'  Ins.  and  Loan  Co.,  13  Wend.  (N.  Y.)  92;  s.  c.  aflBirmed, 
14  Wend.  (N.  Y.)  481. 

6  Ilougliton  V.  Manuf.  Ins.  Co.,  8  Met.  (Mass.)  114. 


WARRANTIES.  165 

than  to  make  its  statements  warranties.^  In  Kentucky  and 
Louisville  Mutual  Insurance  Company  v.  Southard,^  the  court 
were  indisposed  to  admit  that  the  principle  which  converts 
into  a  warranty  every  matter  of  fact  or  description  relative  to 
the  property  insured,  which  the  parties  have  inserted  in  the 
policy,  is  to  be  applied  to  any  such  matter  not  inserted  in 
the  policy  nor  written  upon  it,  though  it  be  referred  to  therein 
as  a  part  of  the  policy,  is  applicable  to  cases  of  fire  insur- 
ance, even  if  it  be  the  rule  in  marine  insurance,  which  was 
doubted.  Nor  can  a  reference  in  a  new  policy  to  a  former 
survey  at  the  office  of  the  agent  through  whom  a  foreign  insur- 
ance had  been  effected,  be  considered  as  bringing  that  survey 
into  the  new  contract  as  a  "  survey  on  file  at  the  office,"  so 
as  to  make  it  a  part  of  the  new  contract,  there  being  no  new 
application  or  survey  or  plan  presented  or  filed  at  the  office.^ 
Upon  the  same  general  principles,  a  party  who  accepts  a  policy 
"  in  reference  to  a  survey  on  file  at  the  office,"  the  l)y-laws 
making  "  survey,  plan,  and  description  "  "  a  warranty  on  the 
part  of  the  insured,"  is  not  responsible  for  executory  repre- 
sentations contained  in  the  appHcation,  of  which  the  survey 
formed  a  part,  it  appearing  that  the  application  was  never 
signed  by  the  insured,  nor  by  any  one  authorized  by  him  so  to 
do.  While,  having  accepted  the  policy  subject  to  the  survey, 
he  will  be  held  responsible  for  the  accuracy  of  that,  yet  a  sur- 
vey imports  only  a  plan  and  description  of  the  present  existing 
state,  condition,  and  mode  of  use  of  the  property,  and  does  not 
by  fair  intendment  embrace  statements  or  representations  of  a 
promissory  or  executory  nature  relating  to  contemplated  alter- 
ations or  improvements  in  the  property,  or  to  the  mode  in 
which  the  premises  are  to  be  occupied  during  the  continuance 
of  the  policy ;  and  for  these  latter,  not  being  shown  to  have 
recognized  or  adopted  them,  he  is  not  responsible.'* 

§  160.  And  where  the  language  of  reference  is  ambiguous, 
and  does  not  clearly  intend  to  make  the  application  a  part  of 

1  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381. 

2  8  B.  Mon.  (Ky.)  634. 

8  Clinton  v.  Hope  Ins.  Co.,  45  N.  Y.  454. 

*  Denny  v.  Conway  Stock  and  Mut.  Fire  Ins.  Co.,  13  Gray  (Mass.),  492. 


166  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

the  policy,  the  doubt  will  be  construed  against  the  company. 
Thus  "  reference  being  had  to  the  application  for  a  more  par- 
ticular description,  and  the  conditions  annexed,  as  forming  a 
part  of  the  policy,"  has  been  held  to  import  the  conditions  into 
the  contract,  but  to  leave  the  statements  in  the  application 
without  to  stand  upon  the  footing  of  representations,  being 
referred  to  merely  for  the  purpose  of  describing  and  identify- 
ing the  property  insured.^ 

So,  although  the  application  be  expressly  made  a  part  of 
the  policy,  its  statements  will  not  be  regarded  as  warranties 
if  qualified  by  other  stipulations  which  afford  a  fair  inference 
that  the  parties  themselves  did  not  so  intend  them.  The  by- 
laws may  provide  that  the  application  shall  be  a  part  of  the 
policy  and  "  a  warranty  on  the  part  of  the  insured,"  and  that 
"  the  policy  shall  be  void  unless  the  applicant  shall  make  a 
correct  description  and  statement  of  all  facts  inquired  for  in 
the  application,  and  also  all  other  facts  material  in  reference 
to  the  insurance,  or  to  the  risk  ; "  yet,  if  in  the  application  it 
is  agreed  that  it  is  "  a  correct  description  of  the  property  so 
far  as  regards  the  condition,  situation,  value,  and  risk  on  the 
same,"  and  that  "  the  misrepresentation  or  suppression  of 
material  facts  "  shall  destroy  the  applicant's  claim  for  dam- 
ages, these  latter  stipulations,  when  construed  together  with 
the  former,  being  not  only  unnecessary,  if  the  assured  is  to  be 
held  to  the  literal  and  exact  truth  of  his  answers,  but  incon- 
sistent with  holding  them  to  be  strict  warranties,  reduce  the 
answers  to  the  quality  of  representations.^  This  case  affords 
a  good  illustration  of  the  over-caution  in  which  insurance 
companies  sometimes  indulge,  as  well  as  of  the  great  impor- 
tance, in  the  construction  of  the  contract  of  insurance,  of 
carefully  comparing  the  several  stipulations  with  each  other.^ 

A  provision  that  the  statements  in  the  application  are  to  be 
regarded  as  warranties,  is  controlled  by  a  subsequent  recital 
that  the  insured  is  to  be  responsible  for  their  truth  so  far  as 

1  Trench  v.  Chenango  County  Mut.  Ins.  Co.,  7  Hill  (N.  Y.),  122, 

2  Elliott  V.  Hamilton  Mut.  Ins.  Co.,  13  Gray  (Mass.),  139. 

3  Joyce  V.  Maine  Ins.  Co.,  45  Me.  168 ;  Frisbie  v.  Fayette  Mut.  Ins.  Co.,  27 
Penn.  St.  325. 


WARRANTIES.  167 

they  are  material  to  the  risk,  to  such  extent  as  to  reduce  the 
statements  from  the  grade  of  warranties  to  that  of  representa- 
tions.^ And  if  the  covenant  is  that  the  statements  are  true 
"  so  far  as  regards  the  value  and  risk,"  they  are  only  war- 
ranties upon  these  points  ;  but  as  to  all  others,  representations 
merely.^ 

§  161.  So,  too,  references  in  the  proposal  for  a  reinsurance 
to  the  statements  made  in  the  proposal  for  the  original  insur- 
ance as  believed  to  be  true,  is  no  warranty  of  their  truth,  but 
simply  a  warranty  of  the  belief  in  their  truth ;  ^  and  refer- 
ences to  statements  and  agreements,  in  order  to  have  the  effect 
of  avoiding  the  policy  in  case  the  statements  prove  untrue  or 
the  agreement  be  not  strictly  kept,  must  be  so  explicit  as  to 
make  them  equivalent  to  conditions  precedent.  And  unless  it 
is  expressly  so  stipulated,  the  statements  or  agreements  should, 
on  the  face  of  the  instrument,  clearly  and  precisely  show  that 
it  is  the  intention  of  the  contracting  parties  to  make  their 
literal  truth,  or  literal  performance,  a  condition  precedent.  If 
there  be  any  doubt  on  this  question,  the  statement  or  agree- 
ment will  be  held  to  have  the  force  only  of  a  representation.* 

§  162.  Constructive  Warranties  not  favored.  —  And  the  COUrtS 
will  also  hold  a  stipulation,  whether  contained  in  the  policy  or 
in  the  application,  to  be  a  representation  rather  than  a  war- 
ranty when  there  is  room  for  doubt  from  ambiguity  of  lan- 
guage or  otherwise.  Tiuis,  where  the  policy  was  made  with 
reference  to  the  conditions  annexed,  but  these  were  referred 
to  not  as  conditions  precedent,  nor  as  forming  part  of  the 
policy,  but  "  for  a  more  particular  description,"  or  "  to  be  used 
and  resorted  to  in  order  to  explain  the  rights  and  obligations 
of  the  parties,  in  cases  not  otherwise  specially  provided 
for,"  the  court  said  these  were  merely  the  statements  of  a 
collateral  document,  which  both  parties  agreed  to  as  an  au- 
thoritative exposition  of  what  they  both  understood  as  the 

1  Longhurst  v.  Conway  Fire  Ins.  Co.  (U.  S.  Dist.  Ct.)  Iowa,  1861. 

2  Lindsey  v.  Union  Mut.  Ins.  Co.,  3  R.  I.  157. 

3  Wheelton  v.  Hardisty,  8  El.  &  B.  232. 

4  Wheelton  v.  Hardisty,  Exch.  Ch.  8  El.  &  B.  232;  Stokes  v.  Cox,  1  H.  &  N. 
Exch.  320,  533. 


168  INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC. 

facts,  on  the  assumption  and  truth  of  which  they  contracted, 
and  the  relations  in  which  they  stood  to  each  other.^  Sothe 
words  "  on  condition  "  do  not  necessarily  import  a  condition 
precedent  equivalent  to  a  warranty,  since  the  manner  and  cir- 
cumstances under  which  they  are  used  may  indicate  that  such 
was  not  the  purpose  or  intent.  Thus  when  the  words  "  on 
condition  that  the  applicant  take  all  risk  from  cotton  waste  " 
were  used  not  in  the  same  context  with  the  other  conditions, 
but  inserted  between  the  statement  of  the  amount  insured 
and  the  statement  of  the  locus  of  the  property,  it  was  held 
that  these  words  so  used  did  not  constitute  a  condition  in  the 
legal  sense,  as  there  was  nothing  which  the  insured  or  any 
other  party  was  to  do  or  omit,  by  way  of  performing  the  sup- 
posed condition,  and  no  event  was  to  happen  that  it  might  be 
saved.  They  amount  simply  to  a  declaration  on  the  part  of 
the  insurers  that  they  will  not  pay  a  loss  by  fire  originating 
in  cotton  waste. ^ 

§  163.  Some  observations  upon  this  point  fell  from  the  court 
in  a  case  in  Kentucky,  which  are  worthy  of  note,  and  which, 
though  their  spirit  has  in  too  many  instances  been  departed 
from,  may  be  considered  as  illustrative  of  the  present  ten- 
dency of  judicial  decision :  "  Whatever  might  be  the  doctrine 
in  case  of  marine  policies,"  says  Marshall,  C.  J.,  "  in  making 
which  the  insurer  is  in  general  wholly  dependent  upon  the 
statements  of  the  insured,  with  regard  to  the  property  and 
the  risk,  it  has  been  seriously  doubted,  and,  so  far  as  we  know, 
has  not  been  established  by  judicial  decisions,  whether  the 
principle  of  construing  every  matter  of  mere  description  con- 
tained in  the  body  of  the  policy  into  a  warranty  should  be 
applied  with  the  same  strictness  to  fire  policies^  where  the  mis- 
description is  most  generally  the  mistake  of  the  underwriter's 
own  surveyor.  These  warranties  being  conditions  precedent, 
which  must  be   performed  or  be  true,  however  immaterial, 

1  Daniels  et  als.  v.  Hudson  River  Fire  Ins.  Co.,  12  Cash.  (Mass.)  426;  West- 
fall  V.  Hudson  River  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  490.  See  also 
Delonguemare  v.  Tradesmen's  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  589  ;  Trench 
V.  Chenango  County  Mut.  Ins.  Co.,  7  Hill  (N.  Y.),  122;  Wilson  v.  Conway  Ins. 
Co.,  4  R.  I.  141. 

2  Kingsley  et  al.  v.  New  England  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.),  393. 


WARRANTIES.  169 

there  is  an  obvious  propriety  that  they  should  be  contained  in 
the  policy,  whicli  is  to  be  kept  by  the  insured,  not  only  that 
he  may  be  enabled  to  make  the  proper  averments  when  he 
comes  to  declare,  but  that  he  may  be  fully  apprised  of  the 
effect  intended  to  be  given  to  his  statements.  Since  if  they 
are  considered  merely  as  representations,  it  is  sufficient  that 
they  were  made  without  fraud,  and  are  substantially  true  in 
every  point  material  to  the  risk. 

"  Under  these  considerations,  we  are  of  opinion  that  it  is  at 
least  safe  to  conclude  that  the  reference  in  this  policy  to  the 
application  and  survey  as  a  part  thereof,  being  a  part  of  the 
clause  which  vacates  the  policy  if  the  premises   should,  at 
the  time  of  any  fire,  be  occupied  for  purposes  more  hazardous 
than  at  the  date  of  the  instrument,  should  be  understood  as 
merely  identifying  the  description  and  condition  of  the  prop- 
erty at  that  time,  for  the  standard  of  comparison  in  case  of 
fire ;  that  no  other  force  or  effect  was  intended  to  be  given  to 
the  writings  referred  to,  than  as  being  a  description  of  the 
nature  or  purposes  of  the  occupation  of  the  building  at  that 
time ;  and  that  as  the  clause  points  expressly  to  the  sort  of 
variance   against   which   it   intends   to   guard   (viz.,  a   more 
hazardous   occupation),   and    declares    expressly   the   conse-' 
quence   of  such   variance,  tliese   declarations   should  be  re- 
garded   as   expressing    the   entire   scope   and   object   of   the 
reference,  beyond  which  it  cannot  be  carried  without  violating 
the  apparent  intention  of  the  parties.     The  entire  clause,  in- 
cluding the  reference  to  the  application  and  the  survey,  was 
intended  to  secure  the  insurers  from  loss  by  a  change  in  the 
occupancy  of  the  premises  which  should  increase  the  risk, 
and  not  to  bind  the  other  party  to  the  truth  of  immaterial 
statements  not  affecting  the  risk,  nor  to  preclude  him  from 
changes  either  in  the  plan  or  occupation  of  the  premises,  unless 
the  hazard  should  be  thereby  increased.     And  the  written  ap- 
plication and  survey  were  referred  to  as  fixing  the  standard 
of  comparison,  and  not  for  the  purpose  of  creating  or  evidenc- 
ing any  covenant  or  warranty  on  the  part  of  the  insured,  as 
to  the  condition  or  occupation  of  the  premises  at  the  time  the 
insurance  was  made.     The  only  covenant  or  warranty  on  this 


170  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

subject  is  contained  in  that  part  of  the  policy  which  describes 
the  building  as  a  mansion-house  situated,  &c.,  and  states  that 
it  was  then  occupied  as  a  dwelling-liouse."  ^ 

§  164.  It  thus  becomes  apparent  that,  though  the  state- 
ments and  stipulations  on  the  part  of  the  insured  are  in- 
serted, or  are  referred  to,  in  the  policy  itself,  it  often  becomes 
difficult  to  determine  whether  they  are  warranties  or  repre- 
sentations. They  are  not  necessarily  warranties  because  they 
appear  on  the  face  of  the  policy.  In  order  to  have  the  force  of 
a  warranty,  the  statement  must  indeed  constitute  a  part  of  the 
contract ;  but  it  by  no  means  follows  that  every  statement 
which  constitutes  a  part  of  the  contract  is  therefore  a  war- 
ranty. AVhether  they  are  so  or  not  will  depend  upon  the  form 
of  expression  used,  the  apparent  purpose  of  the  insertion,  and 
sometimes  upon  the  connection  or  relation  to  other  parts  of  the 
instrument.  So,  also,  if  the  statements  contained  in  a  separate 
paper  are  referred  to  and  made  part  of  the  contract,  yet  if  the 
reference  appear  to  be  made  for  a  special  purpose,  and  not 
with  a  view  to  import  the  separate  paper  into  the  policy  as  a 
part  of  the  contract,  the  statements  will  not  thereby  be  trans- 
formed from  representations  into  warranties.  Warranties 
can  only  exist  upon  the  fair  interpretation  and  clear  intend- 
ment of  the  words  of  the  parties,  and,  since  courts  will  not 
favor  warranties  by  construction,  they  will  not  be  bound 
when,  from  the  form  of  the  expression  used,  or  other  reason, 
there  appears  to  be  no  intention  to  enter  into  them.  Parties 
will  not  be  held  to  have  entered  into  the  contract  of  warranty 

1  Kentucky  and  Louisville  Mut.  Ins.  Co.  v.  Southard,  8  B.  Mon.  637.  And 
the  statute  of  Massachusetts  (Stat.  1864,  c.  196,  §  1),  which  is  as  follows:  "In 
all  insurance  against  loss  by  fii-e  hereafter  made  by  companies  chartered  or 
doing  business  in  this  Commonwealth,  the  conditions  of  the  insurance  shall  be 
stated  in  tlie  body  of  the  policy,  and  neither  the  application  of  the  insured 
nor  the  by-laws  of  the  company  shall  be  considered  as  a  warranty  or  part  of  the 
contract  except  so  far  as  they  are  incorporated  in  full  in  the  policy,  and  so 
appear  on  its  face  before  the  signatures  of  the  officers  of  the  company,"  was  but 
a  legislative  expression  of  the  j  udicial  tendency  at  that  time.  And  now  the  courts 
seem  to  have  addressed  themselves  to  tlie  question  how  far  what  is  expressly 
stated  in  the  policy,  and  is  made  part  of  the  contract,  is  necessarily  a  warranty, 
with  the  evident  disposition  to  restrict  this  effect  of  such  an  express  statement 
in  the  policy  to  material  and  substantial  matters  affecting  the  risk. 


WARRANTIES.  171 

unless  they  clearly  intended  it ;  and  if  the  reference  in  the 
policy  to  statements  contained  in  another  paper  do  not  clearly 
show  that  the  reference  is  made  for  the  purpose  of  giving  to 
the  statement  so  referred  to  the  force  and  effect  of  warranties, 
as  if  they  he  referred  to  as  "  statements  "  or  "  representa- 
tions," or  if  the  reference  appear  to  be  made  for  another  pur- 
pose, or  if  the  purpose  be  doubtful,  such  reference  will  not 
convert  the  statements  into  warranties. ^  In  Houghton  v. 
Manufacturers'  Mutual  Fire  Insurance  Company ,2  it  was  held 
that  though  the  application  was  by  reference  made  part  of  the 
policy,  yet  as  the  statements  in  the  application  were  referred 
to  as  representations,  and  so  denominated  in  that  clause  of  the 
policy  which  referred  to  them,  they  were  to  be  treated  as  such, 
and  to  be  regarded  rather  as  having  the  legal  effect  of  repre- 
sentations than  of  warranties,,  as  understood  in  thp  law  of 
marine  insurance,  though  partaking  in  some  measure  of  the 
character  of  both.  They  are  like  representations  in  requiring 
that  the  facts  stated  shall  be  substantially  true  and  correct, 
and,  so  far  as  they  are  executory,  that  they  shall  be  substan- 
tially complied  with  ;  but  not  like  warranties  in  requiring  an 
exact  and  literal  compliance.  And  when  it  is  said,  as  it  some- 
times, indeed,  not  unfrequently,  is,  that  the  statements  in  an 
application  referred  to  as  forming  a  part  of  the  policy  are  by 
that  reference  imported  into  the  policy  and  become  warranties, 
and,  like  warranties,  must  be  literally  true  and  exactly  com- 
plied with,  it  is  apparent  from  the  cases  just  cited,  and  from  many 
others,  that  the  language  of  the  courts  in  their  assertion  of  the 
rule  is  somewhat  more  positive  and  vigorous  than  is  justified 
by  the  manner  in  which  the  rule,  thus  strongly  and  positively 
asserted,  has  been  illustrated  by  practical  application.  In 
truth,  the  courts  have  apparently  begun  to  see  that  they  have 

1  Campbell  v.  New  England  Mat.  Life  Ins.  Co.,  98  Mass.  381 ;  Miller  v.  Mut. 
Benefit  Life  Lis.  Co.,  31  Iowa,  216  ;  Blood  v.  Howard  Ins.  Co.,  12  Cush.  (Mass.) 
472;  Towne  v.  Fitchburg  Ins.  Co.,  7  Allen  (Mass.),  51;  Jefferson  Ins.  Co.  v. 
Cotheal,  7  Wend.  (N.  Y.)  72;  Snyder  v.  Farmers'  Ins.  and  Loan  Co.,  13  Wend. 
(N.  Y.)  92;  Wilson  v.  Conway,  4  R.  I.  141 ;  Stebbins  v.  Globe  Ins.  Co.,  2  Hall 
(N.  Y.  Superior  Ct.),  632;  Kentucky  and  Louisville  Mut.  Ins.  Co.  v.  Southard, 
SB.  Mon.  (Ky.)  634. 

2  8  Met.  (Mass.)  114. 


172  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

gone  far  enough  under  the  lead  of  arbitrary  rules,  in  find- 
ing constructive  warranties,  in  the  immaterial,  unguarded, 
and  oftentimes  superfluous  statements  contained  in  the  appli- 
cation.^ 

§  165.  The  case  of  Campbell  v.  New  England  Mutual  Life 
Insurance  Company  ^  was  cited  and  approved  (after  quoting 
from  it  largely)  in  Price  v.  Phoenix  Mutual  Life  Insurance 
Company ,3  upon  the  point  that  statements  contained  in  the 
application  will  not  be  held  to  be  warranties,  whether  referred 
to  and  made  part  of  the  policy  or  not,  if  elsewhere  in  the  con- 
tract there  can  be  found  reason  to  suppose  that  such  was  not 
the  clear  understanding  and  intent  of  the  parties,  and  seems 
to  have  been  regarded,  not  justly  as  it  seems  to  us,  by  the 
court  in  the  latter  case  as  irreconcilable  with  prior  cases  in 
Massachusetts.  It  was,  however,  justly  regarded  as  very  deci- 
sively indicating  the  purpose  of  that  court  to  confine  construc- 
tive warranties  within  stricter  limits,  and  beyond  question  as 
irreconcilable  with  numerous  dicta  both  in  that  court  and 
others,  which  have  often  had  too  much  influence  in  deciding 
adjudged  cases.  In  the  latter  case  there  was  no  material 
respect,  upon  the  point  under  consideration,  in  which  the  con- 
tract differed  from  that  in  the  Massachusetts  case,  the  court 
regarding  the  fact  that  in  one  case  the  statement  was  made 
"  the  basis  of  the  policy,"  while  in  the  other  the  policy  was 
declared  to  be  issued  "  upon  the  faith  "  of  the  statements  as 
immaterial.  And  independently  of  the  authority  of  that  case, 
as  the  result  of  a  "  painstaking  examination,"  the  court  ar- 
rived at  a  clear  conclusion  that  what  the  parties  themselves 
designate  as  "  representations,"  "  declarations,"  or  "  state- 
ments" cannot  be  converted  into  warranties  by  being  imported 
into,  and  made  part  of,  the  contract ;  and  they  cite  with 
approval  the  following  judicious  observations  of  Mr.  Philips :  * 
"  The  cases  would  have  presented  few  difficulties  of  con- 
struction if  the  early  jurisprudence  had  been  less  open  to  the 

1  Boardman  v.  N.  H.  Mut.  Fire  Ins.  Co.,  20  N.  H.  557 ;  Hough  v.  City  Fire 
Ins.  Co.,  29  Conn.  10. 

2  98  Mass.  381. 

8  Sup.  Ct.  Minn.,  2  Ins.  L.  J.  253. 
M  Ins.  §  638. 


WARRANTIES.  173 

admission  of  forfeitures  of  the  policy,  and  more  easily  satis- 
fied with  a  compliance  with  written  stipulations  substantially 
equivalent  to  a  literal  one,  when  such  a  construction  was  not 
inconsistent  with  the  express  provisions  of  the  contract.  The 
recent  jurisprudence  tends  to  greater  liberality  of  construction 
in  favor  of  maintaining  the  contract.  Such  a  rule  may  as  well 
be  applied  to  stipulations  and  recitals  in  the  policy  as  to 
representations  preliminary  and  collateral  to  it ;  and  it  is  more 
equitable  after  the  policy  has  gone  into  effect,  and  the  under- 
writer has  a  right  to  retain  the  premium,  that  the  contract 
should  be  continued  in  force  as  long  as  its  being  maintained 
is  consistent  witli  its  express  provisions,  and  the  underwriter 
is  not  thereby  prejudiced."  In  those  States  where  the  princi- 
ples of  equity  are  to  a  considerable  extent  adopted  and  en- 
forced in  the  courts  of  common  law  these  observations  have  a 
special  application. 

§  166.  Where  the  language  of  the  questions  contained  in 
the  application  is  ambiguous,  so  as  to  admit  of  different  an- 
swers, if  the  insured  answer  in  good  faith  in  some  proper 
sense,  and  when  the  application  is  unintentionally  defective  in 
a  matter  known  to  the  insurers  or  their  agent,  the  insured  will 
be  excused  though  he  do  not  give  the  desired  answer. ^  And 
though  the  insured  do  not  answer  certain  questions  at  all,  and 
give  a  negative  answer  to  a  general  question  as  to  his  knowl- 
edge of  any  other  circumstances  affecting  the  risk,  such  answer 
cannot  be  made  applicable  to  another  question  in  the  same 
application,  which  is  unanswered,  but  which  if  negatived 
would  be  untruly  answered ;  nor  will  the  failure  to  answer  at 
all  vitiate  the  policy.  The  issuing  of  a  policy  or  an  applica- 
tion which  contains  no  answer  to  certain  questions  is  a  waiver 
of  answer  to  those  questions,  and  to  avoid  the  policy  in  such 
cases  the  insurers  must  prove  untrue  statements  other  than 
those  inquired  about. ^ 

§  167.  Tlie  recital  in  the  policy  that  it  is  based  upon  an 

1  Wilson  V.  Hampden  Fire  Ins.  Co.,  4  R.  I.  159 ;  Campbell  v.  Merchants'  and 
Farmers'  Mut.  Fire  Ins.  Co.,  37  N.  H.  35;  Cumberland  Valley  Mat.  Prot.  Co. 
V.  Schell,  29  Penn.  St.  31. 

'•i  Liberty  Hall  Ass.  v.  Housatonic  Mut.  Fire  Ins.  Co.,  7  Gray  (Mass.),  261. 


174  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

application  does  not  make  the  application  essential.  A  policy 
so  stating,  but  issued  without  any  written  application,  is  as 
valid  as  if  issued  upon  the  written  application. ^  Nor  is  the 
insured  bound  by  the  statements  contained  in  an  application, 
of  the  contents  of  which  he  has  no  knowledge,  and  which  he 
has  never  signed,  and  which  does  not  purport  to  be  made  by 
him  or  in  his  behalf,  merely  because  the  policy  recites  that 
"  the  contract  is  made  and  accepted  with  reference  to  the  sur- 
vey on  file."  2  Otherwise,  if  the  policy  be  obtained  by  an  agent 
authorized  to  procure  it.^ 

§  168.  Application  may  limit  and  control  the  Language  of  the 
Policy.  — '  If  the  policy  provides  that  if  any  statement  con- 
tained in  the  declaration  (which  is  made  part  thereof)  be 
untrue,  the  policy  shall  be  void,  and  the  declaration  itself  pro- 
ceeds to  say  that  the  particulars  "  are  correct  and  true  through- 
out," and  if  it  shall  hereafter  appear  that  "  any  fraudulent 
concealment  or  designedly  untrue  statement  be  contained 
therein,"  i.e.,  in  the  above-written  particulars,  the  policy  shall 
be  void,  not  every  untrue  statement,  but  only  a  designedly 
untrue  statement  will  avoid  the  policy.  The  two  clauses,  parts 
of  the  same  instrument,  must  be  taken  together,  and  if  any 
doubt  arises  as  to  their  construction,  that  doubt  must  be  con- 
strued against  the  insurers  who  prepared  the  instrument.'* 
"  The  declaration,"  says  Cockburn,  C.  J.,  in  giving  his  opinion, 
"  is  '  that  the  particulars  given  in  answer  to  the  question  pro- 
pounded by  the  company  are  correct  and  true  throughout ; ' 
that  the  proposal  and  declaration  shall  be  the  basis  of  the 
contract.  '  And  if  it  shall  hereafter  appear  that  any  fraudu- 
lent concealment  or  designedly  untrue  statement  be  contained 
therein,  then  all  the  moneys  which  shall  have  been  paid  on 
account  of  the  assurance  made  in  consequence  hereof  shall  be 
forfeited,  and  the  policy  granted  in  respect  of  such  assurance 
shall  be  absolutely  null  and  void.'     It  is  sought,  on  the  part 

1  Blake  v.  Exch.  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265. 

2  Denny  v.  Conway  Stock  and  Mut.  Ins.  Co.,  13  Gray  (Mass.),  429. 

*  Draper  v.  Charter  Oak  Fire  Ins.  Co.,  2  Allen  (Mass.),  569. 

*  Fowkes  V.  Manchester  and  London  Life  Ass.  and  Loan  Assoc,  3  B.  &  S. 
(Q.  B.)  917. 


WARRANTIES.  175 

of  the  defendants,  to  construe  this  declaration  in  the  disjunc- 
tive, so  that  not  only  if  any  fraudulent  concealment  or  de- 
signedly untrue  statement  is  contained  in  the  answers  to  the 
question  the  policy  is  to  be  void  and  the  premiums  forfeited, 
but  that  if  any  incorrect  or  untrue  statement,  however  hon- 
estly and  sincerely*  made  in  the  belief  of  its  truth,  occur  in 
those  answers,  the  same  consequences  are  to  follow.  The 
first  observation  in  answer  is  that,  upon  that  construction,  the 
clause  which  relates  to  fraudulent  concealment,  and  design- 
edly untrue  statement,  is  superfluous  and  unnecessary,  because 
it  is  only  a  reiteration  in  extenso  of  that  which  is  involved  in 
the  former  clause,  which  requires  the  particulars  to  be  correct 
and  true.  In  construing  an  instrument  prepared  by  the  com- 
pany, and  submitted  by  them  to  the  party  effecting  the  insur- 
ance for  his  signature,  it  ought  to  be  read  most  strongly, 
contra  proferentes ;  and  inasmuch  as,  upon  the  construction 
contended  for,  the  latter  clause  is  wholly  unnecessary,  I  think 
we  ought  to  construe  that  clause  as  merely  explanatory  of 
what  is  meant  by  "  correct"  and  "  true"  in  the  former  clause. 
"  A  layman  about  to  effect  an  insurance  would  read  such  a 
document,  when  submitted  to  him  for  his  signature,  in  the 
following  sense :  '  I  agree  that  my  answers  to  the  questions 
propounded  to  me  by  the  company  shall  be  the  basis  of  the 
contract  between  us ;  that  is  to  say,  if  I  am  guilty  of  any 
fraudulent  concealment,  or  designedly  untrue  statement  in 
those  answers,  the  policy  shall  be  null  and  void,  and  not  only 
that,  but  the  premiums  shall  be  forfeited.' 

"  Then  it  is  said  that,  if  we  turn  from  the  declaration  to  the 
policy,  we  shall  find  that  the  language  of  the  policy  varies  from 
the  declaration ;  and  it  is  argued  that  the  policy  is  the  true 
statement  of  the  contract  between  the  parties.  But  the  dec- 
laration is  declared  to  be  as  much  a  part  of  the  policy  as  if  it 
had  been  set  fortli  therein  ;  and  the  language  of  the  policy  is, 
that  if  any  statement  in  the  declaration  is  "  untrue,"  the  policy 
shall  be  void,  and  all  moneys  paid  in  respect  thereof  be  for- 
feited. To  ascertain  the  meaning  of  the  words,  "  if  any 
statement  in  the  declaration  is  untrue,"  we  must  refer  to  the 
declaration  itself,  which  is  made  the  basis  of  the  contract ; 


176  insurance:  fire,  life,  accident,  etc. 

and  reading  those  words  with  the  light  thrown  upon  them  by 
the  language  in  the  declaration,  I  think  the  true  construction 
of  the  language  of  the  defendants  is,  that,  in  order  to  avoid 
the  policy,  the  statement  must  be  designedly  untrue ;  that  is, 
untrue  to  the  knowledge  of  the  assured." 

§  169.  In  further  illustration  of  this  point  may  be  cited  the 
very  recent  case  of  Washington  Life  Insurance  Company  v. 
Harney  ,1  where  the  opinion  of  the  court,  upon  this  point,  was 
as  follows :  — 

"  The  policy  was  issued  and  accepted  by  the  assured  upon 
the  following  amongst  other  express  conditions  and  agree- 
ments, to  wit,  '  If  any  of  the  statements  or  declarations  made 
in  the  application  for  this  policy,  upon  the  faith  of  which  this 
policy  is  issued,  shall  be  found  in  any  respect  untrue.'  .  .  . 
'  Then  in  every  such  case  the  said  company  shall  not  be  liable 
for  the  payment  of  the  sum  insured,  or  any  part  thereof,  and 
this  policy  shall  be  null  and  void.'  We  do  not  understand 
the  clause,  '  upon  the  faith  of  which  this  policy  is  issued,'  as 
limiting  this  condition  to  a  portion  of  the  application,  or  any 
particular  statements  therein.  It  does  not  mean  to  imply 
that  there  are  certain  statements  which  must  be  true  be- 
cause the  policy  is  based  upon  them,  while  others  are  imma- 
terial. It  means  that  the  policy  is  issued  upon  the  faith  of 
the  whole  application,  with  all  its  statements  and  declarations, 
and  that  if  any  of  tliem  are  untrue  the  policy  is  avoided. 
We  must  therefore  consider  the  application  as  a  whole,  and 
each  party  has  a  right  to  have  it  so  considered.  If  the  appli- 
cation propounds  certain  questions  and  indicates  in  what  man- 
ner they  must  be  answered,  it  is  enough  that  they  are  answered 
in  that  manner,  and  when  the  policy  is  based  upon  tlie  state- 
ments and  declarations  of  the  application,  it  is  based  upon 
them  made  in  the  manner  and  under  the  rules  laid  down  by 
the  company  in  the  application.  If  we  turn  now  to  the  appli- 
cation we  find  under  the  head  '  Instructions  in  filling  up  this 
application,'  '  First,  answer  each  of  the  questions  on  the  first 
page  to  the  best  of  your  knowledge  and  belief,  briefly  but 
explicitly ; '  and  at  the  close  of  the  questions  and  answers  of 

1  Sup.  Ct.  Kansas,  2  Ins.  L.  J.  283. 


WARRANTIES.  177 

the  applicant,  and  just  before  her  signature,  is  the  following: 
'  It  is  hereby  declared  that  the  above  are  fair  and  true  answers 
ta  the  foregoing  questions,  and  it  is  acknowledged  and  agreed 
by  the  undersigned  that  the  above  statements  shall  form  the 
basis  of  the  contract  for  insurance,  and  also  that  any  wilfully 
untrue  or  fraudulent  answers,  any  suppression  of  facts  in 
regard  to  the  party's  health,  or  neglect  to  pay  the  premium  on 
or  before  the  day  it  becomes  due,  will  render  the  policy  null 
and  void,  and  forfeit  all  payments  made  thereon.'  While  the 
policy  for  its  validity  requires  truthfulness  in  the  statements 
of  the  application,  it  is  enough  if  they  are  true  according  to 
the  degree  and  conditions  of  truthfulness  required  by  the  appli- 
cation. Tliis  is  all  the  parties  want  when  they  speak  of  truth- 
fulness in  the  policy ;  to  presume  otherwise,  and  suppose  that 
the  company  meant  one  degree  of  truthfulness  in  the  applica- 
tion, and  another  in  the  policy,  is  to  impute  a  dishonesty  which 
the  law  will  never  presume,  and,  if  shown  to  exist,  will  never 
sustain." 

§  170.  While  it  is  true  that  if  a  fact  be  in  plain  terms  ex- 
pressly warranted,  its  materiality  to  the  risk  is  of  no  impor- 
tance, and  it  becomes  a  condition  precedent,  although  entirely 
immaterial,  yet  where  a  circumstance  is  sought  to  be  in- 
cluded by  implication  in  the  warranty,  it  never  can  be  supposed 
that  the  parties  intended  to  include  it,  unless  it  be  manifestly 
material  to  the  risk.^  In  this  way  the  question  of  materiality 
may  sometimes  arise,  even  under  a  warranty,  or  rather  as 
aiding  in  determining  the  question  whether  what  appears  to 
be,  and  in  point  of  form  is,  a  warranty,  is  so  in  point  of  fact. 
Thus  in  Anderson  v.  Fitzgerald,^  where  the  policy  was  to  be 
void  "  if  any  false  statement  in  or  about  the  effecting  or  obtain- 
ing that  insurance"  were  made,  it  was  said  by  Parke,  B. :  "  It 
is  true  that  the  materiality  of  these  statements  may  be  some- 
times evidence  of  the  purpose  with  which  they  were  made, 
and  may  tend  to  show  that  they  were  made  with  the  object  of 
obtaining  the  policy,  because  if  immaterial  they  would  not  be 
likely  to  affect  it ;  but  the  materiality  is  not  a  necessary  con- 

1  O'Neil  V.  Buffalo  Fire  Ins.  Co.,  3  Comst.  (N.  Y.)  122. 

2  4  H.  of  L.  Cas.  484. 

12 


178  insurance:  fire,  life,  accident,  etc. 

dition  to  bring  them  within  the  scope  of  the  proviso,  if  it  be 
shown  that  the  statements  were  made  in  obtaining  the  policy 
and  for  the  purpose  of  effecting  it."  A  warranty  will  in  no 
case  be  extended  by  construction,  nor  will  it  be  made  to 
include  any  tiling  not  clearly  within  its  terms. ^  And  it  will 
be  construed  strictly  against  those  for  whose  benefit  it  is  made, 
when  it  imposes  burdens  upon  others  ;  ^  and  so,  if  possible,  as 
to  avoid  a  forfeiture.^  When,  however,  the  truth  of  all  the 
statements  in  the  application  is  made  a  condition  precedent, 
the  reciting  a  portion  of  them  only  in  the  policy  will  not  have 
the  effect  to  reduce  those  not  recited  from  the  quality  of  war- 
ranties to  that  of  representations.*  And  where  a  policy  insures 
the  holder  against  death  or  injury  by  "  violent  and  accidental 
means  within  the  meaning  of  this  contract  and  conditions," 
and  the  conditions  annexed  specify  certain  modes  of  injury  or 
death  which  the  policy  did  not  cover,  this  exclusion  does  not 
operate  to  enlarge  the  scope  of  the  words  "  violent  and  acci- 
dental means,"  so  as  to  include  all  modes  of  injury  and  death 
by  violence  and  accident  not  embraced  in  the  exclusion,  or 
any  modes  not  fairly  within  the  meaning  of  the  words.^  But 
statements  and  stipulations  not  required  by  the  conditions  of 
the  contract,  though  the  writing  containing  them  is  by  the 
conditions  made  part  of  the  policy,  do  not  constitute  warranties. 
They  are  not  necessary,  but  voluntary  statements  and  stipula- 
tions, and  if  material  have  the  force  of  representations.^ 

§  171.  Warranties  and  Representations  construed  strictly  as  to 
their  Scope.  —  Warranties  and  representations  will  also  be  con- 
strued strictly  as  to  their  scope.  Thus  a  warranty  that  a  room 
is  warmed  by  a  stove,  and  that  the  pipe  is  well  secured,  is  only 
a  warranty  that  it  is  so  warmed  when  warmed  at  all,  and  that 
the  pipe  is  so  secured  when  the  stove  is  used,  but  not  at  other 
times.^     So  a  warranty  that  the  water-tanks  shall  be  at  all 

1  Blood  V.  Howard  Fire  Ins.  Co.,  12  Cush.  (Mass.)  472;  Shepherd  v.  Union 
Mut.  Fire  Ins.  Co.,  38  N.  H.  232. 

2  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sum.  (U.  S.  C.  C.)  434. 

3  Ripley  v.  yEtna  Ins.  Co.,  29  Barb.  (N.  Y.)  552. 
*  Sceales  i;.  Scanlan,  6  Irish  (Law),  367. 

5  Southard  v.  Railway  Passengers  Assurance  Co.,  34  Conn.  574. 

6  Protection  Ins.  Co.  v.  Harmer,  22  Ohio  (2  Ohio  St.),  452. 

7  Loud  V.  Citizens'  Mut.  Ins.  Co.,  2  Gray  (Mass.),  221. 


WARRANTIES.  179 

times  well  supplied  with  water,  as  applicable  to  a  building  in 
process  of  construction,  means  that  the  tanks  sliall  be  built 
and  filled  with  reasonable  diligence  in  the  course  of  construc- 
tion.^ So  a  warranty  of  force-pumps,  ready  for  use,  includes 
a  warranty  that  there  is  some  power  to  work  the  pumps ;  but 
it  is  not  a  warranty  that  that  power  is  the  best,  or  the  usual, 
or  of  any  particular  kind  ;  nor  that  the  pumps  shall  not  be 
disabled  by  the  fire.^  And  a  representation  that  there  is  a 
force-pump  does  not  by  implication  include  hose.  The  truth 
of  the  representation  is  completely  established  by  the  fact  that 
there  is  a  force-pump,  and  whether  hose  or  buckets  are  the 
means  by  which  the  water  delivered  by  the  pump  is  made 
available  in  case  of  fire,  not  being  inquired  about,  is  imma- 
terial.^ So  a  warranty  that  the  property  belongs  to  the  in- 
sured is  not  -a  warranty  of  any  particular  title,  or  that  it  is 
unincumbered.^ 

§  172.  Contracts  of  Insurance  interpreted  by  the  same  Rules 
as  other  Contracts. —  It  may  be  well  to  observe  here,  because 
there  are  unconsidered  suggestions  to  the  contrary,  that  the 
principles  of  interpretation  applicable  to  contracts  of  insur- 
ance are  the  same  as  those  which  obtain  in  the  case  of  other 
contracts.  It  is  likewise  to  be  observed,  that  while  marine 
insurance  was  the  earliest,  and,  till  within  a  comparatively 
recent  period,  the  almost  exclusive  form  under  which  this  con- 
tract came  under  the  observation  of  the  courts,  and  upon  this 
form  is  based  substantially  that  body  of  principles  known  as 
the  Laws  of  Insurance,  all  the  other  forms  of  insurance  are 
the  outgrowth  of  this  earliest  and  primitive  form,  and  are  but 
new  adaptations  and  applications  thence  elaborated,  subject 
only  to  such  modifications  as  were  required  by  the  peculiari- 
ties of  the  new  risks  assumed,  and  the  new  interests  to  be 
protected.  The  doctrines  of  marine  insurance  are  therefore 
always  to  be  resorted  to  and  applied  in  the  elucidation  of  all 
other  kinds,  unless  the  express  provisions  of  the  contract,  or 

1  Gloucester  Manuf.  Co.  v.  Howard  Fire  Ins.  Co.,  5  Gray  (Mass.),  497. 
-  Sayles  v.  North  Western  Ins.  Co.,  2  Curtis  (C.  C.  U.  S.),  612. 
'  Peoria  Mar.  and  Fire  Ins.  Co.  v.  Lewis,  18  111.  653. 
*  Mut.  Ins.  Co.  V.  Deale,  18  Md.  26. 


180  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

circumstances  peculiar  to  the  subject-matter,  render  them 
inapplicable,  or  require  their  qualification  in  order  to  accom- 
plish the  object  for  which  the  contract  is  entered  into. 

§  173.  How  far  Proof  of  Usage  is  admissible  in  aid  of  Inter- 
pretation. —  In  the  early  history  of  insurance  many  terms  and 
phrases  were  used  of  doubtful  meaning  which  required  a  ref- 
erence to  usage  for  the  purpose  of  explanation.  And  so 
numerous  were  these  doubtful  terms  and  phrases,  and  so  fre- 
quent was  the  reference  to  custom  and  usage  to  explain  them, 
that  so  great  a  judge  as  Mr.  Justice  BuUer  is  reported  to 
have  said  that  "  in  policies  of  insurance  in  particular  a  great 
latitude  of  construction  as  to  usage  has  been  admitted.  By 
usage  places  come  within  the  policy  which  are  not  expressed 
in  words.  Usage  not  only  explains  but  even  controls  the 
policy."  1  "  In  all  matters  of  trade,  usage  is  a  sacred  thing."  ^ 
But  if  that  learned  judge  meant  any  thing  more  by  these  ex- 
pressions than  that  great  frequency  of  resort  to  usage  for  the 
purpose  of  explaining  ambiguities  is  had,  he  was  doubtless,  by 
some  peculiarity  of  the  cases  under  consideration,  betrayed 
into  unguarded  expressions,  not  apt  to  fall  from  him,  and  not 
warranted  either  by  the  earlier  or  later  decisions.  Neverthe- 
less the  authority  of  so  great  a  man  gave  vogue  to  the  impres- 
sion that  in  this  respect  contracts  of  insurance  were  in  some 
sort  excepted  out  of  the  general  rules  applicable  to  other  con- 
tracts. But  nothing  is  better  settled  than  that  this  impression 
is  without  foundation.  The  same  rule  of  construction  which 
applies  to  other  instruments  applies  also  to  these.  They  are 
to  be  construed  according  to  the  sense  and  meaning  of  the 
terms  used  ;  and  if  these  are  clear  and  unambiguous,  the 
courts  will  not  admit  parol  evidence  to  contradict,  vary,  or  ex- 
plain them.  Their  terms  are  to  be  understood  in  their  plain, 
ordinary,  and  popular  sense,  unless  they  have  generally,  in 
respect  to  the  subject-matter,  as  by  the  known  usage  of  trade 
or  the  like,  acquired  a  peculiar  sense,  distinct  from  the  popu- 
lar sense,  rendering  it  necessary  to  resort  to  extrinsic  proof 
in  order  to  determine  in  which  sense  they  are  used,  and  so  to 

^  Long  V.  Allen,  cited  in  Park,  390. 

^  Newman  v.  Cazalet,  also  cited  in  Park,  414,  note. 


WARRANTIES.  181 

explain  their  ambiguity,  or  unless  the  context  evidently  points 
out  that  they  must,  in  the  particular  instance,  and  in  order 
to  effectuate  the  immediate  intention  of  the  parties,  be  under- 
stood in  some  special  and  peculiar  sense.^ 

A  policy  of  insurance  is  a  contract,  and  is  to  be  governed 
by  the  same  principles  as  govern  other  contracts.  When  it  is 
said  that  a  contract  of  insurance  is  a  contract  uherrimce  fidei, 
this  only  means  that  the  good  faith,  which  is  the  basis  of  all 
contracts,  is  more  especially  required  in  that  species  of  con- 
tract in  which  one  of  tlie  parties  to  the  contract  is  necessarily 
less  acquainted  with  the  details  of  the  subject  of  the  contract 
than  the  other.^  Its  language,  says  Nelson,  C.  J.,^  "is  to 
receive  a  reasonable  interpretation  ;  its  intent  and  substance, 
as  derived  from  the  language  used,  should  be  regarded.  Tliere 
is  no  more  reason  for  claiming  a  strict  literal  compliance  with 
its  terms  than  in  ordinary  contracts.  Full  legal  effect  should 
always  be  given  to  it  for  tlie  purpose  of  guarding  the  company 
against  fraud  and  imposture.  Beyond  this,  we  would  be  sacri- 
ficing substance  to  form,  —  following  words  rather  than  ideas." 
Indeed,  a  moment's  reflection  will  render  it  apparent  that 
there  is  nothing  in  an  agreement  about  insurance  intrinsically 
more  sacred  or  inviolable  than  in  an  agreement  about  any 
other  subject-matter. 

§  174.  The  Contract  -will  be  construed  liberally  in  favor  of  the 
Object  to  be  accomplished.  —  It  was  early  held,  witli  special 
reference  to  contracts  of  marine  insurance,  tliat  the  strictum 
jus  or  apex  juris  is  not  to  be  laid  hold  on,  but  they  are  to  be 
construed  largely  for  the  benefit  of  trade  and  for  the  insured,* — 
a  rule  which,  under  different  forms  of  expression,  has  obtained 
with  reference  to  all  kinds  of  insurance  to  the  present  day. 
Having  indemnity  for  its  object,  the  contract  is  to  be  construed 

'  Per  Lord  Ellenborough,  Robertson  v.  French,  4  East,  135.  And  see  post, 
§  179. 

-  Lord  Abinger,  C.  B.,  in  Cornfoot  v.  Fowke,  6  Mees.  &  "Wels.  358,  in  reply  to 
the  suggestion  of  Sir  Frederic  Thesiger,  arguendo,  on  a  question  of  representation 
that  a  greater  degree  of  good  faitli  is  required  in  contracts  of  insurance  than  in 
others. 

3  Turley  v.  North  Am.  Fire  Ins.  Co.,  25  Wend.  374. 

*  Tiernay  v.  Ethrington,  1  Burr.  341. 


182  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

liberally  to  that  end,  and  it  is  presumably  the  intention  of  the 
insurer  that  the  insured  shall  understand  that  in  case  of  loss 
he  is  to  be  protected  to  the  full  extent  which  any  fair  interpre- 
tation will  give.^  The  spirit  of  the  rule  is,  that  wliere  two 
interpretations  equally  fair  may  be  given,  that  which  gives 
the  greater  indemnity  shall  prevail.  And  to  the  same  spirit  is 
due  the  rule  that  conditions  and  provisos  will  be  strictly  con- 
strued against  the  insurers  because  they  have  for  their  object 
to  limit  the  scope  and  defeat  the  purpose  of  the  principal  con- 
tract;^ and  apparently  contradictory  clauses  will  be  so  con- 
strued if  possible  as  to  reconcile  them  with  each  otiier,  and  to 
give  to  each  its  due  force  in  furtherance  of  the  main  purpose 
of  the  contract.^  Of  course  the  different  provisions  of  the 
contract  must  be  so  construed,  if  possible,  as  to  give  effect  to 
each.  If,  therefore,  the  natural  and  obvious  interpretation  of 
one  would  render  it  nugatory,  or  bring  it  into  conflict  with 
another,  while  a  different  interpretation  would  reconcile  the 
two,  and  give  force  and  effect  to  both,  the  latter  is  to  be 
adopted.  So  if  the  natural  interpretation,  looking  to  the 
other  provisions  of  the  contract,  and  to  its  general  object  and 
scope,  would  lead  to  an  absurd  or  unreasonable  conclusion,  as 
such  a  result  cannot  be  presumed  to  have  been  within  the 
intention  of  the  parties,  such  interpretation  must  be  aban- 
doned, and  that  adopted  which  will  be  more  consistent  with 
reason  and  probability. 

§  175.  Language  taken  most  strongly  against  those  for  whose 
Benefit  it  is.  —  No  rule,  in  the  interpretation  of  a  policy,  is 
more  fully  established,  or  more  imperative  and  controlling, 
than  that  which  declares  that,  in  all  cases,  it  must  be  liberally 
construed  in  favor  of  the  insured,  so  as  not  to  defeat  without 
a  plain  necessity  his  claim  to  the  indemnity,  which  in  making 
the  insurance  it  was  his  object  to  secure.  When  the  words 
are,  without  violence,  susceptible  of  two  interpretations,  that 
which  will  sustain  his  claim  and  cover  the  loss  must,  in  pref- 

1  Dow  V.  Hope  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  174. 

2  Hoffman  v.  iEtna  Fire  Ins.  Co.,  32  N.  Y.  405. 

3  Merchants'  Ins.  Co.  v.  Edmond,  17  Gratt.  (Va.)  138. 


WARRANTIES.  183 

erence,  be  adopted. ^  While  courts  will  extend  all  reasonable 
protection  to  insurers,  by  allowing  them  to  hedge  themselves 
about  by  conditions  intended  to  guard  against  fraud,  careless- 
ness, want  of  interest,  and  the  Wke,  they  will  nevertheless  en- 
force the  salutary  rule  of  construction,  that  as  the  language 
of  the  conditions  is  theirs,  and  it  is  therefore  in  their  power 
to  provide  for  every  proper  care,  it  is  to  be  construed  most 
favorably  to  the  insured.^  Thus,  if  a  stipulation  be  ambigu- 
ous, and  no  light  can  be  thrown  upon  it  in  accordance  with 
the  received  principles  of  law,  from  extrinsic  evidence,  the 
doubt  is  to  be  resolved  against  the  party  by  whom  and  in 
whose  favor  the  stipulation  is  made.  The  words  of  a  promise, 
with  its  exceptions  and  qualifications,  are  to  be  considered 
as  those  of  the  promisor,  while  those  of  a  representation  on 
which  the  promise  is  founded  are  the  words  of  the  promisee. 
If  a  question  be  equivocal,  so  that  it  is  susceptible  of  being  an- 
swered in  more  than  one  way,  and  differently  from  different 
points  of  view,  it  will  not  be  open  to  the  company  which  pre- 
pares the  question  to  object  that  it  is  not  answered  in  the  true 
sense.^  Thus  the  question  whetiier  one  has  suffered  any  seri- 
ous injury  might  be  answered  in  the  affirmative  if  regarded  in 
the  light  of  the  severity  of  the  suffering,  and  temporary  incon- 
venience occasioned  at  the  time.  But  looiced  at  afterwards,  and 
after  a  permanent  and  complete  recovery,  it  may  well  be  an- 
swered in  the  negative,  so  far  as  the  injury  is  material  to  the 
question  of  the  value  of  a  life  risk.*  So  an  incidental  com- 
munication from  the  insurer  to  the  insured  will  be  deemed 
to  contain  not  only  all  the  language  expresses,  but  all  tiiat  can 
be  fairly  deducible  therefrom  in  the  light  of  the  circumstances 
under  which  it  is  made.  Tlius  if  notice  of  additional  insur- 
ance and  an  approval  in  writing  by  the  insurers  be  required, 
an  acknowledgment  in  writing  that  notice  has  been  received, 

1  Westfall  V.  Hudson  River  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  490. 

2  Cropper  v.  Western  Ins.  Co.,  32  Penn.  St.  351. 

3  Cropper  v.  Western  Ins.  Co.,  32  Penn.  St.  351 ;  Wilson  v.  Hampden  Fire 
Ins.  Co.,  4  R.  I.  150;  iEtna  Ins.  Co.  v.  Jackson,  16  B.  Mon.  (Ky.)  242;  Bartlett 
V.  Union  Mut.  Fire  Ins.  Co.,  46  Me.  500;  Wilson  v.  Conway  Ins.  Co.,  4  R.  I. 
141. 

4  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222. 


184  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

without  more,  will  be  deemed  an  approval.^  So  words  of 
exception,  if  of  doubtful  import,  are  to  be  construed  most 
strongly  against  the  party  in  whose  interest  they  are  intro- 
duced.2 

§  176.  An  instance  of  the  application  of  the  doctrine  that 
where  there  is  any  ambiguity  in  a  policy  it  must  be  taken  most 
strongly  against  the  party  who  prepares  it,  is  well  illustrated 
in  a  comparatively  recent  case.  The  proposal  or  declaration 
is  made  the  basis  of  the  contract  and  part  of  the  policy, 
affirms  that  its  particular  statements  are  "  correct  and  true 
throughout,"  and  stipulates  that  if  it  shall  hereafter  appear 
that  any  fraudulent  concealment  or  designedly  untrue  state- 
ment is  made,  the  policy  shall  be  void.  It  was  contended  by 
the  insurers  that  by  this  language  the  policy  was  to  be  void 
not  only  upon  an  untrue  statement  designedly  made,  but  also 
upon  an  untrue  statement  honestly  made.  But  the  court  re- 
plied that  upon  that  construction  the  clause  which  relates  to 
designedly  untrue  statements  would  be  superfluous,  because 
only  a  reiteration  of  that  which  is  involved  in  the  former 
clause  requiring  the  particulars  to  be  correct  and  true.  But 
in  construing  an  instrument  prepared  by  the  insurers,  it  ought 
to  be  read  most  strongly  against  the  makers,  and  inasmuch  as, 
upon  the  construction  contended  for,  the  latter  clause  would 
be  wholly  unnecessary,  it  should  rather  be  construed  as  merely 
explanatory  of  what  is  meant  by  the  terms  "correct"  and 
"  true  "  in  the  former  clause.^ 

§  177.  Written  over  printed  Words  prevail.  —  As  in  all  con- 
tracts consisting  partly  of  printed  matter  and  partly  of  writ- 
ten, so  with  contracts  of  insurance,  where  any  discrepancy  or 
repugnancy  exists,  the  written  portion  is  to  prevail  over  the 
printed,  for  the  obvious  reason  that  as  the  latter  contains  the 
more  general  and  formal  provisions  applicable  for  the  most 
part  to  all  cases,  there  is  more  ground  for  supposing  tliat  these 

1  Potter  V.  Ontario  and  Liv.  Mut.  Ins.  Co.,  5  Hill  (N.  Y.),  147 ;  Robertson  v. 
French,  4  East,  135. 

•-'  Palmer  v.  Warren  Ins.  Co.,  1  Story  (U.  S.  C.  Ct.),  360;  Blackett  v.  Royal 
Ex.  Ins.  Co.,  2  Cromp.  &  Jer.  244. 

^  Fowkes  V.  Manchester  and  London  Life  Ass.  Association,  3  Best  &  Smith, 
Q.  B. 'J17;  s.  c.  E.  C.  L.  113,917. 


WARRANTIES.  185 

have  not  been  erased  or  modified  so  as  to  conform  to  the  writ- 
ten portion,  through  inadvertence,  than  that  the  special  and 
peculiar  provisions  of  the  written  portion  have  been  adopted 
without  due  consideration,  and  inserted  without  the  design  or 
contrary  to  the  intention  of  the  parties.^  Tlie  printed  forms 
are  calculated  for  ordinary  risks,  and  contain  the  provisions 
and  conditions  usually  attached  to  insurances  upon  them. 
They  must,  therefore,  necessarily  be  general  and  comprehen- 
sive in  their  terms,  and  not  suited  to  insurances  upon  other 
and  special  hazards.  It  is  the  ordinary  course  that  upon  each 
application  a  special  agreement  is  made  between  the  applicant 
and  underwriter,  designating  and  describing  the  premises  re- 
quired to  be  insured,  and  fixing  the  terms  of  that  particular 
insurance ;  and  the  policy  is  then  completed  by  filling  up  the 
blank  spaces  left  in  the  printed  form  with  suitable  words  and 
clauses  to  express  the  contract  thus  agreed  upon.  This  is  the 
usual  mode  of  consummating  the  contract,  and  not  unfre- 
quently  the  printed  form  of  the  policy  is  left  unaltered,  with- 
out expunging  or  modifying  the  parts  of  it  which  conflict  with 
the  written  clauses.  These  written  clauses,  nevertheless,  con- 
tain the  elements  of  the  contract,  and  being  framed  under  the 
immediate  eye  of  the  parties,  and  with  special  reference  to  the 
exigencies  of  the  particular  contract,  and  to  the  terms  agreed 
upon,  they  sometimes  present  a  contract  to  which  some  of  the 
printed  parts  of  the  policy  are  inapplicable.  And  as  effect 
must  be  given  to  the  acknowledged  intentions  of  the  parties, 
these  written  clauses  must  necessarily  supersede  and  control 
such  of  the  printed  clauses  as  would,  if  enforced  and  literally 
applied,  be  inconsistent  with  them." 

§  178.  Insurers  confined  to  the  exact  Words  of  the  "War- 
ranty.—  The  strictness  with  which,  courts  will  hold  insurers 
seeking  to  set  up  a  warranty,  a  breach  of  which  works  a  for- 
feiture, is  well  illustrated  by  the  following  cases :  Th-e  appli- 
cation and  conditions  annexed  were  referred  to  and  made  part 
of  the  policy.     The  insurance  was  upon  a  "  stock  of  merchan- 

1  Robertson  i'.  French,  4  East,  135. 

2  Delonguemare  v.  Tradesmen's  Ins.  Co.,  2  Hall  (N.  Y.),  G22;  Colt  v.  Com- 
mercial Ins.  Co.,  7  Johns.  (N.  Y.J  390. 


186  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

dise."  Ill  the  application  to  the  question,  "For  what  pur- 
pose is  the  building  used  ?  "  it  was  answered,  "  Wholesale  and 
retail  hardware  ;  "  and  to  the  question,  "  How  many  tenants  ?  " 
the  answer  was,  "  One."  In  fact,  the  second  story  of  the  build- 
ing was  occupied  as  a  clothing-store,  and  the  upper  story  for 
lodging-rooms.  The  insured  covenants  that  the  representation 
given  in  the  application  is  a  warranty,  and  contains  a  just, 
full,  and  true  exposition  of  all  the  facts  and  circumstances  in 
regard  to  the  condition,  situation,  and  value  of  the  property 
insured,  and  if  facts  or  circumstances  shall  not  be  fairly  rep- 
resented, then  the  policy  is  to  be  void.  In  the  policy,  also, 
insurance  is  said  to  be  on  the  property  described  in  the  appli- 
cation, which  is  referred  to  and  made  part  of  the  policy,  and 
declared  to  be  a  warranty.  And  it  was  held  that  while  the 
policy  would  be  void  if  the  representations  relating  to  the 
property  insured  were  untrue,  yet  that  false  representations 
as  to  matters  outside  and  independent  of  the  property  insured, 
and  which  had  not  in  any  degree  contributed  to  the  loss,  would 
not  avoid  the  policy  ;  and  as  the  stipulations  both  in  the  appli- 
cation and  in  the  policy  have  reference  to  the  property  insured, 
and  in  respect  to  this  there  was  no  untruthfulness,  a  false 
representation  as  to  the  occupancy  of  the  building  which  was 
not  insured  did  not  avoid  the  policy.^  In  another  case,  the  in- 
surance was  upon  a  "  stock  of  goods  and  merchandise,"  with  a 
stipulation  that  if  the  "  premises  "  be  "  appropriated,  applied, 
or  used  for  the  purpose  of  storing  or  keeping  therein,"  amongst 
other  things,  "  oil  and  cotton,"  the  policy  should  be  of  no  effect 
during  such  use.  A  barrel  of  oil,  with  bunches  of  cotton  near 
it,  had  been  kept  in  the  back  part  of  the  store  for  a  short  time 
previous  to  the  fire.  But  it  was  held  that  the  clause  by  its 
terms  was  confined  to  the  case  of  a  building  insured,  —  a  case 
not  covered  by  the  policy ;  and  if  the  case  had  been  covered 
by  the  policy  it  should  have  been  construed  to  forbid  the 
appropriation  or  chief  use  of  the  building  for  any  of  the  pro- 
hibited purposes,  and  not  the  incidental  keeping  of  small 
quantities  of  prohibited  articles  for  retail,  along  with  a  general 

1  Howard  Fire  and  Mar.  Ins.  Co.  v.  Cormick,  24  111.  455. 


WARRANTIES.  187 

stock  of  goods.^  So  an  alteration  in  the  status  of  the  prop- 
erty insured,  the  same  not  being  a  building,  as  for  instance 
the  machinery  in  a  building,  is  not  an  alteration  in  the  "  prem- 
ises "  insured  such  as  will  work  a  forfeiture.^  And  to  pre- 
vent a  forfeiture  by  such  a  breach  of  warranty,  a  bare,  literal, 
and  technical  compliance  on  the  part  of  the  insured  with  the 
terms  of  the  contract  will  sometimes  be  held  to  be  suffi- 
cient, —  a  compliance  which  is  nearly  tantamount  to  an  eva- 
sion. Thus  under  a  warranty  that  mills  are  worked  by  day 
only,  keeping  up  the  fires  and  running  the  engine  by  night, 
the  machinery  not  being  attaclied,  would  constitute  no  breach.^ 
§  179.  Custom  and  Usage  as  Aids  to  Interpretation.  —  We 
have  just  seen^  that  usage  is  not  unfrequently,  especially  in 
marine  insurance,  resorted  to  in  aid  of  interpretation.  But 
having  due  regard  to  the  incidental  difierences  in  the  various 
kinds  of  risks,  the  rules  under  which  evidence  of  custom  and 
usage  is  admissible  in  aid  of  the  interpretation  of  marine  in- 
surances, are  equally  applicable  to  all  the  other  kinds  of  insur- 
ances, and  have  been  so  well  stated  by  a  learned  author,^  that 
we  take  pleasure  in  transferring  them  to  these  pages.  They 
are  as  follows :  — 

1.  Every  usage  of  a  particular  trade,  which  is  so  well  set- 
tled or  so  generally  known  that  all  persons  engaged  in  that 
trade  may  be  fairly  considered  as  contracting  with  reference 
to  it,  is  considered  to  form  part  of  every  policy,  designed  to 
protect  risks  in  such  trade,  unless  the  express  terms  of  the 
policy  decisively  repel  the  inference. 

2.  The  usage,  moreover,  in  order  to  be  binding,  must  be 
either  a  general  usage  of  the  whole  mercantile  world,  or  a 
particular  usage  of  universal  notoriety  in  the  trade  upon 
which,  and  of  the  place  at  which,  the  insurance  is  effected ; 
the  usage  of  a  particular  place,  or  of  a  particular  class  of  per- 

1  Leggett  V.  ^tna  Ins.  Co.,  10  Rich.  Law  (S.  C),  202. 

2  Robinson  v.  Mercer  County  Mut.  Ins.  Co.,  3  Dutch.  (N.  J.)  135. 

3  Mayall  v.  Mitford,  6  Ad.  &  El.  670;  Hide  v.  Bruce,  3  Doug.  213;  Peoria 
Mar.  and  Fire  Ins.  Co.  v.  Lewis,  18  111.  553. 

*  Ante,  §  173. 

*  Arnould  on  Insurance,  65  et  seq. 


188  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

sons,  cannot  be  binding  on  non-residents,  or  on  other  persons, 
unless  they  are  shown  to  have  been  cognizant  of  it. 

3.  Where  the  sense  of  the  words  and  expressions  used  in 
a  policy  is  either  ambiguous  or  obscure  on  the  face  of  the 
instrument,  or  is  made  so  by  proof  of  extrinsic  circumstances, 
parol  evidence  is  admissible  to  explain  by  usage  their  meaning 
in  the  given  case. 

4.  A  resort  to  parol  evidence,  however,  is  only  permitted 
where  the  language  of  the  policy  is  either  obscure  or  equivo- 
cal ;  such  evidence  will  never  be  admitted  to  set  aside  or  con- 
trol its  plain  and  unambiguous  terms. 

Thus,  proof  is  admissible  that  camphene  is  customarily  used 
in  printing  establishments  to  clean  type  ;  ^  or  that  benzole  is  so 
used  in  patent-leather  factories,  and  is  handled  in  a  particular 
way  ;2  or  that  amongst  manufacturers  "  room  "  means  "  loft," 
whether  the  loft  be  partitioned  into  distinct  apartments  or  not ;  ^ 
or  that  a  house  built  in  a  certain  manner  is  by  usage  treated  as 
a  house  "  filled  in  with  brick  ;"■*  and,  generally,  of  the  mean- 
ing of  any  particular  term  which  has  in  any  trade  secured  a 
limited  or  special  meaning,  different  from  its  popular  accepta- 
tion, when  the  term  is  used  in  a  contract  with  a  person  en- 
gaged in  that  trade  .^ 

§  180.  To  these  may  be  added  another  rule,  to  wit,  that  proof, 
whether  of  a  local  or  general  usage,  cannot  be  resorted  to  for 
the  purpose  of  importing  into  the  contract  a  new  and  dis- 
tinct condition.  Thus  a  usage  that,  in  case  of  the  occurrence 
of  any  circumstance  by  the  act  of  the  insured,  after  effecting 
the  insurance,  whereby  the  risk  is  increased,  he  shall  give  no- 
tice thereof  to  the  insurer,  that  the  latter  may  then  elect  to 
continue  or  annul  the  policy,  cannot  be  received  in  evidence, 
there  being  no  stipulation  in  the  policy  requiring  such  notice.^ 
Nor  when  the  contract  is  to  pay  all  loss  or  damage  by  fire  is  it 

1  Harper  v.  City  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct.)  520. 
'^  Citizens'  Ins.  Co.  v.  McLaughlin,  53  Penn.  St.  485. 

3  Daniels  v.  Hudson  River  Fire  Ins.  Co.,  12  Cush.  (Mass.)  416. 

4  Fowler  v.  jYAna.  Fire  Ins.  Co.,  7  Wend.  (N.  Y.)  270. 

5  Wall  V.  Howard  Ins.  Co.,  14  Barb.  (N.  Y.)  383. 

6  Stebbins  v.  Globe  Ins.  Co.,  2  Hall  (N.  Y.),  632. 


WARRANTIES.  189 

permissible  to  show  that  reinsurers  are  accustomed  to  pay  only 
such  proportion  of  the  loss  as  is  shown  by  the  relation  which 
the  amount  reinsured  bears  to  the  whole  amount  insured. ^ 
Nor  where  the  stipulation  is  to  keep  a  watch  nights,  can  a 
usage  be  shown  to  except  certain  nights.^  But  the  custom  of 
other  similar  establishments  may  be  shown  to  explain  what  is 
"  keeping  a  watch."  ^  And  in  a  case  where  a  building  was 
torn  to  pieces  by  lightning  but  not  burned,  and  the  company 
was  liable  for  losses  "  by  fire  by  lightning,"  evidence  of  the 
general  practice  in  other  insurance  companies  in  similar  cases, 
not  to  pay  where  there  is  no  burning,  was  held  admissible,  in 
aid  of  the  interpretation  of  the  phrase.* 

1  Hone  V.   Mut.  Safety  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  137;  8.  c. 
affirmed,  2  Coinst.  (N.  Y.)  235. 

2  Eipley  v.  JEtna  Fire  Ins.  Co.,  30  N.  Y.  136. 

3  Crocker  v.  People's  Mut.  Ins.  Co.,  8  Cush.  (Mass.)  79. 

*  Babcock  v.  Montgomery  County  Mut.  Ins.  Co.,  6  Barb.  (N.  Y.)  637 ;  s.  c. 
affirmed,  4  Comst.  (N.  Y.)  326. 


190  insurance:  fire,  life,  accident,  etc. 


CHAPTER  YII. 

OF   representation. 

§  181.  Representation  defined.  —  A  representation  is  a  state- 
ment incidental  to  the  contract,  relative  to  some  fact  having 
reference  thereto,  and  upon  the  faith  of  which  the  contract  is 
entered  into.  If  false  and  material  to  the  risk  the  contract 
is  avoided.  Such  a  false  statement  is  termed  in  insurance  a 
misrepresentation,  which  has  been  well  defined  to  be  the  state- 
ment of  something  as  fact  which  is  untrue  in  fact,  and  which 
the  insured  states  knowing  it  to  be  untrue,  with  the  intent 
to  deceive  the  insurers,  or  which  he  states  positively  as  true 
without  knowing  it  to  be  true,  and  which  has  a  tendency  to 
mislead,  —  such  fact,  in  either  case,  being  material  to  the  risk 
and  adverse  to  the  insurers.^ 

The  general  doctrine  undoubtedly  is,  that  a  misrepresenta- 
tion, whether  made  intentionally,  or  through  mistake,  and  in 
good  faith,  avoids  the  policy,  on  the  ground  that,  in  either  case, 
the  injury  to  the  insurer  is  the  same.  It  is  the  fact  that  the 
insurer  relies  upon  the  truth  of  the  representation,  and  not  upon 
the  intention,  which  misleads,  whether  fraudulent  or  otherwise, 
that  gives  him  the  right  to  complain.  And  the  same  doctrine 
has  been  frequently  held  with  reference  to  concealment,  but 
perhaps  with  less  reason,  as  to  which,  however,  we  shall  see 
more  particularly  hereafter.'^  But  a  simply  untrue  statement  is 
not  a  "  palpably  fraudulent  or  untrue  "  one,^  and  good  faith  is 
always  sufficient,  when  the  policy  provides  only  for  truth  "  so 
far  as  is  known  to  the  applicant,"  ^  or  against  "  designedly 

1  Daniels  et  al.  v.  Hudson  River  Fire  Ins.  Co.,  12  Cusii.  (Mass.)  416  ;  Camp- 
bell V.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381 ;  Nicol  v.  Am.  Ins.  Co.,  3 
W.  &M.  (U.  S.  C.  Ct.)  529. 

2  Post,  c.  8. 

'  Guinane  v.  Hope  Mut.  Life,  &c.,  Soc.,  7  Irish  Jur.  o.  s.  52. 
*  Garcelon  v.  Hampden  Fire  Ins.  Co.,  50  Me.  580. 


REPRESENTATION.  191 

untrue  "  statements. ^  The  responsibility  for  misrepresentations 
is  not,  however,  confined  to  those  contained  in  the  application, 
under  a  provision  that  such  misrepresentations  shall  avoid  the 
policy.  Any  other  misrepresentation  made  at  the  time  is 
equally  fatal.- 

§  182.  Affirmative  and  Promissory.  —  Representations,  like 
warranties,  may  be  affirmative  or  promissory.  The  former  are 
those  which  affirm  the  existence  of  a  particular  state  of  things 
at  the  time  the  contract  of  insurance  is  made  and  becomes 
operative.  Tiie  latter  are  those  which  are  made  by  the  assured 
concerning  what  is  to  happen  during  the  term  of  the  insur- 
ance, stated  as  matters  of  expectation,  or,  it  may  be,  of  con- 
tract. The  one  is  an  affirmation  of  a  fact  existing  when  the 
contract  begins  ;  the  other  is  a  promise  to  be  performed  after 
the  contract  has  come  into  existence.  And  upon  this  distinc- 
tion follows  the  important  consequence  that,  while  material 
falsity  in  an  affirmative  representation  will  be  a  complete  de- 
fence to  an  action  on  a  policy  of  insurance,  the  material 
falsity  of  an  oral  promissory  representation  without  fraud  is 
no  defence  whatever.  And  the  reason  of  the  distinction  is 
this.  The  falsehood  of  the  representation  of  a  material  fact 
misleads  the  insured  into  a  contract  which  he  does  not  in- 
tend to  make,  and  therefore,  in  contemplation  of  law,  because 
misled  and  deceived,  does  not  make.  He  may  therefore  set 
up  the  fact  that  he  was  misled  or  deceived,  as  proof  that  no 
agreement  was  ever  made,  since  there  was  no  concurrence  of 
consent  upon  the  sjime  facts.  But  an  oral  promissory  repre- 
sentation, being  an  agreement  prior  in  date  to  the  actual  con- 
tract of  insurance,  and  in  its  nature  such  that  it  cannot  be 
performed  until  after  the  contract  of  insurance  has  taken 
effect,  cannot  be  set  up  to  defeat  the  later  contract  ;  for  this 
would  be  to  violate  a  fundamental  rule  of  evidence,  and  make 
the  continuance  or  maintenance  of  a  written  contract  de- 
pendent upon  the  performance  or  breach  of  an  earlier  oral 
agreement.     If  the  oral  promise  be  made  maid  fide^  and  with 

1  Fowkes  V.  Manchester  and  Lan.  Assur.  Assoc,  3  B.  &  S.  917. 

2  Wainwright  v.  Bland,  2  Mad.  &  Rob.  481  ;  s.  c.  1  Mees.  &  "Wels.  32;  Abbott 
V.  Howard,  Hayes  (Irish),  381. 


192  insurance:  fire,  life,  accident,  etc. 

tlie  intention  to  mislead  and  deceive,  tlie  fraud  will  have 
the  same  effect  as  the  material  falsity  of  an  affirmative  repre- 
sentation. But  if  made  bond  fide  and  without  intention  to 
mislead  or  deceive,  it  cannot  be  set  up  to  avoid  a  contract. 
Only  those  promissory  representations  are  available  for  such  a 
purpose  which  are  reduced  to  writing  and  made  part  of  the 
contract,  —  thus  becoming  substantially,  if  not  formally,  war- 
ranties.^ 

§  183.  Distinction  between  "Warranty  and  Representation.  — 
The  main  distinction  between  a  warranty  and  a  representa- 
tion —  that  .while  the  former  is  an  agreement  constituting  a 
part  of  the  contract,  the  latter  is  but  a  statement  incidental 
thereto  —  is  to  be  carefully  observed,  as  it  carries  with  it  impor- 
tant consequences.  A  warranty  enters  into  and  forms  a  part 
of  the  contract  itself.  It  defines  by  way  of  particular  stipu- 
lation, description,  condition,  or  otherwise,  the  precise  limits 
of  the  obligation  which  the  insurers  undertake  to  assume. 
No  liability  can  arise  except  within  those  limits.  In  order  to 
charge  the  insurers,  therefore,  every  one  of  the  terms  which 
define  their  obligation  must  be  satisfied  by  the  facts  which 
appear  in  proof.  From  the  very  nature  of  the  case  the  party 
seeking  his  indemnity  must  bring  liis  claim  withiu  the  provi- 
sions of  tlie  instrument  he  is  undertaking  to  enforce.  The 
burden  of  proof  is  upon  him  to  present  a  case  in  all  respects 
conforming  to  the  terms  under  which  the  risk  was  assumed. 
And  it  must  be  not  merely  a  substantial  conformity,  but  exact 
and  literal,  not  only  in  material  particulars,  but  in  those  that 
are  immaterial  as  well.  On  the  other  hand,  a  representation 
is,  in  its  nature,  no  part  of  the  contract.  Its  relation  to  the 
contract  is  usually  described  by  the  term  "  collateral."  It 
may  be  proved,  although  existing  only  in  parol  and  preceding 
the  written  instrument.    Unlike  other  verbal  negotiations,  it  is 

1  Kimball  v.  JEtna  Ins.  Co.  et  al.,  9  Allen  (Mass.),  540;  Sanoe  i'.  Springfield 
Fire  and  Mar.  Ins.  Co.,  ib.  This  distinction  has  not  met  the  approbation  of 
some  learned  writers.  See  1  Arnould,  Ins.,  498 ;  2  Duer,  Ins.,  749  et  seq, ;  1 
Phil.  Ins.  §  533.  But  the  opinion  by  Mr.  Justice  Gray  in  the  cases  cited  will  be 
likely  to  command  the  assent  of  the  profession.  It  is  a  learned,  clear,  and  satis- 
factory statement  of  the  distinction  referred  to,  and  the  reasons  upon  which  it 
rests. 


REPRESENTATION.  193 

not  merged  in  nor  waived  by  the  subsequent  writing.  This 
principle  is  in  some  respects  peculiar  to  insurance,  and  rests 
upon  other  considerations  than  the  rule  which  admits  proof  of 
verbal  representations  to  impeach  written  contracts  on  the 
ground  of  fraud.  Representations  to  insurers,  before  or  at 
the  time  of  making  the  contract,  are  a  presentation  of  the  ele- 
ments upon  which  to  estimate  the  risk  proposed  to  be  assumed. 
TJiey  are  the  basis  of  the  contract :  its  foundation,  on  the  faith 
of  which  it  is  entered  into.  If  wrongly  presented  in  any 
respect  material  to  the  risks,  the  policy  that  may  be  issued 
thereupon  will  not  take  effect.  To  enforce  it  would  be  to  apply 
the  insurance  to  a  risk  that  was  never  presented.  But  where 
the  insurer  seeks  to  defeat  a  policy  upon  this  ground,  his  posi- 
tion in  court  is  essentially  different  from  that  which  he  may 
hold  under  a  policy  containing  a  like  description  of  the  risk  as 
one  of  its  terms.  It  is  sufficient  for  the  plaintiff  to  show  ful- 
filment of  all  the  conditions  of  recovery  which  are  made  such 
by  the  contract  itself.  The  burden  is  then  thrown  upon  the 
defendant  to  set  forth  and  prove  the  untruthfulness  of  the  rep- 
resentations, if  there  are  any  such,  upon  which  he  relies,  and 
their  materiality  to  the  risk.^ 

§  184.  Out  of  this  distinction  arises  the  question  of  mate- 
riality. Representations  need  not,  like  warranties,  be  strictly 
and  literally  complied  with,  but  only  substantially  and  in  those 
particulars  which  are  material  to  be  disclosed  to  the  insurers 
to  enable  them  to  determine  whether  they  will  enter  into  the 
contract.  In  case  of  warranty  the  question  of  materiality  does 
not  arise.  In  case  of  representation  it  always  does  ;  and  if  this 
materiality  depends  upon  facts  and  circumstances,  it  is  a  ques- 
tion for  the  jury,  to  be  inferred  from  those  facts  and  circum- 
stances,^  as  is  also  the  materiality  of  a  concealment.^ 

1  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381 ;  Miller  v.  Mut. 
Benefit  Lite  Ins.  Co.,  31  Iowa,  21G. 

•^  Garcelon  v.  Hampden  Fire  Ins.  Co.,  50  Me.  580 ;  Mut.  Ins.  Co.  v.  Deale,  18 
Md.  26  ;  Keeler  v.  Niagara  Fire  Ins.  Co.,  16  Wis.  528  ;  Farmers'  Ins.  and  Loan 
Co.  V.  Snyder,  16  Wend.  (N.  Y.)  481;  Daniels  et  al.  v.  Hudson  River  Fire  Ins. 
Co.,  12  Cush.  (Mass.)  416 ;  Franklin  Ins.  Co.  v.  Coates,  14  Md.  285. 

3  Tyler  i;.  ^tna  Ins.  Co.,  12  Wend.  (N.  Y.)  507;  Protection  Ins.  Co.  v. 
Harmer,  22  Ohio  (2  Ohio  St.),  452;  Ins.  Co.  v.  Chase,  5  Wall.  (U.  S.)  509; 

13 


194  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

§  185.   Question  and  Answer  conclusive   as    to  Materiality.  — 

But  when  the  represeiitatious  are  ia  writing,  and  the  parties,  by 
the  frame  of  the  contents  of  the  papers,  either  by  putting  rep- 
resentations as  to  the  history,  quality,  or  relations  of  the  sub- 
ject insured  into  the  form  of  specific  questions,  or  by  the  mode 
of  referring  to  them  in  the  policy,  settle  for  themselves  that 
they  shall  be  deemed  material,  they  are  to  be  declared  so  by  the 
court,  and  the  insured  cannot  be  permitted  to  show  that  a  fact 
which  both  parties  have  treated  as  material  is  in  fact  imma- 
terial. The  inquiry  shows  that  the  insurer  considers  the  fact 
material,  and  an  answer  by  the  insured  affords  a  just  inference 
that  he  assents  to  the  insurer's  view.  The  inquiry  and  answer 
are  tantamount  to  an  agreement  that  the  matter  inquired 
about  is  material,  and  its  materiality  is  not  therefore  open  to 
be  tried  by  the  jury.^  That  this  materiality  is  under  such  cir- 
cumstances a  question  for  the  court,  has  been  frequently  de- 
cided, especially  in  cases  where  untrue  answers  are  given  to 
questions  as  to  title.^  Whether  certain  statements  are,  or  are 
not,  material,  is  a  matter  upon  which  there  may  be  a  difference 
of  opinion.  Nothing  therefore  can  be  more  reasonable  than 
that  parties  entering  into  a  contract  of  insurance  shall  deter- 
mine for  themselves  what  they  think  to  be  material.  And 
that  determination  is  conclusive.^ 

§  186.  Such  Representations  construed  less  strictly  than  War- 
ranties.—  Representations  of  this  kind,  however,  differ  from 
warranties  in  that  a  substantial  compliance  with  them  is  suffi- 
cient to  answer  their  terms.     Whether  there  has  been  such 

Tesson  v.  Atlantic  Mut.  Ins.  Co.,  40  Mo.  33;  Curry  v.  Commonwealth  Ins.  Co., 
10  Pick.  (Mass.)  535;  Gates  v.  Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.) 
469;  Mut.  Ins.  Co.  v.  Deale,  18  Md.  26. 

1  Wilson  V.  Conway  Ins.  Co.,  4  R.  I.  141  ;  Chaffee  v.  Cattaraugus  County 
Mut.  Ins.  Co.,  18  N.  Y.  376 ;  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98 
Mass.  381 ;  Anderson  v.  Fitzgerald,  4  H.  L.  Cas.  484;  Miller  v.  Mut.  Benefit 
Life  Ins.  Co.,  31  Iowa,  216 ;  Leroy  v.  Market  Ins.  Co.,  39  N.  Y.  90 ;  Price  v. 
Phoenix  Mut.  Life  Ins.  Co.,  Sup.  Ct.  Minnesota,  2  Ins.  L.  J.  223. 

2  Locke  V.  North  American  Fire  Ins.  Co.,  13  Mass.  68 ;  Strong  v.  Manuf. 
Ins.  Co.,  10  Pick.  (Mass.)  45;  Fletcher  v.  Commonwealth  Ins.  Co.,  18  Pick. 
(Mass.)  421 ;  Draper  v.  Charter  Oak  Ins.  Co.,  2  Allen  (Mass.),  573;  Towne  v. 
Fitchburg  Ins.  Co.,  7  Allen  (Mass.),  53. 

8  Anderson  v.  Fitzgerald,  4  H.  L.  Cas.  484. 


REPRESENTATION.  195 

substantial  compliance,  that  is,  whether  the  representation  is 
in  every  material  respect  true,  is  a  question  of  fact  for  the 
jury.  But  it  is  not  for  the  jury  to  say  that  the  representation, 
though  substantially  untrue,  is  nevertheless  immaterial.  For 
example :  suppose  that  in  answer  to  a  specific  question  the 
insured  states  his  age  to  be  thirty  years,  when  in  fact  he  is  a 
montli  older.  It  would  be  proper  to  submit  to  the  jury  whether 
the  answer,  though  strictly  and  technically  untrue,  is  not  sub- 
stantially and  materially  true.  The  materiality  of  the  vari- 
ance may  properly  be  considered  by  the  jury  in  passing  upon 
the  truth  of  the  answer.  But  under  this  guise  they  would 
have  no  right  to  pass  upon  the  materiality  of  the  question 
itself,  that  being  conclusively  settled  by  the  act  of  the  parties, 
by  which  both  must  be  bound.  The  substantial  truth  of  the 
statement  they  may  pass  upon  ;  with  the  materiality  of  the 
facts  they  have  nothing  to  do.^ 

§  187.  In  a  leading  case,  where  the  questions  were  whether 
the  applicant  then  or  theretofore  was  or  had  been  subject  to, 
or  in  any  way  affected  by,  consumption,  bronchitis,  spitting  of 
blood,  <tc.,  to  which  the  answer  was  in  the  negative,  the  court 
say :  "  The  only  question  for  the  jury  on  this  branch  of  the 
case,  therefore,  was  whether  these  representations  were  sub- 
stantially untrue  ;  that  is  to  say,  whether  at  or  before  the  time 
of  making  the  application  the  assured  actually  had  either  of 
these  diseases  or  infirmities  ;  and,  if  they  found  that  lie  had, 
the  policy  was  void,  and  the  plaintiff  could  not  recover.  Ap- 
plying this  rule  to  the  evidence  stated  in  the  report,  it  was  for 
the  jury  to  decide  whether  '  chronic  bronchitis,'  or  '  bronchial 
difficulty,'  or  any  other  bodily  affection  or  condition  to  which 
the  assured  was  found  by  them  to  have  been  subject,  amounted 

1  Miller  v.  Mut.  Benefit  Life  Ins.  Co.,  31  Iowa,  216  ;  Wise  v.  Mut.  Benefit 
Life  Ins.  Co.,  34  Md.  582.  In  Equitable  Life  Ass.  Soc.  v.  Patterson,  41  Ga.  338, 
where  the  policy  was  to  be  void  upon  any  false  statement  respecting  person  or 
family,  and  the  insured  stated  that  the  woman  whose  life  was  insured  was  his 
wife,  when  in  fact  she  was  not,  as  his  real  wife  was  alive,  though  it  did  not  ap- 
pear that  he  knew  it,  it  was  held  that  the  statement  was  material  if  the  insured 
knew  it  to  be  false,  otherwise  not.  But  this  seems  to  be  counter  to  all  the 
authorities.  The  materiality  does  not  at  all  depend  upon  a  knowledge  of  the 
truth  or  falsehood  of  the  facts. 


196  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

to  bronchitis,  consumption,  disease  of  the  lungs,  or  some  other 
of  the  infirmities  stated  in  the  application  and  relied  on  by 
the  defendants;  and  whether  the  spitting  of 'blood  by  him,  if 
proved  to  have  taken  place,  was  under  such  circumstances  as 
to  indicate  disease  in  his  throat,  lungs,  air  passages,  or  other 
internal  organs.     But  it  was  not  within  the  province  of  the 
jury,  under  the  guise  of  determining  whether  the  statements 
of  the  applicant  were  materially  false,  or  untrue  in  some  par- 
ticulars material  to  the  risk,  to  find  that  diseases  and  infirmi- 
ties were  not  material  to  be  disclosed,  which  the  parties  had 
by  the  form  of  the  contract  of  insurance  and  of  the  contem- 
poraneous written  application  conclusively  agreed  to  consider 
material."  ^    So  in  Price  v.  Phoenix  Mutual  Life  Insurance  Com- 
pany,- where  the  question  was  :  "  Has  the  party  ever  had  any 
of  the  following  diseases,  naming  several,  and  among  others, 
rheumatism  ?  "  and  the  answer  was,  "  Never."     In  that  case 
there  was  evidence  tending  to  show  that  the  life-insured  had 
had  sub-acute  rheumatism.     There  was  also  evidence  in  the 
case  tending  to  show  that  sub-acute  rheumatism  is  not  the  dis- 
ease of  rheumatism,  in  the  ordinary  understanding  of  the  term. 
There  was  also  evidence  tending  to  show  that,  technically,  and 
in  medical  parlance,  sub-acute  rheumatism  is  the  disease  of 
rheumatism,  and  that  it  is  generally  overlooked  as  a  disease. 
And  the  court  left  it  to  the  jury  to  say,  whether  the  rheu- 
matism referred  to  in  the  question  is  the  disease  of  rheumatism. 
Any  rheumatic  affection  not  amounting  to  the  disease  of  rheu- 
matism, they  said,  would  not  be  comprehended  in  its  terms,  any 
more  than  the  spitting  of  blood  occasioned  by  a  wound  of  the 
tongue,  or  the  extracting  of  a  tooth,  is  the  disease  of '  spitting 
of  blood,'  mentioned  in  the  same  question.     The  life-insured 
had  a  right  to  answer  the  question  upon  the  basis  that  its 
terms  were  used  in  their  ordinary  signification.     If  there  was 
any  ambiguity  in  the  question,  so  that  its  language  was  capa- 
ble of  being  construed  in  an  ordinary,  as  v.ell  as  a  technical 
sense,  the  defendant  can  take  no  advantage  from  such  ambi- 
guity .^   And  in  the  same  case,  to  the  question  :  '  Has  the  party 

1  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381. 

^  Sup.  Ct.  Min.  2  Ins.  L.  J.  253. 

3  Wilson  V.  Hampden  Fire  Ins.  Co.,  4  E.  I.  159. 


EEPRESENTATION.  197 

had,  during  the  last  seven  years,  any  severe  sickness  or  dis- 
ease?" the  answer  was,  "No."  The  allegation  in  defence  was, 
that  the  life-insured  had  had  within  seven  years  chronic  gas- 
tritis. There  was  evidence  tending  to  show  that  he  had  had 
gastritis ;  and  the  court  said  that  unless  chronic  gastritis  and 
gastritis  are  synonymous,  as  to  which  there  is  no  judicial  pre- 
sumption nor  testimony,  the  evidence  was  not  within  the  issue, 
so  that  the  false  representation  charged  was  not  proved.  In 
addition  to  this  consideration,  they  were  not  free  from  doubt 
as  to  whether  gastritis  was  shown  to  be  "  a  severe  sickness  or 
disease."  "  We  can,"  they  said,  "  take  no  judicial  cognizance  of 
its  character.  The  evidence  certainly  has  a  strong  tendency 
to  show  that  it  was  the  result  of  the  excessive  use  of  spirits, 
and  that  it  was  an  affection  of  brief  duration. 

"  We  cannot  say  that  the  jury  might  not,  upon  the  evidence, 
find  a  warrant  for  regarding  it  as  a  temporary  consequence  of 
dissipation,  rather  than  a  '  severe  sickness  or  disease,'  in  the 
ordinary  meaning  of  those  terms." 

So  if  the  question  be  whether  the  party  be  employed  in 
the  military  service,  the  jury  may  consider  whether  the  facts 
proved  show  an  actual  employment,  but  not  the  materiality 
of  the  facts ;  or  if  he  has  had  any  sickness,  they  may  consider 
whether  the  facts  proved  amount  to  "  sickness,"  as  under- 
stood by  the  parties,  but  not  whether  the  sickness,  if  proved, 
is  material ;  or  if  the  application  of  the  insured  has  been 
declined  by  any  company,  they  may  consider  whether  the  facts 
proved  amount  to  a  declination,  but  not  whether  the  declina- 
tion is  material.  The  question  of  materiality  is  closed  by  the 
interrogatory  and  answer ;  the  question  of  the  truth  of  the 
answer  is  for  the  jury  ;  and  here  they  have  so  much  latitude  as 
to  be  allowed  to  find  it  to  be  true,  if  it  is  substantially  true, 
though  not  technically  literally  or  exactly  true.^ 

§  188.  As  another  illustration  of  what  is  meant  by  the  sub- 
stantial truth  of  answers  to  questions,  may  be  cited  the  recent 
case  of  Power  v.  City  Fire  Insurance  Company,-  where  the 
answer  was,  "  There  is  a  watchman  when  the  mill  is   not  in 

1  Mutual  Benefit  Life  Ins.  Co.  v.  Wise,  34  Md.  583. 

2  8  Phila.  Rep.  566. 


198  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

use."     The  court,  in  charging  the  jury  that  it  was  for  them  to 
determine  if  this  warranty  was   strictly  kept,  say:   "Every 
representation  made  for  the  purpose  of  obtaining  an  insurance 
must  be  strictly  and  literally  true,  in  the  sense  that  no  other 
state  of  facts  can  be  takeu  as  an  equivalent  of  it.    If  it  be  that 
there  was  a  watchman,  only  that  fact,  and  no  other  amount  of 
equivalent  care  or  cautious  arrangements  or  other  guards,  can 
be  accepted  as  satisfying  the  representation.     Tlie  representa- 
tion in  the  application  is  a  written  covenant  that  it  is  true, 
and  makes  the  truth  of  the  answer  a  condition  precedent  to 
any  claim  upon  the  insurer.     I  have  felt  some  inclination  to 
think  that  the  answer  was  not  intended  to  refer  to  the  nightly 
suspensions  of  work  in  the  mill,  but  only  to  seasons  when  the 
mill  was  not  in  use  at  all,  but  lying  idle.     This,  however,  has 
not  been  insisted  on,  and  I  do  not  consider  it.     I  take  the  in- 
surer to  include  the  case  before  us,  wherein  the  mill  was  run 
during  each  day  and  stopped  at  night.     But  I  cannot  say  that 
the  answer  was  intended  by  the  parties  as  a  contract  that  the 
insured  should  always  keep  a  watchman  at  the  mill  when  it 
was  not  going,  and  that  his  sole  duty  during  such  times  should 
be  to  watch  against  fire,  always  awake,  and  always  present ; 
nor  can  I  say  that  the  law  constructs  such  a  contract  out  of  the 
answer.     The  answer  is  very  loose  in  its  terms,  and  the  in- 
surers accept  it  in    all  its  looseness,  and  then  as  of  little 
importance,  and  do  not  insert  it  in  the  policy  for  the  further 
guidance  of  the  insured,  but  file  it  away  in  their  office.     It 
makes  no  approach  to  a  definition  of  the  function  to  be  per- 
formed by  the  watchman.     The  word  is  in  its  very  nature 
loose  and  indefinite  in  its  meaning,  and  the  law  cannot  supply 
this  defect  by  giving  a  definition,  because  it  is  not  a  technical 
term  of  the  law,  and  because  the  nature  of  a  watchman's  func- 
tions varies  in  different  places  and  according  to  the  dangers  to 
which  the  property  is  exposed,  and  even  according  to  the  na- 
ture and  value  of  the  property.     Watchmen  are  seldom  mere 
watchmen  against  fire,  but  almost  always  against  all  dangers 
of  whatever  kind.     Some  kinds  of  danger,  and  at  some  times, 
require   constant  wakefulness  ;    other  kinds,  at  other  times 
and  places,  do  not.     Many,  perhaps  most  persons,  guard  their 


REPRESENTATION.  199 

stores,  safes,  mills,  factories,  &c.  (when  they  watch  at  all),  by 
clerks,  or  hands,  who  sleep  on  the  premises  so  as  to  be  at  hand 
when  danger  arises.  A  family  sleeping  in  the  house  is  a 
protection  of  it.  The  court  cannot  declare,  as  matter  of  law, 
what  is  the  proper  degree  of  a  watchman's  care,  implied  in 
this  answer,  without  adding  to  the  contract  of  the  parties. 
We  might  as  well  define  a  house  in  a  contract  for  building  a 
house.  It  is  for  the  jury  to  say  whether  or  not  the  plaintiff 
has  strictly  and  literally  complied  with  his  contract  to  keep  a 
watchman  when  the  mill  is  not  in  use."  ^ 

§  189.  Representation  in  Part  true  and  part  false.  —  Where 
the  plaintiff"  insures  for  a  specific  sum  on  the  store,  and  an- 
other specific  sum  on  the  stock  of  goods  therein,  and  gives  one 
note  for  the  premium  on  both  sums,  representing  them  to  be 
his  store  and  goods,  when  in  fact  he  has  no  title  to  the  store, 
the  contract  being  entire,  the  misrepresentation  vitiates  it,  so 
that  nothing  can  be  recovered  for  the  loss  of  the  goods  which 
were  admitted  to  belong  to  the  insured.^  So  where  the  prop- 
erty is  represented  to  be  unincumbered,  when  in  fact  it  is  in 
part  covered  by  a  mortgage.^ 

§  190.  Effect  of  Change  of  Circumstances  pending  Negotia- 
tion. —  A  representation  is  a  continuous  statement  from  the 
time  it  is  made,  during  the  progress  of  the  negotiations,  and 
down  to  the  time  of  the  completion  of  the  contract.  So  that 
though  in  point  of  fact  the  representation  be  true  when  actu- 
ally made,  yet  if  by  some  change  intervening  between  that 
time  and  the  time  of  completion  of  the  contract  it  then  be- 
comes untrue,  it  will  avoid  the  contract  if  the  change  be 
material  and  to  the  prejudice  of  the  insurers.   The  law  regards 

1  This  case  was  affirmed  on  a  writ  of  error  to  the  Supreme  Court.  See  also 
North  Am.  Fire  Ins.  Co.  v.  Throop,  22  Mich.  pp.  158  and  159,  for  some  valuable 
suggestions  as  to  the  strictness  and  precision  required  in  such  answers. 

2  Day  V.  Charter  Oak  Fire  and  Mar.  Ins.  Co.,  51  Me.  91 ;  Trench  r.  Che- 
nango County  Mut.  Ins.  Co.,  7  Hill  (N.  Y.),  122;  Lovejoy  v.  Augusta  Mut. 
Fire  Ins.  Co.,  45  Me.  472. 

3  Friesmouth  v.  Agawam  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  587;  Smith  v. 
Empire  Ins.  Co.,  25  Barb.  (N.  Y.)  497;  Gould  r.  York  County  Mut.  Fire  Ins. 
Co.,  47  Me.  403.  Contra  in  Missouri,  Koonts  v.  Hannibal  Sec.  Ass.,  42  Mo.  126; 
Lochner  v.  Home  Mut.  Ins.  Co.,  19  Mo.  628.  And  in  Kentucky,  Phcenix  Ins. 
Co.  V.  Lawrence,  4  Met.  (Ky.)  9. 


200  insurance:  fire,  life,  accident,  etc. 

it  as  made  at  the  instant  the  contract  is  entered  into.^  And 
the  same  rule  applies  in  case  of  concealment.  Any  change  in 
the  state  of  health  of  the  person  or  condition  of  the  property 
to  be  insured,  pending  the  negotiations,  if  such  changes  would 
naturally  have  any  influence  upon  the  judgment  of  the  insur- 
ers, must  be  made  known,  as  the  state  of  facts  existing  at  the 
time  of  the  completion  of  the  contract  will  be  deemed  to  have 
been  the  basis  of  the  contract.^  And  a  change  from  a  mild  to 
an  aggravated  form  of  the  same  disease  is  a  change  which 
ought  to  be  disclosed.^  Where  renewals  are  made  upon  the 
statements  in  the  original  application,  whether  the  truth  of 
the  statements  is  to  be  tried  by  the  circumstances  existing  at 
the  time  of  the  renewal,  or  at  the  time  when  the  original  appli- 
cation was  made,  is  a  question  upon  which  the  authorities  do 
not  agree ;  some  taking  the  view  that  a  renewal  makes  a  new 
contract,  ^  and  others  that  it  merely  continues  the  old  one.^ 
Special  circumstances,  however,  seem  to  control  the  decision, 
according  as  these  circumstances  indicate  the  intent  of  the 
parties. 

In  Luciani  v.  American  Fire  Insurance  Company  ^  the  policy 
was  under  seal,  and  the  renewals  from  time  to  time,  not  al- 
ways for  the  same  amount,  indorsed  on  the  policy,  and  the 
court  held  that  covenant  was  not  the  proper  form  of  action  ; 
while  assumpsit  perhaps  would  lie  upon  the  parol  continu- 
ance of  the  contract.  In  some  cases  it  is  expressly  stipulated 
that  the  renewal  shall  be  upon  the  express  understanding  that 
the  original  representations  remain  true  at  the  time  of  re- 
newal.' But  where  a  renewal  certificate  is  taken  out,  with 
distinct  notice  to  the  insurers  that  the  property  returned  has 

1  Trail  v.  Booring,  4  GiflF.  485 ;  s.  c.  on  appeal,  10  L.  T.  n.  s.  215. 

2  British  Eq.  Ins.  Co.  v.  Great  West.  Ins.  Co.,  38  L.  J.  Ch.  132 ;  s.  c.  on 
appeal,  20  L.  T.  n.  s.  422;  Calvert  v.  Hamilton  Mut.  Ins.  Co.,  1  Allen  (Mass.), 
308. 

'  Rose  V.  Med.  Ins.  and  Gen.  Life  Ins.  Soc,  11  Ct.  of  Sess.  (Scotch)  2d  series, 
345. 

*  Brady  v.  North  Western  Ins.  Co.,  11  Mich.  425. 

s  New  Eng.  Fire  and  Mar.  Ins.  Co.  v.  Wetmore,  32,  221 ;  Baltimore  Fire 
Ins.  Co.  V.  McGowan,  16  Md.  47. 

6  2  Whart.  (Penn.)  167. 

■J  Liddle  v.  Market  Fire  Ins.  Co.,  29  N.  Y.  184. 


REPRESENTATION.  201 

been  removed  from  the  premises  described  in  the  policy  to 
other  premises,  the  renewal  contract  will  cover  the  property 
insured  in  its  new  location.  This  must  have  been  the  intent 
of  the  parties,  certainly  the  intent  and  understanding  of  the 
insured,  as  the  insurers  must  have  known  ;  and  it  was  also 
their  intent  and  understanding,  unless  they  designed  to  de- 
fraud under  the  guise  of  the  contract,  which  will  not  be  pre- 
sumed."' 

§  191.  Subsequent  Changes  immaterial.  —  But  if  a  warranty  Or 
representation  be  true  when  the  bargain  is  closed,  any  usual 
and  ordinary  changes  subsequent  to  that  time  will  be  inopera- 
tive to  vitiate  the  contract  unless  prohibited,  and  courts  will 
not  favor  attempts  which  are  sometimes  made  to  convert  an 
affirmative  into  a  promissory  or  continuing  representation  or 
warranty.  Thus  when  it  is  represented  that  a  building  "  is 
used  only  for  the  purpose  of  meeting  of  a  band  during  two 
evenings  of  the  week,"  the  representation  applies  merely  to 
the  then  existing  use  of  the  building,  not  to  the  future  use 
of  the  property.^  So  if  it  be  described  as  an  "  unoccupied  " 
house,  "  but  to  be  occupied  by  a  tenant,"  or  in  answer  to  the 
question  about  occupation  it  is  said  that  it  "  will  be  occupied 
by  a  tenant,"  this  is  neither  a  warranty  that  it  shall  continue 
unoccupied,  nor  that  it  shall  be  occupied,  but  rather  a  repre- 
sentation true,  if  such  was  the  fact,  of  the  existing  state  of 
things,  and  a  statement  of  an  expectation  that  it  would  be 
so  occupied,  with  a  reservation  of  the  right  to  have  it  so  occu- 
pied ;  and  such  statements  are  not  to  be  treated  as  limiting 
the  use  of  property  so  as  to  deprive  the  insured  of  the  enjoy- 
ment of  it  as  is  usual  in  such  cases.^  So,  where  it  is  said  that 
"a  clerk  sleeps  in  the  store;"*  or  that  "barns  are  used  for 
hay,  straw,  shelter,  and  stabling  ;  "  ^  and,  generally,  when  the 

1  Ludwig  V.  Jersey  City  Ins.  Co.,  New  York  Commission  of  Appeals,  Albany 
Law  Journal,  vol.  vi.  324. 

2  Blood  u.  Harvard  Fire  Ins.  Co.,  12  Cush.  (Mass.)  472. 

3  Hughes  V.  City  Fire  Ins.  Co.,  27  Conn.  10 ;  O'Neil  v.  Buffalo  Fire  Ins.  Co., 
3  Comst.  (N.  Y.)  122;  Herrick  v.  Union  Mut.  Fire  Ins.  Co.,  48  Me.  558. 

*  Frisbie  v.  Fayette  Ins.  Co.,  27  Penn.  St.  325. 

*  Billings  V.  Tolland  County  Mut.  Ins.  Co.,  20  Conn.  139. 


202  insurance:  fire,  life,  accident,  etc. 

statement  is  as  to  the  employment  or  habits  of  a  person,  or 
the  manner  in  which  a  building  is  occupied  or  used,  or  the 
intentions  of  the  applicant.^  Such  statements  are  properly 
to  be  regarded  as  descriptive  of  present  status,  condition,  and 
expectation,  and  not  as  importing  a  promise  as  to  future  use 
or  conduct.  If  insurers  wish  to  control  such  use  they  must 
do  it  expressly  and  by  apt  words,  and  not  expect  the  courts  to 
aid  them  by  construction.^  So  if  it  is  stated  in  the  policy  that 
the  adjoining  land  is  "  vacant,"  this  does  not  warrant  that  it 
shall  continue  so,  and  the  insured  may  erect  buildings  thereon 
though  the  risk  to  the  property  insured  be  thereby  increased.^ 
§  192.  Oral  Statements  prior  to  Application  immaterial.  —  If 
a  written  application  be  made,  it  will  be  presumed  to  contain 
the  representations  which  induce  the  contract,  and  proof  of 
prior  or  subsequent  verbal  statements  is  inadmissible ;  *  and 
especially  if  it  be  an  oral  representation  as  to  a  future  fact,  as 
that  a  house  will  be  occupied,  or  will  be  occupied  in  a  certain 
way,  or  not  occupied  at  all,  for  if  it  is  a  mere  statement  of  an 
expectation  lionestly  entertained,  subsequent  disappointment 
will  not  prove  it  untrue  ;  and  if  it  is  a  provision  that  a  cer- 
tain state  of  facts  shall  exist  or  continue  during  the  currency 
of  the  policy,  it  should  be  incorporated  into  the  written  con- 
tract.^ 

1  Horton  v.  Equitable  Life  Ass.  Soc,  N.  Y.  City  Court  of  Com.  Pleas,  Daly, 
J.,  2  Big.  Life  and  Ace.  Ins.  Cases,  not  elsewhere  reported ;  Keichard  v.  Man- 
hattan Life  Ins.  Co.,  31  Mo.  518 ;  Benham  v.  United  Guaranty  and  Life  Ass. 
Co.,  7  Exch.  744. 

2  Smith  V.  Mechanics'  and  Traders'  Mut.  Fire  Ins.  Co.,  32  N.  Y.  399 ;  Lang- 
don  V.  N.  Y.  Equitable  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  226  ;  s.  c.  6  Wend. 
(N.  Y.)  623;  Rafferty  y.  New  Brunswick  Fire  Ins.  Co.,  3  Harr.  (N.J.)  480; 
Boardman  v.  Maverick  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  583;  Hall  v.  People's 
Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  185;  Boardman  v.  New  Hampshire  Mut. 
Fire  Ins.  Co.,  20  N.  H.  551. 

3  Stebbins  v.  Globe  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  632. 

*  Boggs  V.  Am.  Ins.  Co.,  30  Mo.  63;  Rawle  v.  Am.  Life  Ins.  Co.,  27  N.  Y. 
282. 

5  Kimball  v.  ^tna  Ins.  Co.,  9  Allen  (Mass.),  540;  Alston  v.  Mechanics'  Ins. 
Co.,  4  Hill  (N.  Y.),  .329;  Mayor  of  N.  Y.  v.  Brooklyn  Fire  Ins.  Co.,  4  Keyes 
(N.  Y.),  465.  The  case  of  Bilbrough  v.  Mut.  Ins.  Co.,  5  Duer,  587  (N.  Y. 
Superior  Ct.)  to  the  contrary,  does  not  seem  to  have  met  with  approbation. 


REPRESENTATION.  203 

§  193.  The  question  whether  there  is,  or  is  not,  a  misrepre- 
sentation, not  unfrequently  turns  upon  the  meaning  of  a  par- 
ticular word  or  phrase  used  in  the  policy ;  and  in  such  cases 
the  insured  will  have  the  benefit  of  all  reasonable  doubts,  the 
construction  being  most  strongly  against  the  insurer  as  the 
author  of  the  contract,  and  also  because  the  court  will  not  go 
any  farther  in  enforcing  a  penalty  or  forfeiture  than  it  feels 
obliged  to  by  the  necessary  force  of  the  language  used.  Thus 
where  the  property  insured  was  a  stock  of  goods  described  as 
"  all  of  goods  usually  kept  in  a  country  store,"  and  it  was 
represented  that  no  "  cotton  or  woollen  waste  or  rags  "  were 
kept  in  the  building,  and  it  appeared  that  clean  white  cotton 
rags  were  kept  in  the  store ;  it  was  held,  that,  as  such  rags 
were  ordinarily  kept  in  a  country  store,  and  as  there  was  an 
express  provision  in  the  by-laws  that  "  cotton  or  woollen  waste 
or  oily  rags  "  should  not  be  allowed  to  remain  over  night  in 
any  building  insured  by  the  company,  if  cotton  rags  of  any 
kind  were  excluded  it  could  only  be  those  which,  from  their 
nature  or  condition,  are  easily  inflammable,  and  for  that 
reason  classed  with  "cotton  and  woollen  waste."  ^ 

§  194.  AfBrmative  and  Promissory  Representations  —  Conse- 
quences of  Breach  different.  —  There  is  an  obvious  distinction, 
in  the  consequences,  between  a  misrepresentation  of  facts 
existing  at  the  commencement  of  a  risk  and  a  neglect  of  duty 
in  regard  to  a  matter  occurring  afterwards  ;  in  other  words, 
between  an  affirmative  and  a  promissory  misrepresentation. 
In  the  one  case  the  policy  never  takes  effect ;  the  risk  is  never 
assumed ;  while  in  the  other  the  risk  attaches  but  is  inter- 
rupted. It  is  doubtless  upon  this  distinction  that  courts  have 
held  that  the  operation  of  a  policy  may  be  suspended,  and 
again,  after  an  interval  of  suspension,  become  operative  and 
reattach  to  the  subject  at  risk.^  No  right  is  acquired  in  the 
first  case,  while  in  the  second  a  right  is  acquired  which  may 
be  forfeited.  And  the  same  is  true  of  a  concealment  of  a  fact 
at  the  time  when  the  contract  is  entered  into,  and  of  a  failure 

1  Elliott  V.  Hamilton  Mut.  lus.  Co.,  13  Gray  (Mass.),  139. 
'i  Ante,  §  101. 


204  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

to  make  known  some  fact  which  by  the  terms  of  the  policy  is 
incumbent  upon  the  insured. ^ 

§  195.  Test  of  Materiality,  when  Question  for  Jury.  —  Where 
there  is  a  warranty,  no  question  of  materiality  of  the  fact 
warranted  to  exist  or  stipulated  for,  to  be  done  or  omitted, 
arises.  But  this  question  always  arises  where  the  fact  in 
question  is  alleged  to  be  a  misrepresentation  or  concealment, 
except  where  they  are  converted  into  warranties,  by  a  stip- 
ulation that  an  untrue  answer  shall  avoid  the  policy.  And 
that  is  material  which,  if  known  to  the  insurer  at  the  time 
when  the  contract  was  under  negotiation,  would  naturally  and 
probably  have  induced  him  either  to  decline  the  risk  or  to  have 
taken  it  only  upon  terms  more  advantageous  to  himself.  And 
where  this  materiality  depends  upon  circumstances,  and  is  an 
inference  to  be  drawn  from  such  circumstances,  and  not  upon 
the  construction  of  some  writing,  it  is  a  question  of  fact  for  the 
jury.^ 

§  196.  Material,  though  Fact  misrepresented  does  not  directly 
relate  to  the  Risk.  —  And  whether  the  misrepresentation  or 
concealment  relates  to  the  risk  itself  directly,  or  to  some  inci- 
dental matter  from  which  some  inference  may  be  drawn  as  to 
the  propriety  of  accepting  or  declining  the  risk,  the  result  is 
the  same.  If  a  party  makes  answers  or  representations  touch- 
ing such  incidental  matters,  —  as,  for  instance,  relative  to  his 
pecuniary  means  or  social  or  business  relations,  —  of  such  a 
character  that  if  they  had  not  been  made  the  insurers  would 
have  declined  the  risk, — a  question  to  be  submitted  to  the  jury, 
—  then  the  policy  will  be  void.  This  point  is  well  illustrated 
by  the  remarkable  case  of  Yalton  v.  National  Loan  Fund  Life 

^  Kimball  v.  iEtna  Ins.  Co.,  9  Allen  (Mass.),  540;  Obermeyer  v.  Globe  Ins. 
Co.,  43  Mo.  573. 

2  Columbian  Ins.  Co.  v.  Lawrence,  10  Pet.  (U.  S.)  507;  Campbell  v.  New 
Eng.  Mut.  Life  Ins.  Co.,  98  Mass.  381 ;  Huguenin  v.  Railey,  6  Taunt.  186 ; 
Morrison  v.  Muspratt,  4  Bing.  60 ;  Hartman  v.  Keystone  Ins.  Co.,  21  Tenn.  St. 
466 ;  Sibbald  v.  Hill,  2  Dowl.  P.  C.  263 ;  Catlin  v.  Springfield  Fire  Ins.  Co., 
1  Sum.  (U.  S.  C.  Ct.)  434 ;  Mut.  Benefit  Life  Ins.  Co.,  Sup.  Ct.  Ind.  Ins.  L.  J. 
March,  1873 ;  Wasliington  Life  Ins.  Co.  v.  Haney,  Sup.  Ct.  Kansas,  2  Ins.  L. 
J.  283. 


REPRESENTATION.  205 

Assurance  Society.^  In  this  case,  Schumacher,  who  was  a 
partner  with  Martin  and  Valton,  insured  his  life,  and  assigned 
the  policy  to  them  in  case  he  should  die,  pending  the  copart- 
nership, unmarried,  Martin  taking  an  active  part  in  effecting 
the  insurance.  And  upon  the  point  under  consideration  the 
Appellate  Court  observed  as  follows  :  — ; 

"  The  judge,  among  other  things,  charged  the  jury  that  if 
the  insured  untruly  represented  that  he  was  a  partner  of  the 
firm  of  Yalton,  Martin,  &  Company,  or  that  if  he  untruly  rep- 
resented that  he  was  the  moneyed  man  of  the  firm,  and  either 
or  both  of  such  untrue  representations  were  material  to  the 
risk,  then  the  policy  was  avoided,  and  there  could  be  no  recov- 
ery. That  if  Schumacher  was  dead  in  September,  1850,  and 
his  occupation  that  of  a  merchant  at  the  time  the  proposals 
were  signed,  and  the  representations  of  his  being  a  partner,  or 
the  moneyed  man  of  the  firm,  were  either  not  untrue  or  not 
material  to  the  risk,  then  the  action  was  prima  facie  sus- 
tained. 

"  Tlie  defendants'  counsel  requested  the  court  to  charge  the 
jury  that  if  Schumacher  himself,  or  by  Martin  in  his  behalf, 
represented  to  the  agent  of  the  defendants  that  Schumacher 
was  a  partner  of  the  firm  of  Martin,  Yalton,  &,  Company,  when 
in  fact  at  that  time  he  was  not  such  partner,  and  if  the  defend- 
ants would  not  have  issued  the  policy  if  the  representation  had 
not  been  made,  then  the  policy  was  void,  and  the  plaintiffs 
could  not  recover.  The  judge  declined  so  to  charge,  and  the 
defendants'  counsel  excepted.  The  defendants'  counsel  also 
requested  the  judge  to  charge  the  jury  that  if  they  found  that 
Schumacher  himself,  or  by  Martin  in  his  behalf,  represented 
to  the  agent  of  the  defendants  that  Schumacher  was  the  mon- 
eyed man  of  the  concern  of  Valton,  Martin,  &  Company,  when 
in  fact  at  that  time  he  was  not  such,  and  that  the  defendants 
would  not  have  issued  the  policy  if  the  representations  had 
not  been  made,  then  the  policy  is  void,  and  the  plaintiffs  cannot 
recover.  The  judge  refused  so  to  charge,  and  the  defendants' 
counsel  excepted.     The  charge  of  the  judge  was  correct  as  far 

1  20  N.  Y.  32. 


206  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

as  given.  If  the  representations  were  made,  and  false,  the 
falsity  must  have  been  known  to  Schumacher  and  Martin. 
The  facts  were  within  their  knowledge,  and  the  representa- 
tions fraudulent.  The  requests  to  charge,  considered  in 
connection  with  the  charge  given,  present  the  question  whether 
fraudulent  representations  made  by  the  assured  to  the  insurer 
upon  his  application  for  a  policy,  though  not  material  to  the 
risk,  yet  material  in  the  judgment  of  the  insurer,  and  which 
induced  him  to  take  the  risk,  will  avoid  the  policy.  This 
question  has  not  been  determined  by  any  adjudged  case  in  this 
State,  so  far  as  I  have  been  able  to  discover.  The  elementary 
writers  hold  that  the  policy  may  be  avoided. ^  In  Sibbald  v. 
Hill,2  it  was  held  that  where  the  assured  fraudulently  repre- 
sented to  the  underwriter  that  a  prior  insurance  by  another 
underwriter  upon  the  same  risk  had  been  made  at  a  less  pre- 
mium than  it  was  in  fact  made,  the  policy  was  vitiated.  In 
this  case  it  is  obvious  that  the  risk  itself  was  not  affected  by 
the  representations.  Lord  Eldon,  in  his  opinion,  says  that  it 
appeared  to  him  settled  law,  that  if  a  person  meaning  to  effect 
an  insurance  exhibited  a  policy  underwritten  by  a  person  of 
skill  and  judgment,  knowing  that  this  would  weigh  with  the 
other  party  and  disarm  the  ordinary  prudence  exercised  in 
the  common  transactions  of  life,  and  it  turned  out  that  this 
person  had  not  in  fact  underwritten  the  policy,  or  had  done  so 
under  such  terms  that  he  came  under  no  obligation  to  pay,  it 
appeared  to  him  to  be  settled  law  that  this  would  vitiate  the 
policy.  The  courts  in  this  country  would  say  that  this  was  a 
fraud  ;  not  on  the  ground  that  the  misrepresentation  affected 
the  nature  of  the  risk,  but  because  it  induced  a  confidence 
without  which  the  party  would  not  have  acted.  The  principle 
of  this  case,  when  applied  to  the  one  under  consideration, 
shows  that  the  judge  committed  an  error  in  refusing  to  charge 
as  requested.  It  is  clear  that  the  circumstance  of  a  party 
being  engaged   in   commercial   business,  possessed  of   large 

1  1  Arnould  on  Ins.  §  189  (original  paging,  487-576)  ;  2  Duer,  681-683 ;  3 
Kent,  282. 

2  2  Dow's  Pari.  R.  263. 


REPRESENTATION.  207 

means,  might  induce  an  insurer  to  make  an  insurance  upon 
his  life  for  a  large  amount,  while  were  he  a  mere  porter  the 
risk  would  be  rejected,  although  the  chance  of  life  would  be 
as  good  in  the  latter  situation  as  the  former." 

§  197.  It  appears,  therefore,  to  be  the  rule  that  a  misrepre- 
sentation, though  not  bearing  upon  the  character  of  the  risk, 
if  such  as  to  mislead  the  insurers  into  taking  a  risk  which 
otherwise  would  not  have  been  taken,  is  as  fatal  to  the  valid- 
ity of  the  policy  as  if  it  had  related  to  the  nature  of  the  risk. 
Thus,  by  way  of  additional  illustration,  where  one  insur- 
ance company  applied  to  another  for  reinsurance  on  certain 
articles  of  personal  property,  induced  the  reinsurers  to  believe 
that  they  had  insurance  on  the  buildings,  which  was  not  the 
fact,  the  policy  was  held  to  be  void.i  This  is  not  strictly  a 
misrepresentation  of  facts  upon  which  the  value  of  the  risk  is 
determined,  but  rather  a  false  pretence  of  a  fact  which  induces 
the  insurer  to  take  the  risk  without  inquiry  as  to  its  value. 

§  198.  Representation  —  Substantial  Compliance  —  Equiva- 
lents. —  A  representation  is  substantially  complied  with  by 
the  adoption  of  precautions,  which,  if  not  those  exactly  stated 
in  the  application,  may  be  such  as  tend  to  accomplish  the 
same  purpose  and  are  regarded  as  equally  efficacious.  Thus, 
if  benzine  be  prohibited  in  the  policy,  and  permitted  in  an 
indorsement  thereon,  to  the  amount  of  one  barrel  to  be  kept 
in  tin  cans,  keeping  the  whole  in  one  tin  can  is  a  substantial 
compliance,  if  that  is  shown  to  be  equally  safe.^  So  if  ashes 
are  stated  to  be  kept  in  brick,  if  they  are  kept  in  some  other 
mode,  equally  safe,  the  policy  will  not  be  avoided.^  Where 
the  stipulation  is  a  representation  and  not  a  warranty,  there  is 
room  for  the  substitution  for  equivalents  amounting  to  a  sub- 
stantial performance  ;  while  if  it  be  a  warranty  it  is  at  least 
doubtful  whether  the  doctrine  can  or  ought  to  have  any  place, 
as  one  of  the  objects  of  a  warranty  is  to  obviate  the  necessity 
of  dispute  about  the  materiality  or  immateriality  of  a  particu- 

1  Louisiana  Mut.  Ins.  Co.  v.  New  Orleans  Ins.  Co.,  13  La.  An.  246. 

2  Maryland  Fire  Ins.  Co.  v.  Whitford,  31  :\Id.  219. 

3  Underhill  i;.  Agawam  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  440. 


208  insurance:   fire,  life,  accident,  etc. 

lar  act.  By  a  substantial  compliance  is  meant  the  adoption 
of  precautions,  intended  for  the  same  purpose,  adapted  to  it, 
and  which  may  be  reasonably  regarded  as  equally  or  more 
efficacious.  For  instance,  when  it  is  said  that  ashes  are  taken 
up  in  iron  hods,  it  would  be  a  substantial  compliance  if  brass 
or  copper  were  used  instead.  So  if  it  be  represented  that 
casks  of  water,  with  buckets,  are  kept  in  each  story  of  the 
building  insured,  if  a  reservoir  be  placed  above,  with  pipes  to 
convey  water  to  each  story,  and  regarded  by  skilful  and  expe- 
rienced persons  to  be  equally  efficacious,  it  would  be  a  sub- 
stantial compliance.^ 

§  199.  While  courts  will  sometimes  sustain  a  merely  literal 
and  colorable  compliance  with  a  warranty  as  sufficient,^  yet 
where  representations  are  made  as  a  full,  just,  and  true  exposi- 
tion of  all  facts  and  circumstances  material  to  the  risk,  in  con- 
struing them,  both  as  to  existing  facts  and  as  to  future  precau- 
tions to  be  taken,  both  good  faith  and  the  terms  of  the  contract 
require  that  there  shall  be  a  substantial,  as  well  as  literal  con- 
formity. Such  representations  must  be  construed  with  refer- 
ence to  the  known  and  obvious  requirements  and  purposes  of 
the  insurers,  and  so  as  to  meet  these  requirements,  and  con- 
form to  them,  if  such  a  construction  can  be  made  without  vio- 
lence to  the  language  used.  If,  for  example,  inquiries  are 
made  relative  to  the  appliances  for  extinguishing  fire  in  a 
factory,  and  it  is  answered  that  water  casks  are  kept  in  each 
room,  while  the  answer  would  be  literally  true  if  no  water  were 
kept  in  the  casks,  or  if  the  casks,  though  kept  filled  with  water, 
were  few  in  number  or  so  insignificant  in  size  as  to  afford  prac- 
tically no  security  in  the  sense  understood  and  required  by 
the  insurers,  this  would  not  be  a  full,  just,  and  true  statement 
of  the  facts,  nor  a  substantial  compliance  with  the  undertak- 
ing of  the  insurer.  That  undertaking  requires  a  substantial 
compliance,  by  keeping  a  cask  or  casks  of  water,  of  a  size  ade- 
quate to  the  required  security,  and  holding  a  sufficient  quan- 
tity of  water  to  aid  essentially  in  extinguishing  a  fire  in  its 

1  Houghton  V.  Manufacturers'  Mut.  Fire  Ins.  Co.,  8  Met.  (Mass.)  114. 

2  Ante,  §  178. 


REPRESENTATION.  209 

early  stages  in  that  part  of  tlie  building.^  And  the  same  good 
faith  requires  that  these  casks  should  be  kept  supplied  with 
water,  though  the  fact  that  from  freezing  or  other  unavoidable 
cause  they  might  be  rendered  temporarily  unserviceable,  would 
not  avoid  the  policy,  if  reasonable  diligence  be  used  in  re- 
storing them  to  a  serviceable  condition.'-^ 

1  Houghton  V.  Manufacturers'  Mut.  Fire  Ins.  Co.,  8  Met.  (Mass.)  114. 

2  Aurora  Fire  Ins.  Co.  v.  Eddy,  49  111.  106. 


14 


210  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 


CHAPTER    VIII. 

OF   CONCEALMENT. 

§  200.  Concealment  defined.  —  Representations  should  not 
only  be  true,  but  they  should  be  full.  The  insurer  has  a  right 
to  know  the  whole  truth.  And  a  lack  of  fulness,  if  designed, 
in  a  respect  material  to  the  risk  is  tantamount  to  a  false  rep- 
resentation, and  is  attended  by  like  consequences.  This  lack 
of  fulness  is  termed  a  concealment,  which  is  the  designed  and 
intentional  withholding  of  some  fact  material  to  the  risk  which 
the  insured  in  honesty  and  good  faith  ought  to  communicate 
to  the  insurer.  It  is  not  mere  unintentional  silence  or  inad- 
vertence. It  is  a  positive  intentional  omission  to  state  what 
the  applicant  knows,  or  must  be  presumed  to  know,  ought  to 
be  stated.  It  is  a  suppression  of  the  truth  whereby  the  insurer 
is  induced  to  enter  into  a  contract  which  he  would  not  have 
entered  into  had  the  truth  been  known  to  him.  It  is  a  decep- 
tion whereby  the  insurer  is  led  to  infer  that  to  be  true,  as  to  a 
material  matter,  which  is  not  true.  Hence,  strictly  speaking, 
under  the  general  law  of  insurance,  there  can  be  no  conceal- 
ment of  a  fact  which  is  not  known  to  the  applicant.^ 

§  201.  Of  course,  where  the  truth  and  fulness  of  a  state- 
ment are  warranted,  it  is  no  longer  a  question  of  concealment, 
but  of  the  truth  and  fulness  of  the  statement ;  and  any  failure 
to  disclose  a  material  fact,  even  though  accidental,  and  by 
inadvertence  or  through  ignorance,  is  followed  by  the  same 
consequences  as  if  intentionally  concealed.  And  it  has  accord- 
ingly been  held  that  all  known  facts  material  to  the  risk,  if 
called  for,  must  be  disclosed,  whether  the  party  seeking  insur- 

1  Swete  V.  Fairlie,  6  C.  &  P.  1 ;  Hall  v.  Peoples'  Mut.  Ins.  Co.,  6  Gray  (Mass.), 
185;  Merchants'  and  Manufacturers'  Ins.  Co.  v.  "Wash.  Mut.  Ins.  Co.,  1  Hand 
(Ohio),  408;  Mut.  Benefit  Life  Ins.  Co.  v.  Robertson,  Sup.  Ct.*  111.  (not  yet 
reported) ;  Gerhauser  v.  North  B.  and  M.  Ins.  Co.,  7  Nev.  174.  And  see  post, 
§211. 


CONCEALMENT.  211 

ance  think  them  material  or  not,  upon  the  ground  that  the 
question  as  to  the  belief  of  the  party  with  regard  to  the  mate- 
riality of  the  fact  would  in  many  instances  be  difficult  to  de- 
cide, and  it  would  encourage  suppression  if  that  were  the  issue 
upon  which  the  question  of  concealment  should  turn.  On  the 
other  hand,  if  the  materiality  of  the  fact  be  made  t\\e  issue,  then 
it  becomes  the  interest  of  the  assured  to  state  all  the  facts  he 
knows. ^  And  what  a  man  of  ordinary  intelligence  ought  to 
know,  the  insured  will  be  presumed  to  know,  so  that  if  he  be 
asked  whether  he  has  any  disease,  though  he  may  not  know 
that  he  has,  yet  if  he  is  afflicted  with  the  symptoms  of  dis- 
ease, he  is  bound  to  make  known  the  fact  that  these  symptoms 
exist.2  And  since  the  knowledge  of  an  agent  may  be  imputed 
to  the  principal,  and  is  constructively  his,  he  may  be  guilty  of 
concealing  a  fact  of  which  he  has  no  actual  knowledge.  Thus, 
where  an  agent  wrote  to  his  principal  to  cause  his  vessel  to  be 
insured,  after  an  accident  which  led  to  the  loss  of  the  vessel 
had  happened,  but  did  not  mention  to  his  principal,  the  owner, 
the  fact  of  the  accident,  it  was  held  that  as  the  agent  ought  to 
have  communicated  the  fact  of  the  accident  the  concealment 
was  constructively  that  of  the  owner,  and  lie  could  not  recover 
on  a  policy  which  he  had  effected  in  good  faith.^ 

§  202.  On  the  other  hand,  it  has  been  held  that  there  is  no 
concealment  if  the  fact  omitted  be  not  known  and  believed  to 
be  material  by  the  applicant.  Thus,  where  the  applicant  had 
been  insane  several  years  before  he  applied  for  and  took  his 
policy,  and  had  been  placed  in  an  insane  asylum,  whence  he 
was  discharged  cured,  his  failure  to  state  the  fact  at  the  time 
he  procured  his  policy,  no  specific  question  being  asked,  but 
the  policy  by  its  terms  l)eing  void  for  misrepresentation,  fraud, 
or  concealment,  was  held  not  to  prevent  a  recovery ;  and  this, 
although  the  insured  had  been.for  a  considerable  period  a  can- 
vassing agent  of  the  insurers,  and  in  a  conversation  with  the 
president  of  the  company,  some  time  before  the  policy  was  taken 

1  Lindeneau  v.  Desborougli,  3  Man.  &  Ry.  45. 

2  Vose  V.  Eagle  Life  and  Health  Ins.  Co.,  6  Cush.  (Mass.)  42;  Miles  v.  Conn. 
Milt.  Life  Ins.  Co.,  3  Gray  (Mass.),  580. 

3  Gladstone  v.  King,  1  Maule  &  Sel.  35. 


212  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

out,  had  been  told  by  him  that  they  did  not  wish  to  insure 
insane  persons,  and  had  been  instructed  to  be  cautious  on  that 
point.  The  conversation  which  took  place  some  time  previous 
to  the  making  of  the  contract,  and  had  for  its  object  to  give 
instructions  to  the  agent,  was  held  to  have  no  tendency  to  show 
a  fraudulent  concealment  of  material  facts,  unless  it  could 
also  be  shown  that  the  facts  omitted  were,  in  the  judgment  of 
the  insured,  material.^  So  where,  if  the  answers  were  in  any 
respect  untrue,  the  policy  was  to  be  void ;  and  the  question  was 
whether  the  applicant  had  had  any  sickness  within  the  last  ten 
years,  and  the  answer  was  that  he  had  had  pneumonia,  but 
said  nothing  of  a  "  slight  attack  of  chronic  pharyngitis,"  it 
was  lield  to  be  no  concealment,  as  the  party  was  not  bound  to 
state  such  facts  as  would  ordinarily  be  deemed  immaterial,  such 
as  that  he  had  had  a  cold,  or  a  diarrhoea,  or  an  irritation  of 
the  throat,  not  fairly  embraced  in  what  is  popularly  understood 
as  sickness.^  In  Hutchinson  v.  National  Loan  Assurance  So- 
ciety,^ a  warranty  that  the  insured  had  no  disease  or  symptom 
of  disease  was  held  to  import  only  that,  according  to  the 
knowledge  and  reasonable  belief  of  the  insured,  tliere  was 
freedom  from  any  disease  or  symptom  of  diseases  material  to 
the  risk.  So  in  Jones  v.  Provincial  Insurance  Company,*  it 
was  stated  by  the  applicant  that  he  was  not  "  aware  of  any 
disorder  or  circumstance  tending  to  shorten  life,"  when  in  fact 
he  had  had  within  a  year  or  two,  two  severe  bilious  attacks, 
about  the  tendency  of  which  to  shorten  life  the  physicians  who 
attended  him  differed  in  opinion.  And  it  was  said  tliat  if  the 
assured  honestly  believed  that  these  attacks  had  no  tendency 
to  shorten  his  life,  his  failure  to  mention  them  would  not 
avoid  the  policy.  What  other  persons  of  intelligence  do  not 
know  or  believe  or  apprehend  cannot  reasonably  be  expected 
of  the  insured.  And  what  he  cannot  be  expected  to  know,  he 
cannot  be  considered  as  culpable  for  not  knowing ;  and  what 

1  Mallory  v.  Travellers'  Ins.   Co.,  N.  Y.  Ct.  of  Ap.  Feb.  1872,  Ins.  L.  J. 
July,  1872. 

2  Wise  V.  Mut.  Benefit  Life  Ins.  Co.,  Circuit  Ct.  (Md.)  1870 ;  2  Bigelow,  Life 
and  Ace.  Ins.  Rep.  43 ;  s.  c.  affirmed,  34  Md.  582. 

3  7  Ct.  of  Sess.  Cas.  (Scotch)  407. 
«  3  C.  B.  N.  8.  65. 


CONCEALMENT.  218 

he  cannot  be  expected  to  apprehend,  he  cannot  be  bound  to 
communicate ;  and  in  not  communicating  any  such  fact,  he 
cannot  be  considered  as  concealing  it  even  inadvertently,  much 
less  wilfully. 1  The  knowledge  which  is  imputable  to  the  as- 
sured who  undertakes  to  state  all  material  facts,  either  abso- 
lutely or  so  far  as  they  are  known  to  him,  may  be  actual  or 
constructive.  The  law,  however,  does  not  undertake  to  decide 
whether  this  knowledge  exists  or  not ;  it  is  rather  a  question 
of  fact  for  the  jury.  The  law  will  not  say  that  a  man  must  be 
presumed  to  know  certain  particular  facts  touching  his  estate ; 
but  the  question  whether  certain  facts,  if  misrepresented  or 
concealed,  were  known  to  the  applicant  for  insurance,  is  a 
question  of  fact  to  4)e  found  by  the  jury  upon  the  evidence. 
And  upon  this  point  divers  considerations,  as  authorizing  the 
inference  of  knowledge,  are  fit  and  proper  to  be  submitted  to 
the  jury ;  such  as,  that  the  applicant  and  insured  is  the  owner 
of  the  property,  and  may  be  presumed  to  be  acquainted  with 
its  condition  ;  or,  being  the  life-insured,  is  cognizant  of  his  own 
condition  ;  that  the  matter  relates  to  things  open  and  visible, 
things  capable  of  distinct  knowledge,  and  not  depending  upon 
estimate,  opinion,  or  mere  probability ;  things  in  respect  to 
which  an  owner  is  bound  in  honesty  and  good  faith  to  know, 
takes  upon  himself  to  know,  and  usually  does  know,  —  these, 
and  all  other  pertinent  evidence  bearing  upon  the  question, 
are  to  be  left  to  the  jury,  with  directions  that  if  they  are  satis- 
fied from  all  the  evidence,  and  can  reasonably  infer  that  the 
assured  did  know  the  fact  in  regard  to  which  misrepresentation 
or  concealment  is  imputed,  they  are  to  find  that  he  did  know 
it ;  otherwise  not.^ 

§  203.  The  cases  cited  in  the  last  section  are  apparently  not 
in  accord  with  Lindeneau  v.  Desborough  and  Yose  v.  Eagle 
Life  and  Health  Insurance  Company,  cited  in  the  preceding 
section.  And  certainly  the  language  of  these  cases,  more  par- 
ticularly the  latter,  as  where  it  is  said  that,  though  there  be 
no  warranty,  the  concealment  of  a  material  fact  will  avoid  the 

1  Dennison  v.  Thomaston  Mut.  Ins.  Co.,  20  Me.  125..  per  Whitman,  C.  J. 
See  post,  §  211. 

2  Houghton  V.  Manufacturers'  Mut.  Fire  Ins.  Co.,  8  Met.  (Mass.)  114. 


214  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

policy,  though  the  concealment  be  the  result  of  accident  or 
negligence  and  not  of  design,  would  seem  to  lay  down  an 
entirely  different  and  much  more  stringent  rule.  On  exam- 
ination of  the  cases,  however,  it  will  be  seen  that  the  facts  re- 
quired no  such  decision.  In  both  cases  the  facts  undisclosed 
were  such  as  in  the  opinion  of  the  court  the  applicant  knew  or 
ought  to  have  known.  The  question  propounded  seemed  to 
Lord  Tenterden,  C.  J.,  in  the  former  case  to  be  one  "  calling 
for  an  answer  stating  all  the  facts  which  any  reasonable  man 
might  think  material ; "  and  in  the  case  from  Massachusetts 
the  court  say  that  the  insured  being  inquired  of  if  he  had  had 
consumption,  "  could  have  stated  the  symptoms  of  consump- 
tion which  he  had  and  which  he  knew  he^iad."  In  both  cases, 
therefore,  facts  were  concealed  which  were  known,  actually  or 
presumptively,  to  be  material,  and  they  were  both  no  doubt 
well  decided  upon  the  facts.  Neither  case  actually  decides 
upon  its  facts  any  thing  more  than  that  the  insured  was  bound 
to  communicate  all  facts  known  to  him,  and  by  him  believed 
to  be  material,  presuming  that  he  knew  and  believed  what 
men  of  ordinary  intelligence  know  and  believe.  In  this  view 
the  cases  are  reconcilable.  And  perhaps  this  will  be  found  to 
be  the  true  rule,  —  that  there  is  concealment  whenever  facts 
are  withheld  which  are  known,  or  which  must  be  presumed  to 
be  known,  because  they  ought  to  be  known  to  an  ordinarily 
intelligent  person,  to  be  material.  According  to  this  view, 
concealment  is  a  violation  of  good  faith,  and  not  a  mere  error 
of  opinion.  Suppose  the  applicant  is  inquired  of,  as  in  the 
Massachusetts  case,  if  he  has  consumption.  He  is,  in  fact, 
afflicted  with  a  cough.  But  a  cough  proceeds  from  various 
other  causes  as  well  as  from  a  disease  of  the  lungs.  He  has 
in  good  faith  endeavored  to  inform  himself  as  to  the  true 
causes,  and  has  been  informed  by  his  physicians  that  it  does 
not  proceed  from  the  lungs,  but  from  an  entirely  different 
cause.  It  would  seem  that  the  insured,  who  honestly  believes, 
and  has  reason  to  believe,  that  his  cough  is  due  to  some  other 
cause,  ought  not  to  lose  the  benefit  of  his  insurance,  because, 
when  asked  if  he  has  disease  of  the  lungs,  he  does  not  disclose 
the  fact  that  he  has  a  cough,  even  though  it  sliould  ultimately 


CONCEALMENT.  215 

appear  that  in  point  of  fact  the  cough  did  proceed  from  a  dis- 
ease of  the  lungs,  and  that  the  applicant  in  fact  had  the  con- 
sumption when  the  insurance  was  effected.  Before  the  insured 
can  fairly  be  said  to  conceal  the  fact  of  a  particular  disease, 
when  he  does  not  disclose  the  fact  that  he  has  symptoms,  which 
may  or  may  not  indicate  the  presence  of  the  disease,  it  would 
seem  that  it  should  at  least  appear  that  he  knew,  or  had  reason 
to  believe,  they  were  symptoms  of  the  disease  inquired  about. ^ 
§  204.  And  this  seems  to  be  the  doctrine  of  the  very  recent 
case  of  Horn  v.  Amicable  Mutual  Life  Insurance  Company .- 
In  that  case  the  applicant  was  required  to  name  the  physician 
usually  employed  by  him,  and  if  he  had  none,  then  to  name 
any  other  doctor  who  could  be  applied  to  for  information  upon 
the  state  of  his  health.  He  answered,  "  None  ;  "  and  the  fact 
was  that  he  had  occasionally  applied  to  one  physician  to  pre- 
scribe for  a  cough  of  long  standing,  accompanied  by  shortness 
of  breath,  and  had  also  secretly  applied  to  another  insurance 
company,  when  his  application  was  declined  upon  the  exam- 
ination of  the  physician  of  that  company.  It  was  held  that 
as  the  applicant  must  have  known  that  both  of  the  doctors 
could  have  given  important  information  as  to  his  health,  and 
denied,  in  effect,  that  there  was  any  one  who  could  give  that 
information,  there  was,  therefore,  a  fraudulent  concealment, 
as  matter  of  law.  And  in  the  same  case  the  court  proceeds 
to  say  that  in  life  insurance  the  statements  as  to  the  health  of 
the  applicant  are  misrepresentations,  and  not  warranties,  and 
the  question  is  one  of  honesty  and  fair  dealing ;  and,  referring 
to  the  case  of  Miles  v.  Connecticut  Mutual  Life  Insurance 
Company,-^  observes  that  that  case  is  founded  upon  no  anal- 
ogous case  of  life  insurance,  unless  it  be  Yose  v.  Eagle  Life 

^  It  is  worthy  of  note  that  in  Mallory  v.  Travellers'  Ins.  Co.,  cited  in  last  sec- 
tion, the  court  refer  to  Lindeneau  v.  Desborough,  uhi  supra,  as  one  of  the  author- 
ities upon  which  they  base  their  decision.  They  also  distinguish  the  case  from 
those  where  specific  questions  are  put,  with  a  stipulation  that  the  answers  shall  be 
full  and  true.  They  also  cite  Rawls  v.  Amer.  Life  Ins.  Co.,  27  N.  Y.  282;  Val- 
ton  V.  National  Loan  Fund  Life  Ass.  Soc,  20  N.  Y.  32.  See  also  Hogle  v. 
Guardian  Life  Ins.  Co.,  6  Robt.  (N.  Y.  Superior  Ct.)  567;  Kelsey  v.  Universal 
Life  Ins.  Co.,  35  Conn.  225. 

-'  N.  Y.  Sup.  Ct.  2d  Dist.  Dec.  T.  1872,  Alb.  L.  J.  Feb.  15,  1873. 

8  3  Gray,  580. 


216        ^  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

and  Health  Insurance  Company,^  which  itself  was  decided 
upon  the  ground  of  misrepresentation  as  well  as  upon  tlUkt  of 
warranty,  upon  which  last  ground  no  authority  is  cited  in  its 
support.  No  such  rule,  however,  they  proceed  to  say,  has  been 
laid  down  in  New  York,  and  they  are  unwilling  to  originate 
such  a  doctrine  as  law.  The  assured  must  state  all  he  knows 
bearing  upon  the  condition  of  his  health,  and  any  untrue  state- 
ment or  concealment  in  this  respect  ought  justly  to  render 
the  policy  void.  In  all  respects  where  it  appears,  or  can  be 
shown,  that  the  applicant  had  any  knowledge  of  the  facts 
called  for  by  the  interrogatories,  it  matters  very  little  whether 
the  answer  be  held  a  warranty  or  not,  inasmuch  as  any  untrue 
statement  will  be  a  misrepresentation  or  fraud,  which  will 
equally  avoid  the  policy. 

§  205.  Indeed,  the  case  of  Campbell  v.  New  England  Mut- 
ual Life  Insurance  Company  "^  seems  to  have  been  regarded 
as  evincing  a  disposition  on  the  part  of  the  courts  of  Massa- 
chusetts to  modify  the  severity  of  the  rule  which  the  language 
of  the  court  in  the  case  of  Yose  v.  Eagle  Life  and  Health 
Insurance  Company  would  seem  to  require,  and  which  was 
followed  in  the  subsequent  case,  in  the  same  State,  of  Miles  v. 
Connecticut  Mutual  Life  Insurance  Company.  Thus,  in  Price 
V.  Phoenix  Life  Insurance  Company, ^  which  was  a  case  very 
similar  in  its  facts,  the  court  adopt  the  views  of  the  Massachu- 
setts case,*  although  they  say  they  are  well  aware  that  it  would 
be  difficult,  if  not  impossible,  to  reconcile  the  views  expressed 
in  that  case  with  the  doctrines  laid  down  in  a  great  number  of 
other  cases. 

§  206.  Always,  however,  to  be  remembered  is  that  class  of 
cases  where  the  insured  has  bound  himself,  hand  and  foot,  by 
a  stipulation  that  his  application  contains  a  just,  full,  and  true 
exposition  of  all  the  facts  inquired  for,  or  its  equivalent  in  a 
different  form  of  words,  and  is  to  be  deemed  a  warranty.  Such 
cases  are  to  be  distinguished  from  those  we  have  been  consid- 
ering. In  these,  according  to  the  received  interpretation,  no 
question  of  knowledge,  good  faith,  or  materiality  arises  ;  it  is 

1  6  Cush.  42.  2  98  Mass.  381 ;  ante,  §  187. 

'  Sup.  Ct.  Minn.  2  Ins.  L.  J.  253.  «  93  Mass.  381. 


CONCEALMENT.  217 

simply  a  question  of  the  truth  and  fulness  of  the  answers  ;  and 
a  want  of  either  is  fatal.  Such  policies  are  practically  no 
security  at  all.  The  insured  is  at  the  mercy  of  the  insurer ; 
and  if  the  applicant  will  be  so  imprudent  as  to  make  such  a 
bargain,  the  courts  cannot  help  him.^ 

§  207.  Facts  known  to  Insurer  —  Minor  Details.  —  A  failure 
to  state  facts  known  to  the  insurer,  or  which  he  ought  to 
know,  since  these  he  will  be  presumed  to  know,  or  which 
lessen  the  risk,  for  that  only  is  material  which  tends  to  in- 
crease the  risk,  in  the  absence  of  express  stipulation,  and 
where  no  inquiry  is  made,  is  no  concealment.  The  insurers 
are  presumed  to  be  skilled  in  their  business,  and  to  know 
those  general  facts,  political  and  otherwise,  which  are  open  to 
the  public,  and  may  be  known  to  all  who  are  interested  to 
inquire. 2  In  like  manner  the  insured  is  presumed  to  know 
what  a  man  of  ordinary  capacity  ought  to  know,  and  a  failure 
to  state  such  facts  as  are  clearly  material  in  the  general  judg- 
ment will  amount  to  a  concealment.^  Such  details,  however, 
as  the  characters  and  pursuits  of  the  tenants  or  occupants  of 
building ;  ^  or  the  character  of  the  buildings  adjoining ;  ■=•  or 
that  the  insured  had  commenced  the  erection  of  a  new  build- 
ing near  those  insured  ;  ^  or  of  pending  litigation  relative 
thereto ; '  or   how  a  building  is  heated  or  lighted,  unless  in 

1  Hardy  v.  Union  Mut.  Fire  Ins.  Co.,  4  Allen  (Mass.),  217;  Chaffee  v.  Catta- 
raugus County  Mut.  Ins.  Co.,  18  N.  Y.  376  ;  Kennedy  v.  St.  Lawrence  County  ftlut. 
Ins.  Co.,  10  Barb.  (N.  Y.)  285;  Abbott  v.  Shawmut  Mut.  Fire  Ins.  Co..  3  Allen 
(Mass.),  214;  Shawmut  Mut.  Fire  Ins.  Co.  v.  Stevens,  9  ib.  332;  Columbia  Ins. 
Co.  V.  Cooper,  50  Peun.  St.  331.  We  remember  to  have  heard  a  learned  judge, 
who  was  giving  a  reluctant  judgment  in  one  of  these  cases  against  the  insured, 
observe,  with  considerable  feeling,  that  if  such  companies  would  provide  simply 
that  they  should  never,  in  any  event,  be  Uable  in  case  of  loss,  they  would  not 
only  save  the  courts  from  much  disagreeable  duty,  but  would  be  free  from  the 
suspicion  of  having  purposely  entrapped  the  insured. 

2  Carter  v.  Boehme,  1  W.  Black.  5y3;  Boggs  v.  Amer.  Ins.  Co.,  30  Mo.  63; 
Merch.  and  ]Mar.  Mut.  Ins.  Co.  v.  "Washington  ]\Iut.  Ins.  Co.,  1  Hand  (Ohio), 
408;  Haley  y.  Dorchester  Mut.  Fire  Ins.  Co.,  12  Gray  (Mass.),  545;  Pimm  v. 
Lewis,  2  F.  &  F.  778 ;  Foley  v.  Tabor,  ib.  663. 

3  Dennison  v.  Thomaston  Jlut.  Ins.  Co.,  20  Me.  125. 
*  Lyon  V.  Commercial  Ins.  Co.,  2  Rob.  (La.)  266. 

5  Satterthwaite  r.  Mut.  Ben.  Ins.  Co.,  14  Penn.  St.  393. 

6  Gates  V.  Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  469. 
1  Hill  V.  Lafayette  Ins.  Co.,  2  Mich.  476. 


218  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

the  mode  of  heating  or  lighting  there  is  something  unusual,^ 
—  need  not  be  disclosed  unless  inquired  for.  Although  it 
was  said  in  an  early  case  that  marine,  fire,  and  life  insur- 
ance stand  upon  the  same  footing  as  to  tlie  application  of 
the  doctrine  of  concealment,^  it  is  certain  that  the  courts 
have  shown  an  inclination  to  be  less  strict  in  cases  of  fire 
insurance,  where  the  insurers  are  by  no  means  so  dependent 
upon  the  insured  for  their  information,  and  may,  and  often 
in  fact  generally,  do,  by  themselves  or  their  agents,  make 
personal  examination.  Besides,  the  propounding  of  a  series  of 
questions  as  to  particular  facts  gives  rise  to  the  inference  that 
others  are  not  regarded  as  material,  or  that  upon  them  the 
insurer  has  informed  himself.  Hence  a  failure  to  disclose 
many  minor  details  obvious  to  any  one  who  examines,  and 
open  to  general  observation,  is  not  to  be  regarded  as  a  conceal- 
ment.-^ 

§  208.  What  Facts  must  be  disclosed  —  Threats  of  Burning. — 
Such  facts,  however,  as  are  unusual,  threatening,  and  not  open 
to  general  observation,  especially  if  they  are  the  inducement 
or  occasion  for  the  application  for  insurance,  ought  to  be  dis- 
closed, whether  inquired  about  or  not.  The  fact  that  frequent 
threats  or  attempts  have  been  made  to  set  fire  to  the  property 
for  insurance  upon  which  application  is  made,  is  such  an  one 
as  would  naturally  attract  the  attention  of  the  insurers,  if 
known,  and  modify  their  estimate  of  the  risk.  Withholding 
would  therefore  amount  to  a  concealment,  which  would  vitiate 
the  policy.'*  And  the  same  would  be  true  if  the  inducement 
which  leads  to  the  procurement  of  insurance  is  the  fact  that 
attempts  have  been  made  to  set  fire  to  neighboring  property  so 

1  Girard  Fire  and  Mar.  Ins.  Co.  v.  Stephenson,  37  Penn.  St.  293;  Clark  u. 
Manufacturing  Ins.  Co.,  8  How.  (U.  S.)  235. 

-  Lindeneau  v.  Desborough,  8  B.  &  C.  586. 

3  Burritt  v.  Saratoga  County  Mat.  Fire  Ins.  Co.,  5  Hill  (N.  Y.),  188  ;  Holmes 
V.  Cliarlestown  Mut.  Fire  Ins.  Co.,  10  Met.  (Mass.)  211;  Jolly's  Adm'r  v.  Bait. 
Eq.  Soc,  2  H.  &  G.  (Md.)  295;  Gates  v.  Madison  County  Mut.  Ins.  Co.,  1  Seld. 
(N.  Y.)  469. 

*  Curry  V.  Commonwealth  Ins.  Co.,  10  Pick.  (Mass.)  535;  Beebee  y.  Hart, 
ford  Mut.  Ins.  Co.,  25  Conn.  51 ;  N.  Y.  Bowery  Ins.  Co.  v.  N.  Y.  Ins.  Co.,  17 
Wend.  (N.  Y.)  359 ;  North  American  Fire  Ins.  Co.  v.  Throop,  22  Mich.  146. 


CONCEALMENT.  219 

situated  that  if  it  should  burn,  the  property  upon  which  insur- 
ance is  sought  would  be  endangered.^  But  a  neglect  to  dis- 
close such  facts,  after  insurance  has  been  obtained,  is  not 
such  a  failure  to  make  known  any  change  of  circumstances 
increasing  the  risk  under  a  by-law  providing  that  notice  of 
such  change  of  circumstances  must  be  made  under  penalty 
of  avoiding  the  policy  if  it  be  not  done.^ 

§  209.  General  Statement  SufBcient,  if  such  as  Good  Faith  and 
Fair  Dealing  require.  —  A  general  statement  of  the  facts,  how- 
ever, sufficient  to  put  the  insurers  upon  inquiry  if  they  desire 
more  particular  information,  is  all  that  is  necessary .^  But 
if  inquiry  be  made  on  this  point,  as  the  matter  is  within  the 
especial  knowledge  of  the  applicant,  the  answer  should  be  full, 
and  in  itself  contain  the  information  which  would  naturally 
lead  to  further  investigation.  If,  therefore,  in  response  to  a 
specific  inquiry,  the  applicant  declares  that  he  has  no  reason 
to  believe  his  property  in  danger  from  incendiarism,  and  it 
appears  that  in  fact  he  had,  it  will  be  no  reply  that  he  had 
previously  talked  with  the  agent  of  the  company  about  several 
recent  attempts  made  to  burn  buildings  in  town,  and  the  risk 
of  such  fires  generally,  without  mentiouing  a  supposed  attempt 
upon  the  building  upon  which  the  application  for  insurance  was 
made.  Whether  such  talk  might,  or  might  not,  have  put  liim 
on  inquiry  is  immaterial.  The  truth  of  the  answer  is  the  only 
question  open  to  the  jury.  "  When  a  person  is  particularly 
interrogated,"  said  the  court  in  North  American  Fire  Insur- 
ance Company  v.  Throop,^  "  regarding  a  subject  peculiarly 
within  his  own  knowledge,  and  the  other  party  is  expected  to 
contract  with  him  in  reliance  upon  his  answer,  and  the  answer 
is  made  misleading,  if  not  untruthful,  it  seems  to  us  alike  a 
perversion  of  law  and  justice  to  say  that  he  shall  have  tbe 
advantage  of  his  uncandid  answers  if  he  can  convince  the  jury 
that  the  other  party  was  wanting  in  prudence  in  relying  upon 

1  Walden  v.  Louisiana  Ins.  Co.,  12  La.  134.  See  also  Buffe  v.  Turner, 
6  Taunt.  338. 

2  Clark  V.  Hamilton  Mut.  Ins.  Co.,  9  Gray  (Mass.),  148. 
'  Beebee  v.  Hartford  Mut.  Ins.  Co.,  25  Conn.  51. 

*  22  Mich.  146. 


220  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

them,  because  of  having  extrinsic  notice  which  was  sufficient, 
if  followed  up  by  inquiries  in  other  quarters,  to  have  led  him 
to  a  knowledge  of  the  exact  facts.  The  insurer  has  a  right  to 
know  the  truth  from  the  assured  himself ;  and  if  his  inquiries 
addressed  to  him  failed  to  elicit  the  truth,  it  is  no  excuse  to 
the  latter,  either  in  morals  or  law,  that  the  insurer,  if  suffi- 
ciently distrustful  and  suspicious,  and  inclined  to  rely  upon 
what  he  had  heard  from  others  rather  than  upon  the  word  of 
the  assured  himself,  could  be  regarded  as  '  put  on  inquiry,' 
respecting  the  truthfulness  and  candor  of  the  information,  in 
consequence  of  something  he  had  heard  incidentally  at  a  time 
when  perhaps  he  had  no  special  occasion  to  charge  his  mem- 
ory with  it.  He  goes  to  the  authority  that  ought  to  be  the 
best,  and  he  has  a  right  to  rely  upon  what  is  told  him.  If  it 
were  allowable  to  submit  to  a  jury  the  question  of  his  prudence 
in  doing  so,  it  would  be  impossible  for  them,  in  most  cases,  to 
be  so  fully  possessed  of  the  exact  condition  of  his  information 
at  the  time  as  to  be  enabled  to  determine  whether  he  was 
or  was  not  guilty  of  negligence  in  such  reliance."  It  was 
recently  held,  however,  in  McBride  v.  Republic  Fire  Insur- 
ance Company,^  where  there  were  specific  threats  against 
the  particular  property  insured,  and  an  answer  to  an  in- 
quiry upon  this  point  was  in  the  negative,  that  such  an 
answer  would  not  avoid  the  policy,  unless  the  threats  made 
were  of  such  a  character  and  from  such  a  person  that  danger 
was  reasonably  to  be  apprehended,  and  such  that  a  person  of 
ordinary  prudence  and  caution  would  regard  them  as  worthy 
of  notice.  But  mere  idle  talk,  which  by  such  a  person  might, 
and  probably  would,  be  disregarded,  need  not  be  communi- 
cated. 

§  210.  Equivocal  Interrogatories. —  Of  COUrse,  if  the  inquiry 
be  equivocal,  or  calls  for  an  answer  which  involves  an  expres- 
sion of  opinion,  as  when  the  question  is  as  to  the  "  distance 
of  buildings  within  ten  rods  ;  ^  or  what  buildings  endanger  the 

1  Sup.  Ct.  Wis.  2  Ins.  L.  J.  270. 

2  Gates  V.  Madison  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  43;  s.  c.  1  Seld. 
(N.  Y.)  469,  reversing  same  case  in  3  Barb.  (N.  Y.)  73;  Masters  v.  Madison 
County  Mut.  Ins.  Co.,  11  Barb.  (N.  Y.)  624. 


CONCEALMENT.  221 

one  insured  ;i  or  if  there  is  a  livery-stable  in  the  vicinity ;  2 
whether  the  first  question  involves  tlie  necessity  of  specifying 
all  the  buildings  within  that  distance,  or  only  the  nearest  ones, 
or  what  buildings  "  endanger,"  or  what  constitutes  "  vicinity," 
are  questions  to  some  extent  of  opinion  upon  which  intelli- 
gent men  may  differ,  and  tlierefore  it  is  enough  to  answer 
them  as  men  of  ordinary  intelligence  should.  So  if  the  inquiry 
be  as  to  whether  the  applicant  has  suffered  from  any  derange- 
ment of  certain  functions,  or  had  any  "  serious  illness,"  as  the 
answer  to  these  questions  may  be  mere  matter  of  opinion,  an 
honest  though  erroneous  answer  is  no  misrepresentation.^ 

§  211.  Upon  this  point  there  is  a  comparatively  early  case  in 
this  country,'*  so  full  of  sound  practical  sense  that  it  cannot 
be  too  often  cited  nor  too  often  perused.  The  only  facts  neces- 
sary to  be  added  to  those  stated  in  the  opinion  of  the  court 
are  that  to  the  questions,  "  What  are  the  buildings  occupied 
for  that  stand  within  four  rods  ?  how  many  buildings  are  there 
to  the  fires  of  which  this  may  be  in  any  case  exposed  ?  "  there 
was  no  answer,  and  that  the  policy  was  to  be  void  if  any  cir- 
cumstance material  to  the  risk  was  suppressed.  "Whitman, 
C.  J.,  in  giving  the  opinion,  said  :  — 

"  The  misrepresentation  alleged  is  contained  in  the  answer 
to  a  written  interrogatory,  propounded  to  the  plaintiff,  as  to 
the  distance  of  other  buildings  from  the  premises  insured. 
The  answer  was  in  these  words :  '  East  side  of  the  block  are 
small  one-story  wood-sheds,  and  would  ncJi  endanger  the 
buildings  if  they  should  burn.'  In  evidence  it  appeared  that 
small  sheds  projected  out  from  near  the  back  part  of  the  brick 
block  of  buildings  (one  of  which  was  the  house  in  question) 
twenty-four  feet,  being  twelve  feet  in  width,  and  eight  feet 
stud ;  and  leaving  a  passage-way  in  the  rear  of  them  of  four- 
teen feet  wide,  adjoining  some  two-story  wooden  buildings 
standing  on  another  street  forty-nine  feet  from  the  plaintifiTs 

1  Dennison  v.  Thomaston  Mut.  Fire  Ins.  Co.,  20  Me.  125. 

2  Haley  v.  Dorchester  Mut.  Fire  Ins.  Co.,  12  Gray  (Mass.),  545. 

3  Hogle  V.  Guardian  Life  Ins.  Co.,  6  Robt.  (N.  Y.  Superior  Ct.)  567. 
*  Dennison  v.  Thomaston  Mut.  Ins.  Co.,  20  Me.  125. 


222  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

house,  and  in  which  the  fire  which  consumed  the  plaintiffs 
house  originated. 

"  The  first  question  which  arises  is,  Was  this  a  misrepre- 
sentation, or  was  there  a  suppression  of  the  truth  tantamount 
thereto,  and  material  to  the  risk  ?  It  does  not  seem  to  be 
necessary,  in  order  to  avail  the  defendants  in  their  defence, 
that  the  misrepresentation  or  suppression  of  the  truth  should 
have  been  wilful.  If  it  were  but  an  inadvertent  omission, 
yet  if  it  were  material  to  the  risk,  and  such  as  the  plaintiff 
should  have  known  to  be  so,  it  would  render  the  policy  void. 

"  In  the  case  at  bar  it  has  now  been  rendered  undeniable 
that  the  burning  of  the  two-story  buildings  on  another  street 
endangered  the  plaintiff's  house ;  and  to  the  interrogatory 
propounded  it  now  would  seem  that  the  existence  of  those 
buildings  might,  with  propriety,  have  been  stated.  But  this 
does  not  prove  that  before  the  occurrence  of  the  fire  it  would 
have  been  deemed  material  to  name  them,  as  being  near 
enough  to  put  the  plaintiff's  house  in  jeopardy.  It  is  not  an 
unfrequent  occurrence,  after  a  disaster  has  happened,  that  we 
can  clearly  discern  that  the  cause  which  may  have  produced  it 
would  be  likely  to  have  such  an  effect ;  while,  if  no  such  dis- 
aster had  occurred,  we  might  have  been  very  far  from  expect- 
ing it.  In  this  case  it  is  essential  to  determine  whether  the 
plaintiff  was  bound  to  have  known  that  a  fire,  originating  in 
the  two-story  wooden  buildings,  would  have  endangered  the 
burning  of  his  house.  If,  as  a  man  of  ordinary  capacity,  he 
ought  to  have  had  such  an  apprehension,  then  he  ought  to 
have  named  those  buildings  in  reply  to  the  interrogatory 
propounded  ;  for  what  a  man  ought  to  have  known,  he  must 
be  presumed  to  have  known.  His  knowledge  in  a  case  like 
the  present  must  have  been  something  more  than  that,  by  a 
possibility,  a  fire  so  originating  might  have  endangered  his 
house.  This  kind  of  knowledge  might  exist  in  regard  to  a 
fire  originatuig  in  almost  any  part  of  a  city  like  Bangor ;  for 
a  fire  originating  in  an  extreme  part  of  it,  if  the  wind  were 
high  and  favorable  for  the  purpose,  might  endanger  all  the 
buildings,  however  remote,  standing  nearly  contiguous  one  to 


CONCEALMENT.  223 

another  to  the  leeward  of  it.  Any  danger  like  this  could  not 
have  been  in  contemplation  when  the  interrogatory  was  pro- 
pounded. Such  buildings  only  as  were  so  nearly  contiguous 
as  to  have  been,  in  case  a  fire  should  originate  therein,  pro- 
ductive of  imminent  hazard  to  the  safety  of  the  plaintiff's 
dwelling  could  have  been  in  view  by  the  defendants.  And 
the  question  is,  Were  the  two-story  wooden  buildings  of  that 
description  ? 

"  In  reference  to  this  question,  it  may  not  be  unimportant 
to  consider  that  the  defendants,  at  the  time  when  this  policy 
was  effected,  had  an  agent  residing  in  Bangor,  whose  business 
it  was  to  attend  in  their  behalf  to  the  applications  for  insur- 
ance in  that  quarter.  It  may  be  believed  that  the  selection  of 
this  individual  was  the  result  of  knowledge  with  regard  to  his 
intelligence  and  capacity  for  such  purpose.  It  was  not,  how- 
ever, his  business  perliaps  to  prepare  representations  to  be 
made  by  applicants  for  insurance.  But  it  did  so  happen  that 
he  assisted  the  plaintiff  in  preparing  the  answers  to  the  stand- 
ing interrogatories  before  named,  intended  to  produce  a  repre- 
sentation upon  which  to  found  the  estimates  of  the  propriety 
of  assuming  the  risks  proposed.  He,  it  seems,  examined  the 
premises,  looked  at  the  wood-sheds,  and  the  two-story  wooden 
buildings  beyond  them.  To  liim  it  did  not  seem  to  have  oc- 
curred that  the  vicinity  of  those  buildings  was  such  as  to 
render  it  necessary  that  the  two-story  wooden  buildings  should 
be  named  in  answer  to  the  interrogatory  ;  for  he,  at  the  request 
of  the  plaintiff,  penned  the  reply  thereto  as  he  thought  proper. 

"  It  does  not  appear  that  any  witness  has  testified  that,  ante- 
rior to  the  disaster,  he  should  have  anticipated  such  an  event 
as  within  the  range  of  probability.  What  other  individuals 
of  intelligence  did  not  foresee  to  be  likely  to  occur,  could  not 
reasonably  be  expected  of  the  plaintiff.  And  what  he  could 
not  be  expected  to  know,  he  cannot  be  considered  as  culpable 
for  not  knowing.  And  what  he  could  not  be  expected  to  ap- 
prehend, he  could  not  be  bound  to  communicate ;  and  in  not 
communicating  any  such  fact,  he  could  not  be  considered  as 
guilty  of  concealing  it,  even  inadvertently,  and  much  less  wil- 
fully. 


224  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

"  As  to  the  wooden  sheds,  thej  were  named  ;  and  the  de- 
scription given  of  them  is  precisely  in  conformity  to  the  truth. 
They  were  named,  however,  in  connection  with  an  opinion 
that,  if  they  took  fire,  they  would  not  endanger  the  house. 
There  is,  then,  no  misrepresentation  with  regard  to  their  exist- 
ence. The  misrepresentation  complained  of,  in  reference  to 
them,  is  merely  in  matter  of  opinion.  But  opinions,  if  hon- 
estly entertained  and  honestly  communicated,  are  not  misrep- 
resentations, however  erroneous  they  may  prove  to  be.  That 
this  opinion  was  uttered  bond  fide,  and  in  perfect  singleness 
of  heart  and  purpose,  may  well  be  believed,  and  may  fairly  be 
deducible  from  the  fact  that  it  was  expressed  in  concurrence 
with  the  unquestionable  belief,  at  the  time,  of  its  correctness, 
by  the  confidential  friend  of  the  defendants.  An  opinion  so 
uttered,  if  not  in  good  faith,  might  well  be  complained  of,  as 
it  might  tend  to  throw  the  defendants  off  their  guard.  In  such 
case,  it  might  tend  to  show  a  fraudulent  design ;  and  in  con- 
nection with  evidence  of  misrepresentation  of  facts,  even  short 
of  what  otherwise  might  be  necessary  to  vacate  a  contract, 
would  be  likely  to  have  that  effect." 

§  212.  Equivocal  Answer,  —  An  equivocal  answer,  however, 
to  a  question,  though  true  in  one  sense,  may  involve  a  misrep- 
resentation or  concealment,  all  the  facts  being  known  to  the 
applicant ;  as  if  the  insured  should  say  he  had  been  sick  a 
week  when  he  had  been  sick  two  weeks,  or  had  had  a  medical 
attendant  once  within  a  certain  period  when  in  fact  he  had 
had  one  on  several  occasions  within  that  time,  or  that  he  was 
thirty  years  old  when  in  fact  he  was  fifty. ^  And  Lord  Cock- 
burn  thought  that  when  the  insured  was  asked  as  to  his  occu- 
pation or  profession,  and  answered  that  he  was  an  "  engineer," 
which  in  fact  he  was,  but  was  also  an  ironmonger,  he  should 
have  stated  the  latter  fact.  But  the  rest  of  the  court  did  not 
agree  with  him.^  So  if  at  the  time  of  insurance  objection 
is  made  to  the  proximity  of  a.  gambling  establishment,  the 
fact  that  the  premises  upon  which  insurance  is  applied  for  is 

1  Cazenove  v.  Brit.  Eq.  Ass.  Co.,  6  C.  B.  n.  s.  437 ;  s.  c.  on  appeal,  29  L.  J. 
(C.  P.)  160. 

2  Perrins  v.  Mar.  and  Gen.  Trav.  Ins.  Co.,  2  E.  &  E.  317. 


CONCEALMENT.  225 

occupied  in  part  by  gamblers,  is  one  which  might  be  material. ^ 
An  equivocal  or  evasive  answer,  where  all  the  facts  are  known 
to  the  applicant,  so  that  he  can  answer  unequivocally,  is  just 
as  fatal  as  a  false  one.  If  not  untrue,  it  is  practically  a  con- 
cealment. As  when  one  has  had,  and  knows  he  has  had,  cer- 
tain symptoms  of  disease  inquired  about,  and  he  answers, 
"  See  surgeon's  report ;  "  ^  or  is  inquired  of  as  to  the  number 
of  times  he  has  required  medical  attendance,  and  answers, 
"  Two  years  ago,"  when  in  fact  he  had  required  it  at  other 
times  ;  ^  or  as  to  his  age,  and  gives  a  less  number  of  years 
than  the  true  number;  *  or  as  to  occupation,  and  having  two, 
he  states  the  one  most  favorable  to  himself.^  But  on  this  point 
of  occupation  the  Court  of  Exchequer  Chamber  seem  to  have 
sanctioned  the  most  obvious  equivocation.^  So  if  the  insured 
equivocates  as  to  his  medical  attendant ;  or  if,  having  had 
more  than  one,  gives  the  name  of  that  one  whom  he  has  reason 
to  believe  is  least  able  to  give  the  information  sought  by  the 
insurers.' 

§  213.  Agent's  Concealment  imputable  to  Principal. —  Con- 
cealment or  misrepresentation  by  an  agent  authorized  to  effect 
the  insurance  is  of  course  concealment  or  misrepresentation 
by  the  principal,  and  carries  with  it  the  same  consequences. 
The  important  question  is  whether  the  agent  is  of  such  a  char- 
acter. In  effecting  insurance  upon  the  lives  of  third  persons, 
reference  is  often  made  to  the  person  whose  life  is  to  be  in- 
sured, or  to  some  other  person  for  information,  and  the  doc- 
trine that  such  persons  so  referred  to  are  to  be  considered  as 
the  agents  of  the  insured  in  giving  answers  to  all  material 

1  Lyons  v.  Com.  Ins.  Co.,  2  Rob.  (La.)  266. 

2  Smith  V.  ^tna  Life  Ins.  Co.,  Ct.  of  App.  N.  Y.  Jan.  1873,  2  Ins.  L.  J.  116. 
«  Cazenove  v.  Brit.  Eq.  Ass.  Co.,  6  C.  B.  n.  s.  437. 

*  Ibid.,  per  Pollock,  C.  B.  Murphy  v.  Harris,  Batty  (Irish),  206 ;  Wray  v. 
Man.  Prov.  Ass.  Co.,  cited  by  Bliss,  Ins.  165. 

5  Hartman  v.  Keystone  Ins.  Co.,  21  Penn.  St.  406. 

6  Cazenove  v.  Brit.  Eq.  Ass.  Co.,  6  C.  B.  N.  s.  437  ;  ante,  §  212. 

7  Morrison  v.  Muspratt,  4  Bing.  60;  Hutton  v.  Waterloo  Life  Ass.  See, 
1  F.  &  F.  735 ;  Monk  v.  Union  Mut.  Life  Ins.  Co.,  6  Robt.  (X.  Y.  Superior  Ct.) 
455 ;  Huckman  v.  Femie,  3  Mees.  &  Wels.  505.  And  see  also  Forbes  v.  Ed. 
Life  Ass.  Co.,  10  Ct.  of  Sess.  Cas.  (Scotch)  451;  Abbott  v.  Howard,  Hayes 
(Irish),  381 ;  Maynard  v.  Rhodes,  1  C.  &  P.  360. 

15 


226  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

questions  which  may  be  put  to  tliem  respecting  the  matters 
as  to  which  they  may  be  properly  interrogated,  has  apparently 
received  the  sanction  of  some  learned  judges.^  But  in  a  com- 
paratively recent  case,^  Lord  Campbell  carefully  reviewed  the 
several  cases  supposed  to  give  such  sanction,  showing  that 
they  did  not  necessarily  so  decide,  and  came  to  the  conclusion 
that  the  doctrine  is  unsound.  And  it  seems  now  to  be  the 
settled  law  of  England  that  when  the  insured  does  not  ex- 
pressly stipulate  for  the  truth  of  the  statements  of  third  per- 
sons thus  referred  to,  but  only  states  his  belief  in  their  truth, 
fraudulent  misrepresentation  or  concealment  by  them,  but  not 
known  to  the  insured,  will  not  avoid  the  policy.  They  are  not 
agents  in  any  such  sense  as  to  make  him  responsible  for  what 
they  fraudulently  state,  or  fail  to  state.^ 

§  214:.  Statements  of  the  Person  vrhose  Life  is  insured  as 
against  the  Party  insured.  —  But  where  one  procures  insurance 
upon  the  life  of  another,  the  latter  having  signed  the  applica- 
tion upon  the  truth  of  the  answers  in  which  the  validity  of 
the  policy  is  made  to  depend,  it  has  been  held  on  the  one  hand 
that  evidence  of  the  declarations  of  the  party  upon  whose  life 
the  insurance  is  effected  as  to  the  state  of  his  health,  whether 
made  before  or  after  the  insurance  is  effected,  if  made  about 
that  time,  or  so  near  as  to  afford  a  probable  inference  as  to  the 
state  of  his  health,  is  admissible  against  the  insured.*  But 
such  declarations  must  have  been  made  within  such  reason- 
able proximity  to  the  time  of  effecting  the  insurance  as  to 
afford  some  substantial  ground  of  inference  as  to  the  state  of 
health  at  that  time.  One  important  ground  upon  which  such 
declarations  are  received  is,  that  they  are  a  part  of  the  res 

1  See  Fitzherbert  v.  Mather,  1  Term  E.  12 ;  Cornfoot  v.  Fowke,  6  Mees.  & 
Wels.  358  ;  Morrison  v.  Muspratt,  4  Biug.  60 ;  Maynard  v.  Rhodes,  5  Dowl.  & 
Ry.  266;  Lindenau  v.  Desborough,  8  B.  &  C.  586;  Everett  v.  Desborough, 

5  Ding.  503 ;  Huckman  v.  Fernie,  3  Mees.  &  Wels.  505 ;  Swete  i'.  Fairlie,  6  C.  & 
P.  1  ;  Rawlins  v.  ])esborough,  2  Moo.  &  Ry.  329. 

2  Wiieeltou  V.  Hardisty,  in  the  Queen's  Bench,  affirmed  in  the  Exchequer 
Chamber,  8  El.  &  Bl.  232. 

3  See  also  Rawls  v.  American  Mut.  Life  Ins.  Co.,  27  N.  Y.  (13  Smith)  282, 
affirming  s.  c.  36  Barb.  (N.  Y.)  357. 

*  Kelsey  v.  Universal  Ins.   Co.,   35  Conn.  225;  Aveson  v.  Lord  Kinnaird, 

6  East,  188. 


CONCEALMENT.  227 

gestce.  The  subject  of  inquiry  is  the  health  of  the  person 
whose  life  is  insured  at  the  time  the  insurance  is  effected,  and 
no  one  can  have  so  perfect  a  knowledge  of  that  as  the  person 
himself.  Medical  men  always  arrive  at  their  conclusions  in 
respect  to  the  health  by  information  derived  in  part  from  what 
their  patients  say  ;  and  what  is  said  by  them  under  circum- 
stances which  preclude  any  suspicion  or  collusion  is  as  fairly 
a  part  of  the  res  c/estce,  in  respect  to  health,  as  symptoms  learned 
from  other  sources.^  In  botli  of  the  cases  just  cited  the  state- 
ments were  made  prior  to  the  consummation  of  the  contract, 
and  therefore,  strictly  speaking,  what  was  said  about  the  ad- 
missibility of  statements  subsequent  thereto  is  extra-judicial. 
And  so  they  seem  to  have  been  regarded  by  the  court  in  a  very 
recent  case  in  Kansas,^  where  it  was  held  that  the  declarations 
of  a  party  whose  life  was  insured  for  another's  benefit,  made  long 
after  (it  does  not  appear  by  the  report  of  the  case  how  long) 
the  contract  was  completed,  cannot  be  received  in  evidence 
against  the  insured  to  impeach  the  truthfulness  of  the  state- 
ments of  the  same  party  made  in  the  application.  The  con- 
tract, it  was  said,  is  between  the  insured  and  the  insurer. 
The  parties  are  the  same  whether  that  which  is  insured  is  a 
human  life  or  a  building.  There  is  this  difference,  however, 
that  the  life  being  active,  can,  by  its  conduct,  affect  the  con- 
tract, even  so  far  as  to  annul  it,  while  the  building,  being  inan- 
imate and  passive,  has  of  itself  no  such  power.  But  aside 
from  this  the  rights  and  liabilities  of  the  parties  to  the  contract 
are  the  same.  The  party  upon  whose  life  the  insurance  is 
effected  is  not  a  party  to  the  record,  and  therefore  his  declara- 
tions are  not  admissible  on  that  ground.  He  is  not  a  party  in 
interest,  as  the  whole  benefit  enures  to  the  insured.  Neither 
is  he  the  agent  of  the  insured,  authorized  to  speak  in  his 
behalf,  nor  does  he  come  within  any  other  rule  by  which  his 
declarations  can  be  received  against  the  insured.  And  such 
was  the  doctrine  in  the  case  of  Rawls  v.  American  Life  Insur- 
ance Company,  with  reference  to  statements  made  before  the 

1  Kelsey  v.  Universal  Ins.  Co.,  35  Conn.  225 ;  Aveson  v.  Lord  Kinnaird,  6 
East,  188. 

2  Washington  Life  Ins.  Co.  v.  Hovey,  Sup.  Ct.  Kansas,  2  Ins.  L.  J.  283. 


228  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

contract  was  entered  into,  the  length  of  tim§  prior  to  that 
event  not  being  adverted  to  ^  and  the  inadmissibility  being 
placed  upon  the  ground  that  the  life  insured  was  no  party  in 
interest  to  the  contract,  and  could  therefore  make  no  state- 
ment or  admission,  in  the  absence  of  authority,  that  would 
devest  the  rights  of  the  plaintiff,  —  the  insured.  So  also,  in 
Fraternal  Mutual  Life  Insurance  Company  v.  Applegate,'^ 
where  a  wife  had  insured  the  life  of  her  husband  for  her  ben- 
efit, the  declarations  of  her  husband,  made  after  the  insurance 
as  to  the  state  of  his  health  before  that  time,  were  held  inad- 
missible for  the  purpose  of  impeaching  the  truthfulness  of  the 
statements  made  in  the  application,  which,  in  this  respect 
differing  from  the  cases  which  we  have  just  been  considering, 
was  signed  by  the  beneficiary  thus  :  "  Henrietta  Applegate,  by 
H.  S.  Applegate,"  the  husband.  The  statements  in  question 
were  regarded  by  the  court  as  those  of  a  stranger  who  was 
neither  a  party  to  the  suit,  nor,  at  the  time  when  they  were 
made,  acting  as  the  agent  of  the  insured.  They  were  not  the 
declarations  of  a  sick  person  in  relation  to  his  condition  at 
the  time  of  making  them,  but  related  to  transactions  and  a 
state  of  facts  long  past.  They  were  not  admissions  against 
interest,  for  they  could  only  affect  injuriously  his  wife's  sepa- 
rate property.  They  were  not  the  statements  of  one  who  had 
been  a  witness  on  the  trial  offered  to  impeach  his  testimony. 
And  although  they  were  the  declarations  of  the  person  who 
best  knew  the  facts,  this  would  only  go  to  their  weight,  when 
their  competency  had  been  established.^ 

§  215.  Special  Facts  deemed  Material  to  be  disclosed.  — 
Whether  the  fact  that  the  insured  was  in  prison  at  the  stated 
place  of  residence  was  material  should  be  submitted  to  the 
jury.'*     So,  too,  the  fact  that  he  had  been  insane  twenty  years 

1  36  Barb.  (N.  Y.)  357;  s.  c.  affirmed,  27  N.  Y.  282. 

2  7  Ohio  St.  292. 

3  And  see  also  Stobart  v.  Dryden,  1  Mees.  &  Wels.  615,  from  which  it  is  to 
be  inferred  tliat  Aveson  v.  Lord  Kinnaird  is  not  an  authority  save  upon  its  exact 
facts.  In  fact  this  case  and  the  case  of  Kelsey  v.  Universal  Life  Ins.  Co.,  nbi 
sup.,  seem  to  have  carried  the  principles  upon  which  they  proceed  —  a,  quasi  right 
of  cross-examination,  and  the  doctrine  that  the  declarations  are  part  of  an  act, 
and  so  part  of  the  res  geskp.  —  to  an  extreme,  if  not  to  an  untenable  limit. 

*  Haguenin  v.  Bailey,  6  Taunt.  186. 


CONCEALMENT.  229 

before,  if  to  the  applicant's  own  mind  it  was  material.^  So  a 
misstatement  as  to  iiis  pecuniary  condition  and  relations  may 
be  material,  if  made  to  the  medical  examiner,  whose  decision 
upon  the  quality  of  the  risk  might  be  influenced  by  the  fact  that 
the  applicant  had  the  means  to  take  proper  care  of  himself,^ 
but  not  a  misstatement,  which  amounts  only  to  an  opinion  as  to 
whether  there  has  been  any  derangement  of  certain  functions, 
or  whether  he  has  had  any  "  serious  illness."  ^  And  in  a  case 
reported  by  Ellis,  it  seems  to  have  been  assumed  that  a  con- 
cealment of  the  fact  that  the  insured,  a  single  woman,  had,  a 
year  or  two  before,  had  a  child,  was  material.  So  the  physi- 
cian was  permitted  to  testify.  But  there  was  another  good 
ground  of  defence,  and  the  case  upon  this  point  cannot  be 
entitled  to  much  weight.*  As  the  right  of  lien  is  vital  to  the 
existence  of  mutual  insurance  companies,  an  omission  to  state 
an  incumbrance,  especially  if  inquired  about,  and  answers  in 
the  application  are  agreed  to  be  true  and  full,  is  conclusively 
material  as  matter  of  law.^  But  an  agreement  between  the 
mortgagee  and  mortgagors  that  the  latter  shall  pay  the  pre- 
mium upon  an  insurance  in  the  name  of  the  latter  is  not  a  fact 
material  to  be  disclosed.''  Nor  need  the  not  unusual  mode  of 
use  or  manner  of  heating  or  lighting  the  property  insured 
be  stated  unless  inquired  for.'' 

1  Mallory  v.  Travellers'  Ins.  Co.,  N.  T.  Ct.  of  App.  1872. 

2  Valton  V.  Nat.  Loan  Fund  Ass.  Soc,  1  Keyes  (N.  Y.),  21,  reversing  s.  c.  17 
Abb.  (N.  Y.)  Pr.  Cas.  278. 

s  Hogle  V.  Guardian  Life  Ins.  Co.,  4  Abb.  (N.  Y.  Superior  Ct.)  Pr.  Cas.  n.  s. 
346. 

4  Edwards  v.  Barrow,  Ellis,  Ins.  116. 

5  Bowditch  Mut.  Fire  Ins.  Co.  v.  Winslow,  3  Gray  (Mass.),  415. 

6  Kernoclian  v.  N.  Y.  Bowery  Ins.  Co.,  17  N.  Y.  428,  reversing  s.  c.  5  Duer 
(N.  Y.  Superior  Ct.),  1. 

1  Girard  Fire  and  Mar.  Ins.  Co.,  37  Penn.  St.  293 ;  Clark  v.  Manuf.  Ins.  Co., 
8  How.  (U.  S.)  235;  Boggs  v.  American  Ins.  Co.,  30  Mo.  63. 


230  INSURANCE  :   FIRE,  LIFE,   ACCIDENT,   ETC. 


CHAPTER    IX. 

OF   SPECIAL   PROVISIONS   OF   THE    CONTRACT. 

§  216.  In  proceeding  to  consider  the  scope  and  effect  of  the 
various  conditions  and  stipulations  in  which  the  modern  con- 
tract of  insurance  abounds,  it  is  of  the  first  importance  to 
determine  whether  they  are  in  the  nature  of  warranties  or 
representations,  and  if  so,  whether  they  are  affirmative  or  prom- 
issory, and  also  whether  they  are  themselves  controlled  by  ac- 
cessory stipulations  as  to  their  truth,  fulness,  and  materiality. 
Since  some  policies,  as  we  have  seen,  seek  to  make  all  the 
statements  in  the  application  warranties  by  making  them  by 
express  stipulation  a  part  of  the  contract,  while  others  stipu- 
late that  they  are  to  be  referred  to  for  a  limited  purpose  only, 
as  for  the  purpose  of  description  and  identification,  or  stipu- 
late for  the  truth  of  all  facts  stated,  or  for  their  truth  only  so 
far  as  risk  or  value  are  concerned,  or  so  far  as  is  known  to  the 
insured,  or  they  are  material  to  the  risk,  or  are  inquired  for, 
or  for  their  truth  in  all  these  respects  ;  or  refer  to  the  state- 
ments in  the  application,  which  by  reference  is  made  part  of 
the  contract,  as  representations ;  or  as  to  be  used  and  resorted 
to  to  explain  the  rights  and  obligations  of  the  parties.  Much 
depends  upon  the  proper  solution  of  these  preliminary  ques- 
tions, as  will  be  seen  by  a  perusal  of  the  preceding  chapters, 
in  which  we  have  endeavored  to  state  some  of  the  general 
principles  applicable  thereto.  Bearing  these  in  mind,  we  shall 
be  better  able  to  arrive  at  satisfactory  conclusions  upon  the 
many  perplexing  questions  which  will  arise,  and,  guided  by 
their  light,  we  shall  find  that  many  decisions,  apparently  con- 
tradictory and  irreconcilable,  are  not  so  in  fact,  but  stand  well 
upon  the  special  circumstances  of  the  case  and  the  special 
stipulations  of  the  contract  under  consideration. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  231 

§  217.  General  Purpose  of  the  Stipulation.  —  There  are  two 
general  classes  of  these  stipulations  which  it  is  well  to  notice : 
first,  those  relating  to  matters  and  things  prior  to  the  loss,  and 
having  for  their  general  object  to  define  and  determine  the 
limits  of  the  risk  ;  and  second,  those  which  relate  to  matters 
and  things  occurring  after  the  loss,  and  having  for  their  object 
to  define  and  determine  the  mode  in  which  an  accrued  loss  is 
to  be  established,  adjusted,  and  recovered.  The  former  per- 
tain more  especially  to  the  circumstances  which  affect  the  risk, 
such  as  the  character,  habits,  mode  of  life,  use,  occupation, 
alteration,  alienation,  title,  location,  and  the  like,  of  the  per- 
son's property  or  premises  insured,  and  constitute,  so  to  speak, 
the  substance  of  the  contract ;  while  the  latter  pertain  more 
especially  to  those  formal  acts  and  circumstances  which,  when 
reciprocal  rights  and  liabilities  have  become  fixed  by  the 
terms  of  the  contract,  are  supplementary  thereto,  and  neces- 
sary to  make  it  productive  to  the  insured  of  the  benefit  sought 
thereby.  As  to  the  former,  relatively  speaking,  there  is  more 
strictness  in  holding  parties  to  the  terms  of  the  contract,  and 
less  readiness  to  find  in  the  circumstances  a  waiver  of  their 
respective  rights.  In  other  words,  the  courts  will  proceed 
with  caution  in  determining  the  question  of  the  liability  of  the 
insurer ;  but  when  this  liability  is  fixed  by  the  capital  fact  of  a 
loss  within  the  range  of  their  responsibility,  they  will  be  very 
reluctant  to  deprive  the  insured  of  the  benefit  of  that  liability, 
by  any  failure  or  neglect  to  comply  with  the  mere  formal  re- 
quisitions of  the  contract,  by  which  his  riglit  is  to  be  made 
available  for  his  indemnification. 

§  218.  Increase  of  Risk,  generally.  —  The  not  unusual  pro- 
vision that  if  the  situation  or  circumstances  affecting  the  risk 
upon  the  property  insured  shall  be  altered  or  changed,  with 
the  consent  of  the  insured,  so  as  to  increase  the  risk,  the 
policy  shall  be  void,  binds  the  assured  not  only  not  to  make 
any  alteration  or  change  in  the  structure  or  use  of  the  prop- 
erty which  will  increase  the  risk,  but  prohibits  him  from  in- 
troducing any  practice,  custom,  or  mode  of  conducting  his 
business  which  would  materially  increase  the  risk,  and  also 
from  discontinuing  any  precaution  represented  in  the  applica- 


232  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC. 

tion  to  have  been  adopted  and  practised  with  a  view  to  dimin- 
ish the  risk.  Its  legal  effect  is,  so  far  as  the  representations 
set  forth  certain  usages  and  practices  observed  in  and  about 
the  business  or  property  insured,  as  to  the  mode  of  conducting 
the  business  or  management  of  the  property,  and  as  to  pre- 
cautions against  fire,  that  they  are  not  only  an  affirmation  of 
the  truth  of  the  facts  at  the  time  they  are  stated,  but  a  stipu- 
lation that,  so  far  as  the  insured  and  all  those  intrusted  by  him 
with  the  care  and  management  of  the  property  are  concerned, 
such  mode  of  conducting  the  business  shall  be  substantially 
observed,  and  such  precautions  substantially  continue  to  be 
taken  during  the  currency  of  the  policy.^  And  as  to  both,  the 
compliance  should  be  substantial  and  in  good  faith,  and  not 
merely  literal  and  colorable.^  Whether  the  change  be  mate- ' 
rial  is  for  the  jury,  and  if  the  jury  find  that  the  change  in- 
creases the  risk  it  will  be  fatal.^  In  Stokes  v.  Cox,*  the  Court 
of  Exchequer  Chamber  upheld  a  verdict  reversing  the  judg- 
ment of  the  Court  of  Exchequer  setting  it  aside,  —  where  it 
was  recited  in  the  policy  that  no  steam-engine  was  employed 
on  the  premises,  and  there  was  a  condition  that  in  case  the  risk 
should  be  increased  by  any  alteration  of  circumstances  the 
policy  should  be  void.  There  was  a  boiler  on  the  premises  at 
the  time  of  the  insurance,  used  for  generating  steam  for  heat- 
ing water  and  warming  the  rooms  ;  but  a  steam-engine  was 
afterwards  erected.  The  fact  that  the  policy  stated  that  no 
steam-engine  was  employed,  was  held  not  to  be  a  warranty 
that  none  should  be,  but  under  the  condition  it  might  be  if  it 
did  not  increase  the  risk.^  A  contemplated  change,  however, 
and  preparations  to  that  end  not  amounting  to  the  actual  en- 

1  Houghton  V.  Manuf.  Mut.  Fire  Ins.  Co.,  8  Met.  (Mass.)  114. 

2  Ibid.     And  see  ante,  §  198. 

3  Hobby  V.  Dana,  17  Barb.  (N.  Y.)  Ill ;  Jennings  v.  Chenango  County  Mut. 
Ins.  Co.,  2  Denio  (X.  Y.),  75. 

*  1  H.  &N.  (Exch.)320. 

5  In  their  opinion  the  court  alluded  to  the  criticisms  of  Lord  Campbell  in 
Sillem  V.  Thornton  (cited  post,  Ch.  XL),  on  the  cases  of  Shaw  v.  Robberds  and 
Pim  V.  Reid,  apparently  with  disapprobation,  and  pointed  out  the  fact  that  Sil- 
lem V.  Thornton  did  not  at  all  present  the  case  of  a  change  in  use  increasing 
the  risk,  but  rather  that  of  a  misrepresentation  in  describing  the  property 
insured. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  233 

tering  upon  the  new  business,  has  no  effect.  A  warranty 
against  engaging  in  a  more  hazardous  occupation  is  not  vio- 
lated by  setting  out  on  a  journey  with  an  intent  to  engage  in 
such  occupation,  the  life  being  lost  before  any  actual  engage- 
ment therein,  and  while  on  the  journey,  the  policy  providing 
that  the  life  —  a  slave  —  should  not  be  removed  to  more  south- 
ern latitudes.  This  implied  that  he  might  be  removed  to  more 
northern  latitudes.  It  was  allowable  to  remove  him,  and  the 
loss  being  occasioned  by  a  high  wind,  and  not  by  the  inten- 
tion to  employ  him  in  a  more  hazardous  occupation,  no  pro- 
vision, express  or  implied,  of  the  policy  was  infringed.^ 

In  Boatwright  v.  ^tna  Insurance  Company,^  an  attempt 
was  made  to  restrict  the  meaning  of  that  clause  of  the  policy 
which  provides  against  any  increase  of  risk  by  the  occupation 
of  the  premises  for  hazardous  purposes,  so  that  it  should  apply 
only  to  such  hazardous  uses  as  were  declared  to  be  so  in  the 
classification  of  risks.  But  the  court  did  not  accept  this  view 
of  the  case  ;  holding,  on  the  contrary,  that  the  occupation  for 
any  hazardous  purpose,  whether  enumerated  in  the  special 
class  or  not,  would  avoid  the  policy. 

In  Schmidt  v.  Peoria  Marine  and  Fire  Insurance  Company,^ 
the  court  go  so  far  as  to  hold  that,  under  a  general  stipulation 
that  an  increase  of  risk  shall  avoid  the  policy,  the  right  of  the 
iusurers  to  object  is  limited  to  those  losses  which  occur  while 
the  increase  of  risk  continues ;  and  this  still  appears  to  be 
the  law  of  Illinois.  But  the  courts  of  no  other  State  have 
gone  to  that  extent.  And  the  case  which  was  referred  to  and 
relied  upon  as  having  decided  the  same  point  in  the  same 
way,*^  was  one  where  the  policy  expressly  provided  not  that 
the  policy  should  be  void  if  the  risk  was  increased,  but  that 
if  the  property  should  be  used  or  appropriated  to  or  for  any  of 
the  prohibited  purposes,  the  policy  should  cease  and  be  of  no 
effect  so  long  as  such  use  continued,  —  a  provision  which,  so 
far  as  the  reported  case  shows,  does  not  appear  to  have  been 
contained  in  the  case  under  consideration. 

1  Zummers  v.  U.  S.  Ins.  An.  and  Tr.  Co.,  13  La.  An.  504. 

2  1  Strob.  (S.  C.)  281.  3  41  lU.  295. 

*  Kew  Eng.  Fire  and  Mar.  Ins.  Co.  v.  Wetmore,  32  111.  221. 


234  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  219.  Even  so  broad  a  restriction  to  the  liability  of  the 
insurers,  as  that  they  shall  not  be  held  responsible  if  the  risk 
be  increased  by  any  means  whatever  without  the  assent  of 
the  insurers,  is  to  be  so  interpreted  that  a  reasonable  use 
of  the  property  insured,  having  regard  to  its  nature  and  cir- 
cumstances, may  be  made  by  the  insured.  A  farmer  insures 
his  horses  against  loss  by  fire  and  lightning  for  five  years, 
and  describes  them  as  kept  on  his  farm.  This  does  not  pre- 
clude him  from  calling  upon  the  insurers  for  any  indem- 
nity if  a  loss  happens  off  the  farm,  as  when  going  to  church, 
or  to  market,  or  to  visit  a  friend  in  the  neighborhood,  or  other- 
wise within  the  ordinary  range  of  uses  to  which  farmers 
customarily  put  their  horses.  It  cannot  be  supposed  that  in 
such  a  case  it  is  intended  that  the  insured  shall  get  a  permit 
every  time  he  goes  off  his  farm.  So  precarious  an  insurance 
one  would  hardly  take  the  pains  to  obtain. ^  Increase  of  risk 
means  material  increase,  and  "  additional "  risk  is  not  neces- 
sarily material  increase. ^  Nor  is  a  permission  given  by  the 
insured  to  shipwrecked  seamen  to  take  shelter  in  his  store- 
house for  the  night  a  change  of  risk  in  the  sense  of  the  policy, 
although,  in  violation  of  the  orders  of  the  insured,  they  kindle 
a  fire  in  a  stove  whereby  the  building  is  set  on  fire  and  con- 
sumed.^ Nor  does  it  include  ordinary  repairs.^  And  such  a 
clause  is  limited  and  controlled  by  another  provision  in  the 
same  policy,  that  an  increase  of  risk  from  certain  specified 
causes  shall  only  have  the  effect  to  suspend  the  policy  while 
the  risk  continues.^ 

§  220.  Still  the  general  and  sweeping  clause  making  the 
insured  responsible  for  all  such  changes  within  his  control  as 
increase  the  risk,  is  one  which  needs  to  be  looked  to  very  care- 

1  Peterson  v.  The  Mississippi  Valley  Ins.  Co.,  24  Iowa,  494.  And  see  post, 
§224. 

2  Allen  V.  Mut.  Fire  Ins.  Co.,  2  Md.  Ill ;  Mayor  of  N.  Y.  v.  Hamilton  Mut. 
Ins.  Co.,  10  Bosw.  (N.  Y.  Superior  Ct.)  537;  Baxendale  v.  Harvey,  4  H.  &  N. 
(Exch.)  445. 

3  Loud  V.  Citizens'  Mut.  Ins.  Co.,  2  Gray  (Mass.),  221. 

*  Townsend  v.  North  Western  Ins.  Co.,  18  N.  Y.  168 ;  Lyman  v.  State  Mut. 
Fire  Ins.  Co.,  14  Allen  (Mass.),  229. 

5  Mayor,  &c.  v.  Hamilton  Mut.  Ins.  Co.,  10  Bosw.  (N.  Y.  Superior  Ct.)  537; 
Bowman  v.  Pacific  Ins.  Co.,  27  Mo.  152. 


SPECIAL  PROVISIONS   OP  THE   CONTRACT.  235 

fully,  as  it  applies  to  improvements,  such  as  the  erection  of 
new  buildings/  or  the  putting  an  oven  into  a  house  already 
built,^  or  the  introduction  of  new  machinery. ^  And  even  a 
removal  of  a  steam-engine  from  one  place  to  another  on  the 
same  premises,  as  from  a  position  in  the  court-yard  to  a  place 
within  the  building,  may  amount  to  an  alteration  which,  if 
the  removal  is  availed  of  by  use,  will  avoid  the  policy.*  And 
under  the  usual  proviso  against  increase  of  risk,  if  the  risk  be 
increased,  it  becomes  entirely  immaterial  to  inquire  whether 
the  loss  was  occasioned  by  the  increase  of  risk,  unless  the 
stipulation  be  that  the  insurers  will  not  be  liable  for  any 
loss  occasioned  by  an  increase  of  risk.^  But  if  the  insured 
have  two  policies  from  the  same  office,  and  they  procure  by  the 
payment  of  an  additional  premium  the  right  to  increase  the 
risk  under  one,  this  increase  will  not  vitiate  the  other  policy, 
although  it  be  also  an  increase  of  risk  to  the  property  in  that 
policy  insured.^ 

§  221.  These  stipulations  against  increase  of  risk  usually 
avoid  the  contract  by  the  mere  fact  of  the  change  which  causes 
such  increase,  unless  the  insurers  be  notified  of  such  change, 
and  assent  thereto.  But  there  is  oftentimes  added  another 
clause,  which  leaves  it  optional  with  the  company,  after  receiv- 
ing knowledge  of  the  change  in  the  risk,  whether  to  cancel 
the  policy  or  not.  This  was  the  case  in  Allen  v.  Massasoit 
Insurance  Company,'^  where  the  court  takes  occasion  to  refer 
to  these  respective  provisions,  and  to  state  their  scope  and 
purpose. 

"  There  are  two  clauses  in  the  policy  which  refer  to  such 
a  state  of  facts.  The  first  declares  that  '  if  the  situation  or 
circumstances  affecting  the  risk  thereupon '  shall  be  so  altered 
or  changed  by  or  with  the  advice,  agency,  or  consent  of  the 

1  Murdockr.  Chenango  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  210;  Francis 
V.  SoraerviUe  Mut.  Ins.  Co.,  1  Dutch.  (N.  J.)  78. 

2  Boatwright  v.  ^tna  Ins.  Co.,  1  Strob.  (S.  C.)  281. 

3  Reid  V.  Gore,  Dist.  Mut.  Fire  Ins.  Co.,  11  Upper  Canada  (Q.  B.),  345. 
<  Bunell  V.  Jeremy,  3  Wels.  Hurl.  &  Gor.  (Exch.)  535. 

6  Gardiner  v.  Piscataqua  Mut.  Fire  Ins.  Co.,  38  INIe.  439 ;  post,  §  223. 
•>  North  Berwick  Co.  v.  N.  E.  Fire  and  Mar.  Ins.  Co.,  52  Me.  33G. 
1  99  Mass.  161. 


236  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

assured  as  to  increase  the  risk  thereupon,  '  the  risk  thereupon 
shall  cease  and  determine,  and  the  policy  become  null  and 
void,  unless  confirmed,'  <fec.  The  second  clause  is  as  follows : 
*  If,  during  the  insurance,  the  risk  be  increased  by  the  erection 
of  buildings,  or  by  the  use  or  occupation  of  neighboring  prem- 
ises or  otherwise,  or  if  the  company  shall  so  elect,  it  shall  be 
optional  with  the  company  to  terminate  the  insurance  after 
notice  given  to  the  assured  or  his  representative  of  their  inten- 
tions to  do  so,  in  which  case  the  company  will  refund  a  ratable 
portion  of  the  premium.' 

"  The  two  clauses  were  directed  to  two  objects  :  the  first,  to 
whatever  should  increase  the  risk  by  the  consent  or  agency  of 
the  assured  ;  and  the  second,  to  whatever  should  increase  the 
risk  without  his  consent  by  the  agency  of  others. 

"  The  first  it  was  intended  to  guard  against  absolutely,  it 
being  within  the  power  of  the  assured  to  prevent ;  the  latter, 
which  might  occur  without  his  act,  or  even  without  his  knowl- 
edge, it  was  just  should  not  affect  his  rights  without  notice. 
The  mention  of  the  erection  of  buildings  was  merely  the  speci- 
fication of  one  mode  in  which  the  risk  might  be  increased ; 
and  appears  to  have  been  given  by  way  of  illustration.  But 
the  previous  provision  was  general,  and  included  all  modes 
in  which  the  risk  should  be  increased  by  the  agency  of  the 
insured." 

§  222.  Increase  of  Risk  —  Alteration.  —  An  almost  universal 
provision  of  the  policy  is  one  intended  to  guard  against  the 
danger  of  increase  of  risk  by  alteration.  This  alteration  may 
take  place  in  the  building  insured,  or  in  its  mode  of  use  or 
occupation,  or  in  its  situation  with  reference  to  other  build- 
ings, or  in  any  other  circumstance  tending  to  change  the  char- 
acter of  the  risk.  This  does  not,  as  a  general  rule,  include 
every,  the  least,  alteration.  In  marine  insurance  a  deviation 
from  the  voyage  is  held  to  avoid  the  policy ;  but  this  has  been 
said  to  be  not  on  the  ground  of  an  increase  of  the  risk,  but 
on  the  ground  that  the  insured  has  voluntarily  substituted 
another  voyage  for  the  one  insured,  and  the  change  of  the 
voyage  determines  the  contract  from  the  time  it  happens. 
The  same  strictness,  however,  is  not  observable  in  fire  insur- 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  237 

ance.  It  would  seem,  at  the  first  glance,  that  the  enlargement 
of  a  building,  already  contiguous  to  a  building  on  one  side,  so 
that  it  should  be  contiguous  on  two  sides,  must  necessarily 
increase  the  risk,  the  points  of  contact  having  been  increased. 
And  so  it  has  been  contended,  in  analogy  to  the  doctrine  of 
marine  insurance,  that  a  deviation  avoids  the  policy  without 
reference  to  an  increase  of  the  risk.  But  it  is  to  be  consid- 
ered that,  while  by  deviation  the  identity  of  the  voyage  in- 
sured is  changed,  a  building  may  be  altered,  repaired,  or 
enlarged  without  substantially  affecting  its  identity,  either  as 
a  structure  or  as  a  subject-matter  of  insurance.  It  may  still 
remain  the  same,  or  so  nearly  so  that  the  increase  of  risk  is 
inappreciable.  Indeed,  it  may  be  that  there  is  no  increase  at 
all,  and  possibly  even  a  diminution.  Tlie  substitution  of  a 
slated  for  a  shingled  roof,  for  instance,  even  though,  in  the 
change,  the  area  of  the  roof  should  be  somewhat  enlarged, 
it  is  obvious,  would  not  increase  the  risk,  though  it  would  un- 
doubtedly be  an  alteration.  So  the  extension  of  a  wooden 
building  towards  and  nearer  to  an  adjacent  building,  might 
increase  the  risk,  but  a  substitution  for  wood  of  brick,  stone, 
slate,  or  some  other  substance  less  combustible  than  wood,  at 
the  point  of  nearest  proximity,  might  more  than  counterbal- 
ance the  increase  of  risk  from  the  extension.  Whether  the 
alteration,  therefore,  in  any  particular  case  will  avoid  the 
policy,  depends  as  a' general  rule  upon  its  materiality,  and 
this  again  is  determined  by  the  question  whether  it  increases 
the  risk,  —  a  question  of  fact  to  be  determined  by  the  jury 
upon  all  the  circumstances  of  each  particular  case.^  Par- 
dessus  is  of  the  opinion  that  the  rule  as  to  the  effect  of  a 
deviation  at  sea  would  not  be  so  strictly  applied  to  a  transit 
by  land ;  but  that  in  the  latter  case  the  deviation  would  not 
avoid  the  policy,  if  the  insured,  after  deviation,  should  return 
to  the  route  indicated  in  the  policy .^ 

§  223.   Alteration  —  Materiality  —  Warranty.  —  Of    the    ele- 

1  Curry  y.  The  Commonwealth  Ins.  Co.,  10  Pick.  (Mass.)  535;  Larabee  v. 
Wilson,  Doug.  271 ;  Jolly  v.  Bait.  Eq.  Soc,  1  H.  &  G.  (Md.)  295 ;  Stetson  v. 
Massachusetts  Mut.  Fire  Ins.  Co.,  4  Mass.  330. 

2  Cours  de  Droit.  Com.  §  596,  par.  3. 


238  insurance:  fire,  life,  accident,  etc. 

ments  to  be  considered  in  determining  the  question  of 
the  materiahty  of  an  alteration,  one  of  prime  importance  is 
whether  the  alteration  be  such  that  had  the  insurance  been 
sought  on  the  building,  as  altered,  a  higher  rate  of  insurance 
would  have  been  demanded  than  was  demanded  on  the  build- 
ing as  actually  insured.  And  if  such  be  the  fact,  then  it 
would  be  of  no  avail  to  show  in  an  action  for  a  loss  that  it  was 
not  occasioned  by  the  alteration,  nor,  on  the  other  hand,  would 
it  be  incumbent  on  the  insurers  to  show  that  it  was  occasioned 
by  the  alteration.  In  other  words,  the  question  of  materiality 
does  not  necessarily  depend  upon  the  fact  whether  the  loss  is, 
or  is  not,  occasioned  by  the  alteration.^  The  question  of  the 
materiality  of  an  alteration  or  change  may,  however,  by  ex- 
press stipulation,  be  taken  out  of  the  field  of  debate.  It  is 
competent  for  the  parties  to  agree  that  this  or  that  alteration 
or  change  shall  work  a  forfeiture,  in  which  case  the  only  in- 
quiry will  be  whether  the  one  in  question  comes  within  the 
category  of  changes  which  by  agreement  shall  work  a  forfeit- 
ure. Thus,  where  in  a  policy  of  insurance  there  is  a  memo- 
randum of  hazardous  trades,  and  it  is  stipulated  that  none  of 
these  trades  shall,  during  the  currency  of  the  policy,  be  car- 
ried on  in  the  building  insured  upon  penalty  of  forfeiting  the 
right  to  recover  in  case  of  loss,  the  use  of  the  building  for  such 
a  trade  will  avoid  the  policy ;  and  evidence  to  show  that  the 
actual  use  did  not  increase  the  risk  of  damage  by  fire  will  be 
inadmissible,  and  this,  although  the  policy  covered  one  of  the 
specially  hazardous  risks.^  But  even  in  case  where  the  stipu- 
lation with  reference  to  alteration  is  a  warranty,  want  of  literal 
and  exact  fulfilment  as  to  minute  matters,  immaterial  to  the 
risk,  will  not  avoid  the  policy.  The  jury  will  consider  whether 
the  warranty  is  substantially  observed.^ 

§  224.  What  Extent  of  Alteration  permissible  when  not  inhib- 
ited, —  Unless  there  be  a  special  stipulation  to  the  contrary, 
when  a  building  is  insured,  the  insured  does  not  relinquish 

1  Merriam  v.  The  Middlesex  Mut.  Fire  Ins.  Co.,  19  Pick.  (Mass.)  162. 

2  Lee  V.  Howard  Fire  Ins.  Co.,  3  Gray  (Mass.),  583 ;  Glen  v.  Lewis,  8  Wels. 
Hurl.  &Gor.  (Exch.)  607. 

3  Girard  Fire  and  Mar.  Ins.  Co.  v.  Stephenson,  37  Penn.  St.  293. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  239 

the  right  of  exercising  the  ordinary  and  necessary  rights  of 
ownership  over  the  same,  and  may  not  only  make  ordinary, 
but  such  general,  repairs  and  changes  as  may  be  necessary  or 
convenient  to  make  tlie  building  better  subserve  its  purposes, 
according  to  the  mode  customary  in  such  cases.  But  if  alter- 
ations be  made  materially  enhancing  the  risk,  and  not  neces- 
sary to  the  enjoyment  of  the  premises,  or,  according  to  usage, 
are  not  the  result  of  the  exercise  of  such  ordinary  acts  of 
ownership  as  may  fairly  be  presumed  to  have  entered  into  the 
contemplation  of  the  parties  at  the  time  when  the  insurance 
was  effected.  In  other  words,  the  insured,  unless  restricted  in 
some  way  in  the  policy,  may  use,  protect,  and  enjoy  his  property 
as  such  property  is  customarily  used,  enjoyed,  and  protected ; 
and  in  any  case  of  dispute  the  question  will  be  for  the  jury 
whether  the  insured  has  transcended  a  fair  exercise  of  his 
rights.^  The  only  restraints  in  such  a  case  arise  from  neces- 
sary implication  founded  on  the  presumed  intentions  of  the 
parties,  and  are  such  as  are  called  for  by  the  dictates  of  reason, 
justice,  and  public  policy.  The  insurer  must  be  presumed  to 
know  that  the  owner  intends  to  derive  benefit  from  the  use 
and  occupancy  of  his  buildings,  and  to  that  end  he  must  keep 
them  in  tenantable  condition.  And  to  put  them  in  tenantable 
condition  prudence  may  require  that,  in  order  to  enable  him 
to  reap  the  greatest  benefit  from  his  property,  he  shall  do 
something  more  than  make  his  building  barely  inhabitable. 
Having  regard  to  its  appearance  and  convenience  as  compared 
with  other  property  of  a  similar  character  in  the  vicinity, 
he  may  make  such  repairs  and  alterations  as  will  make  it, 
relatively  to  other  property  with  which  it  may  come  in  compe- 
tition, equally  attractive,  desirable,  and  convenient.  The  con- 
tract of  insurance  is  not  to  be  construed  so  as  to  restrain  the 
prudent  and  thrifty  from  improving  their  property  and  their 
income  within  the  limits  of  ordinary  usage.  In  the  case 
last  cited,  where  the  repairs  were  of  a  thorough  and  exten- 
sive character,  so  uiucii  so  that  the  house  was  given  up  to  the 
possession  of  the  mechanics  engaged  therein  for  several  weeks, 
and  was  meantime,  as  is  usual  in  such  cases,  incumbered  with 
1  Jolly  V.  Bait.  Eq.  Soc,  1  H.  &  G.  (Md.)  295. 


240  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  materials,  and  strewn  with  the  chips  and  other  waste  inci- 
dent to  such  repairs,  it  was  contended  by  the  distinguished 
•counsel^  for  the  defendants  that  such  repairs  avoided  the 
policy,  and  they  likened  the  case  to  a  deviation  in  marine 
assurance,  and  so  it  was  ruled  at  the  trial.  But  on  appeal  the 
court  sent  back  the  case  for  a  new  trial,  giving  a  very  elabo- 
rate opinion,  from  which  we  make  the  following  extract :  — 

"  The  strictness  and  nicety  which  have  been  wisely  adopted 
in  the  trial  of  questions  arising  on  policies  of  marine  insur- 
ance are  not,  to  their  full  extent,  applicable  to  the  policies  of 
this  society.  The  former  are  entered  into  by  the  assurer 
almost  exclusively  on  the  statements  and  information  given 
by  the  assured  himself;  in  the  latter  case  the  insurers  assume 
the  risk  on  the  knowledge  acquired  by  an  actual  survey  and 
examination  made  by  themselves,  not  on  representations  com- 
ing from  the  insured.  This  association,  therefore,  formed  for 
their  individual  accommodation  and  security,  cannot,  upon 
any  sound  principle  of  construction,  be  viewed  as  involving 
in  it  a  mutual  relinquishment  of  the  right  of  exercising  those 
ordinary  necessary  acts  of  ownership  over  their  houses  which 
have  been  usually  exercised  by  the  owners  of  such  property. 
It  hence  follows  that  the  insured  is  authorized  to  make  any 
necessary  repairs  in  the  mode  commonly  pursued  on  such 
occasions. 

"  But  if,  by  the  gross  negligence  or  misconduct  of  the  work- 
men employed,  a  loss  by  fire  ensue ;  or  if  alterations  be  made 
in  the  subject  insured  materially  enhancing  the  risk,  and  not 
necessary  to  the  enjoyment  of  the  premises  insured,  or  accord- 
ing to  usage  and  custom  were  not  the  result  of  the  exercise  of 
such  ordinary  acts  of  ownership  as  in  the  understanding  of  the 
parties  were  conceded  to  the  insured  at  the  time  of  insurance, 
and  a  loss  by  fire  is  thereby  produced,  —  then  are  the  under- 
writers released  from  all  reliability  to  indemnify  for  such  loss. 
The  policy  of  insurance  here  being  perfectly  silent  on  the  sub- 
ject, and  no  general  principle  or  rule  of  law  having  been 
established,  in  cases  like  the  present,  by  which  to  determine 
whether  the  repairs  or  alterations  were  such  as  the  insured 

1  Wirt  and  Taney. 


I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  241 

had  authority  to  make  as  being  necessary  to  the  user  of  the 
property,  and  whether,  if  authorized,  they  were  made  in  the 
usual  and  customary  way,  the  proper  tribunal  to  decide  thos& 
questions  is  the  jury  and  not  the  court. 

"  It  appears  to  have  been  conceded  in  argument  that  ordi- 
nary necessary  repairs  might  be  made  by  the  insured,  but  not 
a  thorough  repair  like  the  present.  The  proof  of  the  appel- 
lants is  '  that  the  repairs  made  on  this  house  were  necessary 
for  the  purpose  of  rendering  it  tenantable,'  and  that  they  were 
made  in  the  usual  way.  The  bill  of  exceptions  shows  tliat  by 
the  word  '  repairs '  both  parties  meant  all  that  was  done  to  the 
house.  The  distinction  attempted  to  be  taken  has  not  been 
supported  by  any  authorities,  and  in  common  sense  and  jus- 
tice there  can  be  no  discrimination  between  the  right  to  make 
ordinary  repairs  and  such  a  thorough  repair  as  is  necessary  for 
the  purpose  of  rendering  the  house  tenantable. 

"  It  has  been  stated  by  the  counsel  of  both  parties  that  there 
can  be  found  in  the  books  no  adjudication  on  a  policy  against 
j&re  analogous  to  the  present.  It  becomes  this  court,  then, 
maturely  to  deliberate  before  they  sanction  the  doctrine  con- 
tended for  by  the  appellees,  which,  contrary  to  justice  and  the 
understanding  and  intention  of  the  parties  at  the  formation  of 
their  contract,  annihilates  all  claim  to  indemnity  on  the  part 
of  the  insured,  and  yet  leaves  the  insurer  in  the  full  enjoyment 
of  the  premium  for  responsibility.  It  perhaps  scarcely  ever 
happens  that  during  the  period  of  seven  years,  the  usual  term 
to  which  such  policies  are  limited,  some  trifling  alteration  or 
addition  is  not  made  to  the  property  insured  ;  as  a  new  door  or 
window  opened,  an  additional  closet,  shelf,  or  such  like  fixture 
erected:  any  of  which  acts,  if  the  grounds  assumed  by  the 
appellees  are  supported,  change  the  identity  of  the  property, 
create  a  new  risk,  and  absolve  the  underwriters.  Indeed, 
if  alterations  and  additions  are,  per  se,  a  change  of  the  risk, 
it  would  follow  that  the  erection  of  a  parapet  wall  in  a  city, 
a  substitution  of  brick  for  a  wooden  floor,  or  a  marble  for  a 
wooden  mantel-piece,  or  the  introduction  of  a  coal-grate  in 
a  chimney  constructed  for  wood  as  the  only  fuel,  though  les- 
sening the  peril,  would  discharge  the  policy  ;  as,  according 

16 


242  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

to  the  principles  of  maritime  insurance,  every  change  of  the 
risk  exonerates  the  underwriter,  whether  the  danger  be  in- 
-creased  or  diminished,  or  happen  the  loss  from  whatsoever 
cause  it  may.  To  infer,  without  any  express  provision  or 
necessary  implication  arising  out  of  the  contract  itself,  or  pub- 
lic policy  demanding  it,  that  the  insured  surrendered  all  right 
to  make  such  common-place,  trivial,  unimportant  additions  to, 
and  alterations  of,  his  property,  as  its  safety  or  his  convenience 
or  comfort  might  suggest,  is  a  construction  too  rigorous  to  be 
rational ;  the  effect  of  which  would  be  to  render  worse  than 
useless  those  most  useful  and  indispensable  institutions  in  popu- 
lous cities,  —  fire  insurance  companies,  —  and  give  a  fatal  stab 
to  our  enterprising  manufacturers,  who,  if  suing  for  a  loss 
under  a  policy  covering  the  manufactory  and  machinery,  would 
be  turned  out  of  court  without  remedy  or  hope,  if  perchance 
the  insurer  could  prove  that  the  most  immaterial  alteration  or 
improvement  were  made  in  his  machinery,  by  substituting  the 
power  of  the  screw  for  that  of  the  lever,  the  leather  strap  for 
the  iron  wheel,  or  the  iron  for  the  wooden  shaft.  But  suppose 
all  the  rules  of  marine  insurance  applicable  to  the  question  at 
bar,  can  a  case  be  found  in  which  it  was  ever  contended  that 
to  add  to  the  equipment  of  a  vessel  insured  a  yard  or  more  of 
canvas,  or  an  additional  cleat  or  clew-line,  was  to  vacate  the 
insurance  ? 

"  The  numerous  and  warmly  litigated  questions  of  devia- 
tion and  change  of  risk,  which  burden  the  records  of  courts 
of  justice,  bear  no  analogy  to  that  now  under  consideration. 
There,  departing  from  the  course  of  the  voyage,  or  performing 
it  at  any  other  time  than  that  required  by  the  policy,  subjects 
the  vessel  to  dififerent  perils  than  those  contemplated  by  the 
contracting  parties ;  a  flaw,  a  whirlpool,  a  breaker  may  be  en- 
countered in  one  course  of  the  voyage  which  would  be  a  cause 
of  neither  danger  nor  alarm  at  a  mile's  distance.  The  tem- 
pests or  casualties  attending  the  performance  of  a  voyage  to- 
day bear  no  similitude  or  proportion  to  those  attendant  on 
a  like  voyage  to-morrow.  But  ho  such  total  revolution  is 
wrought  in  the  perils  to  a  house  insured  against  fire  which 
has  undergone  alterations  or  repairs ;  it  remains  subject  to  the 


SPECIAL   PROVISIONS   OP  THE   CONTRACT.  243 

same  perils,  although  their  degree  may  be  increased  or  dimin- 
ished. It  becomes  a  question  of  increase^  not  of  change  of 
risk,  for  the  ascertainment  of  which  the  jury,  and  not  the 
court,  is  the  proper  tribunal."  ^  And  so  it  was  said  in  Robin- 
son V.  Mercer  County  Mutual  Fire  Insurance  Company,^  with 
reference  to  a  change  of  use  from  one  business  to  another  of 
greater  risk,  that  if  the  insured  exposed  the  property  to  a  risk 
far  more  hazardous  than  could  have  been  contemplated  by  the 
insurers,  good  faith  required  that  they  should  have  notice,  and 
if  the  insured  neglected  to  notify  them  it  would  amount  to 
that  gross  negligence  which  would  defeat  a  recovery. 

§  225.  Limitatioa  of  Risk  —  Change  in  Surroundings  —  En- 
largement.—  And  the  same  rules  are  applicable  to  changes  in 
the  situation  of  the  property  insured  relative  to  other  prop- 
erty, and  other  surrounding  and  incidental  circumstances 
tending  to  increase  the  risk.  If  the  contract  be  silent  on  this 
point,  any  change  within  the  limits  of  fair  and  honest  dealing 
is  permissible,  even  though  to  that  change  the  destruction 
of  the  property  may  be  due.^  In  Joyce  v.  Maine  Insurance 
Company,*  there  was  the  peculiar  provision  that  if  the  risk 
was  increased  by  the  erection  of  buildings,  or  tlie  occupation 
of  neighboring  premises,  it  should  be  the  duty  of  the  insured 
to  give  immediate  notice  thereof  to  the  insurers,  that  they 
might  terminate  the  insurance  if  they  should  so  elect.  But 
no  penalty  for  neglect  to  give  notice  was  fixed.  Such  a  pro- 
vision was  held  to  afford  to  the  insurers  no  ground  of  defence, 
in  case  of  its  violation,  as  they  cannot  assume  that  they  would 

1  And  see  ante,  §  219,  and  post,  §  230.  2  3  Dutch.  (N.  J.)  134. 

'  Stebbins  v.  Globe  Ins.  Co.,  2  Hall  (N.  Y.. Superior  Ct!),  631  ;  Grant  v.  How- 
ard Ins.  Co.,  5  Hill  (N.  Y.),  16  ;  Western  Farmers'  Mut.  Ins.  Co.,  1  Handy  (Cin- 
cinnati Superior  Ct.),  325;  Gates  v.  Madison  County  Mut.  Ins.  Co.,  1  Seld. 
(N.  Y.)  460  ;  Young  v.  Washington  County  Mut.  Ins.  Co.,  14  Barb.  (N.  Y.)  545. 
In  Howard  v.  Kentucky  and  Louisville  Ins.  Co.,  13  B.  Mon.  (Ky.)  282,  it  is  said 
that  in  such  a  case  the  policy  will  not  be  avoided  unless  the  increased  risk  is  the 
cause  of  the  loss,  in  which  case  wliat  was  unobjectionable  becomes  misconduct, 
a  doctrine  which  cannot  be  said  to  be  in  accordance  with  the  current  of  opin- 
ions, nor  is  it  supported  by  Stebbins  v.  Globe  Ins.  Co.,  2  Hall  (N.  Y.  Superior 
Ct.),  632,  the  only  case  cited  as  an  authority.  That  case  says,  obiter,  that  if  the 
•  increase  of  risk  be  fraudulent  and  occasion  the  loss,  it  may  be  a  defence. 

4  45  Me.  168. 


244  insurance:  fire,  life,  accident,  etc. 

have  terminated  the  insurance  if  notice  of  the  change  had 
been  given.  And  in  point  of  fact  such  a  provision  seems  to 
have  no  force,  the  insurers  having  no  better  standing  in  court 
than  they  would  have  without  it.  Under  a  somewhat  similar 
provision  in  a  policy  which  provides  that  the  trustees  may  de- 
clare it  null  and  void  if  the  insured  premises  be  repaired  or 
enlarged  so  as  to  render  the  risk  greater,  the  notice  of  the 
trustees  does  not  conclude  the  insured.  He  may  yet  go  to 
the  jury  on  the  question  whether  the  enlargement  did  in  fact 
increase  the  risk.^  If  any  particular  act  is  to  be  done,  as,  for 
instance,  if  a  building  contiguous  to  the  property  insured  is 
to  be  removed,  this  can  only  be  required  within  a  reasonable 
time  ;  and  if  a  loss  occur  before  the  removal,  it  is  for  the  jury 
to  say  whether  that  reasonable  time  had  elapsed  before  the 
loss.2 

§  226.  Increase  of  Risk  during  Alteration  —  Increase  and  De- 
crease.—  But  if  the  policy  provides  against  an  alteration  and 
enlargement,  which  shall  increase  the  risk,  a  considerable  and 
deliberate  alteration  and  enlargement  not  incidental  to  the  use 
of  the  property  will  avoid  the  policy,  if  it  increases  the  risk 
during  the  alteration  ;  and  whether  the  alteration  is  such  a 
one  is  for  the  jury.  It  seems,  however,  that  ordinary  repairs 
under  such  circumstances  would  not.^  In  Heniker  v.  British 
American  Insurance  Company,^  where  extensive  alterations 
•were  made  both  in  the  building  itself  and  the  surroundings, 
the  court  refused  to  allow  the  jury  to  find  —  there  being  an 
actual  increase  of  risk  in  the  building  itself — whether,  on 
the  whole,  taking  into  consideration  any  decrease  of  risk  in 
the  surroundings,  there  was  any  actual  increase  of  risk.  But 
in  Date  v.  Gore  District  Mutual  Insurance  Company,^  where 
the  changes  were  all  within  the  building,  some  calculated  to 
increase  the  risk  and  others  to  diminish  it,  the  court  allowed 
the  jury  to  strike  the  balance,  and  say  if,  on  the  whole,  there 
was  any  increase. 

1  Stetson  V.  Massachusetts  Mut.  Fire  Ins.  Co.,  4  Mass.  330. 

2  Lindsey  v.  Union  Mut.  Fire  Ins.  Co.,  3  R.  I.  157. 

3  Lyman  v.  State  Mut.  Fire  Ins.  Co.,  14  Allen  (Mass.),  227. 

*  14  Upper  Canada  (C.  P.)  99.  5  15  Upper  Canada  (C.  P.)  175. 


SPECIAL  PROVISIONS   OF  THE   CONTRACT.  245 

§  227.  Alteration  by  others  than  the  Insured.  —  Unless  the 
consequences  are  restricted  to  the  acts  of  particular  persons, 
an  alteration,  such  as  would  work  a  forfeiture  of  the  policy,  if 
made  by  the  insured,  is  equally  fatal  if  made  by  a  tenant  with- 
out the  knowledge  or  consent  of  the  insured.  That  it  is  made 
by  a  tenant  is  no  excuse  if  contrary  to  the  covenants  in  the 
policy.  The  tenant's  possession  is  the  landlord's  possession. 
The  latter  continues  to  be  the  party  insured,  and  the  cove- 
nants which  he  enters  into  remain  whether  he  occupies  person- 
ally or  by  tenant. 1  If  the  insured  desires  to  escape  so  large  a 
responsibility,  he  must  see  to  it  that  the  terms  of  the  policy 
are  not  so  broad  as  to  include  the  acts  of  third  persons.  If 
he  do  not  do  this,  he  will  find,  perhaps  when  it  is  too  late,  that 
he  has  agreed  to  be  responsible  for  the  acts  of  third  persons.^ 
And  upon  this  principle,  an  alteration  by  a  mortgagor,  after 
an  assignment  of  the  policy,  and  without  the  knowledge  of  the 
assignor,  avoids  the  policy.^  A  change  of  use,  if  prohibited 
on  penalty  of  forfeiture,  though  made  by  a  tenant  without  the 
knowledge  of  the  owner,  the  insured,  is  fatal,  unless,  as  is  the 
case  in  some  policies,  he  is  only  made  responsible  for  such 
changes  as  he  permits."*  But  a  tenant  is  not  a  proprietor 
within  the  meaning  of  a  provision  against  alterations  by  act 
of  the  proprietor,  and  an  alteration  therefore  by  a  tenant,  not 
known  to  the  owner,  does  not  avoid  the  policy.^ 

§  228.  Alteration  —  Premises.  —  "  Premises  "  means  build- 
ing, and  though  there  is  an  alteration  in  the  status  of  the 
property  insured  increasing  the  risk,  it  is  not  an  alteration 
in  the  "  premises  "  or  building  in  which  the  property  insured 
is  located,  and  therefore  works  no  forfeiture.^    But  a  provision 

1  Diehl  V.  Adams  County  Mut.  Ins.  Co.,  58  Penn.  St.  443. 

2  Shepherd  v.  Union  Mut.  Fire  Ins.  Co.,  38  N.  H.  232. 

'^  Kuntz  V.  Niagara  Dist.  Fire  Ins.  Co.,  16  Upper  Canada  (C.  P.)  373  ;  Grosve- 
nor  1-.  Atlantic  Mut.  Ins.  Co.,  17  N.  Y.  391 ;  State  Mut.  Fire  Ins.  Co.  v.  Roberts, 
31  Penn.  St.  438;  Loring  v.  Manuf.  Ins.  Co.,  8  Gray  (Mass.),  28. 

*  Fire  Assoc,  of  Philadelphia  v.  Williamson,  26  Penn.  St.  196  ;  Howell  v. 
Bait.  Eq.  Soc,  16  Md.  317  ;  Appleby  v.  Fireman's  Fund  Ins.  Co.,  4.5  Barb.  (N.  Y.) 
454. 

5  Paddleford  v.  Prov.  Mut.  Fire  Ins.  Co.,  3  R.  I.  192. 

6  Robinson  v.  Mercer  County  Mut.  Ins.  Co.,  3  Dutch.  (N.  J.)  135 ;  Leggett  v. 


246  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

against  lighting  the  "  premises  "  insured  in  a  policy  on  a  stock 
of  goods,  refers  to  lighting  the  building  as  well  as  the  mer- 
chandise.^ In  Trench  v.  Chenango  County  Mutual  Insurance 
Company ,2  it  was  held  that  where  buildings  and  personal  prop- 
erty were  insured  in  the  same  policy,  and  there  was  a  breach 
of  warranty  in  the  failure  to  state  all  the  buildings  within  a 
certain  distance,  that  the  breach  avoided  the  policy  only  as  to 
the  building,  and  that  as  to  the  personal  property  there  might 
be  a  recovery  therefor.  But  this  doctrine  was  doubted  in 
Sexton  V.  Montgomery  County  Mutual  Insurance  Company ,2 
repudiated  in  Kennedy  v.  St.  Lawrence  County  Mutual  Insur- 
ance Company ;  ^  and  the  case  itself,  upon  this  point,  was 
overruled  in  Wilson  v.  Herkimer  County  Mutual  Insurance 
Company.^ 

§  229.  Alterations  at  Risk  of  the  Insured.  —  A  provision  that 
alterations  and  repairs  are  at  the  risk  of  the  insured  has  been 
said  to  mean,  not  that  they  shall  necessarily  avoid  the  con- 
tract, but  that  the  assured  shall  assume  the  hazard  of  their 
increasing  the  liability  of  the  insurer.^  But  in  Kingsley  v.  New 
England  Mutual  Insurance  Company,'^  a  condition  that  the 
insured  should  "  take  all  risk  from  cotton  waste,"  was  held  to 
mean  that  if  the  fire  originated  in  cotton  waste  the  insured 
were  not  to  be  responsible. 

§  230.  Alteration  in  Mode  of  Use.  —  Under  a  policy  insuring 
in  general  terms  a  store,  building,  or  factory,  without  restric- 
tion as  to  the  use,  or  as  to  the  kind  of  goods  to  be  kept,  or  as 
to  increase  of  risk  generally,  any  kind  of  goods  may  be  kept, 
and  any  kind  of  business  carried  on,  and  any  change  of  cir- 
cumstances made,  not  expressly  prohibited  within  the  limits  of 
good  faith  and  fair  dealing ;  and  the  fair  inference,  from  the  fact 
that  certain  kinds  of  goods  and  certain  kinds  of  business  are 

^tna  Ins.  Co.,  10  Rich.  Law  (S.  C),  202;  jwst,  §  241.  And  see  also  Howard 
Fire  and  Mar.  Ins.  Co.  v.  Cormick,  24  111.  455. 

1  Stettiner  v.  Granite  Ins.  Co.,  5  Duer  (N.  Y.  Superior  Ct.),  594. 

2  7  Hill  (N.  Y.),  122.  3  9  Barb.  (N.  Y.)  191. 
*  10  Barb.  (N.  Y.)  285.  s  2  Seld.  (N.  Y.)  53. 

6  Girard  Fire  and  Mar.  Ins.  Co.  v.  Stephenson,  37  Penn.  St.  293.  And  see 
also  Perry  County  Ins.  Co.  v.  Stewart,  19  Penn.  St.  45. 

7  8  Cush.  (Mass.)  893. 


SPECIAL  PROVISIONS   OP  THE  CONTRACT.  247 

classed  as  hazardous,  is,  that  all  others  are  within  the  scope  of 
the  policy.^  And  in  the  absence  of  fraud,  it  is  immaterial 
whether  the  newly  introduced  property,  trade,  or  business  is 
more  or  less  hazardous.  Subject  only  to  the  restraints  of  hon- 
esty and  fair  dealing,  the  insured  may  use  his  property  as  he 
sees  fit,  and  has  towards  tlie  insurers  no  obligation  not  set 
down  in  the  contract.^  Undoubtedly  there  may  be  such  a 
marked  and  serious  change  from  a  risk  of  the  lowest  grade 
to  one  of  the  highest,  and  under  such  circumstances  as  obvi- 
ously not  to  have  been  within  the  contemplation  of  either 
party ;  in  fact,  converting  the  property  insured  into  a  substan- 
tially different  subject-matter,  and  such  a  change  as  no  fair- 
minded  man  would  regard,  or  have  a  right  to  regard,  as 
protected  under  the  original  policy.  In  such  a  case  the  ques- 
tion would  be,  whether  the  change  was  in  degree  or  kind 
within  such  reasonable  limits  as  to  be  consistent  with  good 
faith,  or  whether  it  was  of  such  an  extravagant  character  as 
to  evince  an  utter  disregard  of  the  just  rights  and  expecta- 
tions of  the  insurers,  and  an  obvious  absence  of  good  faith.^ 

§  231.  statement  of  Present  Use  generally  no  Warranty. — 
Where  the  policy  merely  describes  the  property  insured  as 
used  or  occupied  for  a  particular  purpose,  and  there  is  no  pro- 
hibition of  a  change  in  the  use  or  occupation,  the  insured  will 
only  be  held  to  the  truth  of  the  statement  at  the  time  when 
the  insurance  is  effected.  Such  statement  will  not  be  con- 
strued into  a  warranty  that  the  subject-matter  of  insurance 
shall  continue  to  be  so  occupied  or  used  during  the  currency 
of  the  policy.  Nor  will  a  change  in  the  use  or  occupancy  of 
the  property  insured,  still  keeping  within  the  same  character 
of  risk,  and  not  increasing  the  risk,  avoid  the  policy.     If  the 

1  Langdon  v.  Equitable  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  226;  s.  c.  6 
Wend.  (N.  Y.)  623. 

2  Pim  V.  Reid,  6  M.  &  G.  1 ;  Shaw  v.  Robberds,  6  Ad.  &  El.  75.  In  Sillem  v. 
Thornton,  3  El.  &  Bl.  868,  Lord  Campbell  says,  Pim  v.  Reid  was  decided  solely 
on  a  question  of  pleading,  and  doubts  the  doctrine  stated  in  that  case.  But  the 
case  then  under  consideration  did  not  at  all  resemble  eitlier  of  the  cases  criticised. 

3  Robinson  v.  Mercer  County  Mut.  Fire  Ins.  Co.,  3  Dutch.  (N.  J.)  134.  And 
see  also  the  observations  of  Lord  Campbell  in  Sillem  v.  Thornton,  3  E.  &  B. 
868,  cited  post.    See  Table  of  Cases. 


248  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

insurers  wish  to  guard  absolutely  against  change,  they  must 
do  so  by  appropriate  and  positive  stipulation. ^  In  Wood  v. 
Hartford  Fire  Insurance  Company,^  the  insurance  was  upon  a 
paper-mill,  which  was  a  special  memorandum  risk,  with  a  pro- 
hibition to  use  for  purposes  classed  as  "  hazardous  or  extra 
hazardous,"  and  a  grist-mill  was  added  to,  or  rather  substi- 
tuted for,  a  portion  of  the  paper-mill,  but  without  substan- 
tially affecting  the  efficiency  of  the  latter.  And  it  was  held 
that  this  was  not  a  change  from  a  paper-mill  to  a  grist-mill, 
and,  if  it  had  been,  as  the  grist-mill  was  also  a  memorandum 
risk,  it  would  not  have  avoided  the  policy.  So  a  dwelling- 
house  may  be  used  for  a  boarding-house,  if  the  latter  be  not 
included  in  some  class  of  greater  risk.^  A  mere  exclusion 
from  the  risk  is  not  a  prohibition  which  works  a  forfeiture. 
Thus,  where  a  policy  expressly  provides  that  "  gunpowder  is 
not  insurable  unless  by  special  agreement,"  and  enumerates 
gunpowder  amongst  the  extra  hazardous  articles,  and  further 
provides  that  the  building  insured  is  privileged  to  contain 
extra  hazardous  merchandise,  gunpowder  may  be  kept  without 
prejudice  to  the  right  to  recover  under  the  policy  in  case  of 
loss.  The  effect  of  the  stipulation  is  merely  to  exempt  the 
insurers  from  liability  for  the  gunpowder.^ 

§  232.  Classification  of  Risks  —  Hazardous  Goods.  —  As  not 
all  subject-matters  of  insurance  are  equally  hazardous,  in- 
surers have  adopted  the  plan  of  classifying  the  various  risks 
which  they  assume  into  special  categories,  such  as  not  hazard- 
ous, hazardous,  extra  hazardous,  specially  hazardous,  and 
memorandum  articles,  or  such  as  are  not  insurable  at  all,  or 
only  upon  special  terms,  upon  which  several  classes  different 
rates  of  insurance  are  charged.  It  is  obvious  that  an  insur- 
ance upon  one  class  ought  not,  and  in  point  of  law  it  does  not, 
cover  property  in  goods  in  another;  and  the  policy  may  be, 
and  frequently  is,  so  drawn  that  if,  under  a  policy  insuring 

1  Smith  V.  Mechanics'  and  Traders'  Fire  Ins.  Co.,  32  N.  Y.  399  ;  Schmidt  v. 
Peoria  Mar.  and  Fire  Ins.  Co.,  41  111.  295. 
^  13  Conn.  538. 

3  Rafferty  v.  New  Brunswick  Fire  Ins.  Co.,  3  Harr.  (N.  J.)  480. 
*  Duncan  v.  Sun  Fire  Ins.  Co.,  6  Wend.  (N.  Y.)  488. 


SPECIAL   PROVISIONS   OP   THE    CONTRACT.  249 

specifically  one  class,  articles,  or  modes  of  use,  or  practices, 
embraced  in  another  according  to  the  arbitrary  classification 
of  the  insurers,  are  introduced,  kept,  stored,  or  permitted,  the 
policy  becomes  void  ;  as  when  the  policy  expressly  provides 
that  any  particular  class  or  classes  of  articles  shall  not  be  kept, 
nor  any  particular  practice  or  mode  of  use  adopted  or  carried 
on,  unless  specially  provided  for.  Thus,  if  the  insurance  be  in 
terms  upon  "  stock  in  trade  consisting  of  merchandise  not 
hazardous,"  the  keeping  of  hazardous  articles,  though  a  part 
of  the  general  stock,  so  denominated  in  the  memorandum,  will 
avoid  the  policy,  since  the  very  description  of  the  subject-mat- 
ter excludes  such  hazardous  articles.  The  doctrine,  in  such 
cases,  is  well  stated  in  Richards  v.  Protection  Insurance  Com- 
pany,^ where  the  policy  was  on  "  stock  in  trade  consisting  of 
merchandise  not  hazardous,"  and  where  oil,  tallow,  and  glass, 
enumerated  as  extra  hazardous,  were  kept  as  part  of  the 
stock,  by  Shepley,  C.  J. :  — 

"  Four  classes  of  hazards  are  named  in  the  conditions  an- 
nexed to  the  policy,  denominated  not  hazardous,  hazardous, 
extra  hazardous,  and  memorandum  of  special  risks.  The 
goods  insured  were  by  the  plaintiffs  declared  to  be  of  the  first 
class.  The  goods  before  named  were  not  of  that  class,  but 
were  of  the  second  class,  denominated  hazardous.  (The  plain- 
tiffs procured  insurance  '  on  their  stock  in  trade,  consisting  of 
not  hazardous  merchandise.')  Insurance  is  proposed  to  be 
made  upon  goods  contained  in  these  three  different  classes  at 
different  rates  of  premium.  Tlie  classes  of  hazard,  and  the 
conditions  of  insurance  annexed  to  the  policy,  form  a  part 
of  the  contract  between  the  parties.  That  contract  requires 
mutual  good  faith  and  fair  dealing.  The  law  presumes  that 
the  parties  acted  with  intelligence.  The  defendants  did  not 
propose  to  insure  goods  of  the  class  denominated  hazardous 
at  the  premium  affixed  for  the  class  denominated  not  hazard- 
ous. Nor  did  they  propose  to  insure  goods  composed  partly 
of  one  class  and  partly  of  the  other,  at  the  rate  of  premium 
affixed  to  the  least  hazardous.  This  appears  from  the  lan- 
guage used ;  for  '  groceries,  with  any  hazardous  articles,'  are 

•  30  Me.  273. 


250  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

enumerated  in  the  class  of  hazardous.  If  the  plaintiffs,  hav- 
ing procured  insurance  on  their  stock  in  trade,  consisting  of 
not  hazardous  articles,  could  have  kept  a  stock  of  goods  for 
sale  composed  entirely  of  hazardous  articles,  and  could  have 
recovered  for  a  loss  of  them  by  fire,  they  could  do  so  only  by 
compelling  the  defendants  to  become  insurers,  and  to  bear  the 
loss  for  a  compensation  less  than  the  one  affixed  to  such  a  class 
of  goods,  and  less  than  the  one  agreed  upon  by  the  parties  as 
appropriate  to  such  a  risk.  So  if  they  could  have  kept  goods 
for  sale  composed  partly  of  the  first  and  partly  of  the  second 
class  of  risks,  and  could,  after  a  loss  of  them  by  fire,  have  re- 
covered for  them,  the  defendants  would  have  been  compelled 
to  bear  the  loss  for  a  premium  less  than  that  for  which  they 
would  have  knowingly  assumed  the  risk.  The  injustice  in  the 
latter  case  would  not  be  so  great  as  in  the  former,  but  a  recov- 
ery would  be  equally  unauthorized  according  to  the  terms  of 
the  contract."  ^ 

And  this  doctrine  has  been  recently  applied  in  a  case  where 
fireworks  and  other  merchandise,  hazardous  and  extra  hazard- 
ous, were  included  in  the  policy,  but  which  also  enumerated 
fireworks  as  in  a  different  class.  Thus,  under  a  policy  insur- 
ing "  fireworks,  ordnance  stores,  and  other  merchandise,  haz- 
ardous and  extra  hazardous,"  "  in  the  second  class  of  hazards," 
in  which  were  included  fire-crackers  and  matches,  but  putting 
"  fireworks  "  in  the  specially  hazardous  category  of  the  third 
class,  it  was  recently  held  in  New  York  that  keeping  that  de- 
scription of  fireworks,  which  was  so  specially  dangerous  as  by 
the  ordinance  to  be  prohibited  storage  in  the  city,  if  thereby  the 
risk  was  increased,  and  it  seems  if  it  was  not,  would  avoid  the 
policy.  The  court  said  it  could  not  be  presumed  that  it  was 
intended  to  cover  an  article  so  specially  hazardous  as  to  be 
prohibited  storage,  but  only  such  as  were  permitted  storage 
and  to  be  sold  at  retail.^  And  permission  to  keep  fire-crackers 
does  not  give  the  right  to  keep  fireworks.  Thus  insurance  "  on 
a  stock  of  fancy  goods  and  other  articles  in  his  line  of  busi- 
ness," <fec.,and  "  privileged  to  keep  fire  crackers  on  sale,"  does 

1  See  also  Pindar  v.  Resolute  Fire  Ins.  Co.,  38  N.  Y.  366. 

2  Com.  of  App.,  Jan.  1873,  2  Ins.  L.  J.  186. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  251 

not  authorize  the  keeping  of  fire  ivorks^  since  fireworks  are 
not  included  under  the  license  to  keep  fire-crackers,  and  they 
could  not  be  included  under  the  general  words,  "  other  arti- 
cles in  his  line  of  business,"  where  by  the  terms  of  the  policy 
they  are  not  covered  unless  specially  permitted.^ 

§  233.  stock  in  Trade,  such  as  usually  kept. —  While,  how- 
ever, as  we  have  seen  in  the  preceding  section,  if  the  policy 
insures  only  one  class  of  articles  and  expressly  excludes  other 
classes,  the  keeping  of  an  article  in  the  excluded  class,  al- 
though it  be  usually  kept  with  the  class  of  goods  actually 
insured,  will  avoid  the  policy,  yet  if  the  policy  describe  the 
property,  the  stock  insured,  as  such  as  is  "  usually  kept  in  a 
country  store,"  this  qualification  enlarges  the  scope  of  the 
policy,  so  that  it  will  attach  to  and  cover  memorandum  arti- 
cles, or  any  articles  enumerated  in  the  non-insured  classes. 
The  keeping  of  the  memorandum  articles  is  usually  made  to 
avoid  the  policy,  unless  otherwise  provided  therein.  And  this 
qualification  of  the  description  of  the  subject-matter  is  equiva- 
lent to  a  provision  in  the  policy  whereby  the  memorandum 
articles  are  permitted  to  be  kept  and  insured.^  So  where  the 
policy  is  upon  "  merchandise  such  as  is  usually  kept  in  coun- 
try stores."  Under  such  a  description  of  the  risk,  all  articles 
such  as  can  be  shown  to  be  usually  kept  in  country  stores  are 
covered  and  protected  by  the  policy,  although  they  may  be 
enumerated  in  the  second  classes  of  risks.^  But  in  the  case  of 
Macomber  v.  Howard  Fire  Insurance  Company,^  where  the 
policy  was  upon  a  stock  in  trade  described  as  consisting  of  "  dry- 
goods,  groceries,  hardware,  crockery,  glass  and  wooden  ware, 
Britannia  and  tin  ware,  stoves  of  various  kinds,  and  various 
other  ivares  and  merchandise,'^  and  provided  that  the  use  of 
the  premises  for  the  purpose  of  keeping  or  storing  any  of  the 
articles  denominated  hazardous  or  extra  hazardous  in  the  condi- 
tions annexed  to  the  policy  should  avoid  the  policy  unless  other- 
wise especially  provided  for,  and  "  groceries  with  any  hazard- 

1  Steamboat  v.  Relief  Ins.  Co.,  13  Wall.  (U.  S.)  183. 

2  Pindar  v.  King's  County  Ins.  Co.,  36  N.  Y.  648. 

»  Franklin  Fire  Ins.  Co.  v.  Updegraff,  43  Penn.  St.  353. 
«  7  Gray  (Mass.),  257. 


252  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

ous  articles,"  "  rags,"  and  other  articles  were  enumerated 
as  hazardous,  and  were  in  fact  kept  upon  the  premises,  the 
policy  was  held  to  be  void,  although  the  excepted  articles  were 
such  as  were  usually  kept  in  such  a  stock  in  trade.  Under 
the  modern  tendency,  however,  to  interpret  liberally  in  favor 
of  the  object  of  the  contract,  and,  in  cases  of  doubt,  strictly 
against  the  insurer,  it  is  doubtful  if  this  case  would  be  followed 
in  other  courts  except  upon  the  same  identical  facts,  and  per- 
haps not  in  the  same  court.^ 

§  234.  Permission  strictly  construed.  —  But  nothing  will  be 
permitted  under  such  an  implied  permission  not  fairly  within 
the  scope  of  the  general  words  of  qualification  ;  and  though  a 
policy  prohibiting  the  use  of  premises  for  hazardous  purposes 
may  in  certain  cases  cover  the  keeping  for  sale  of  hazardous  ar- 
ticles, on  the  ground,  by  fair  implication,  that  they  are  included 
within  the  general  stock  insured,  it  will  not  cover  the  use  of 
such  hazardous  articles  for  lighting  or  other  like  purpose,  if 
their  use  be  prohibited  upon  the  premises.^  It  is  one  thing 
to  appropriate  premises  to  the  keeping  of  a  hazardous  article 
for  sale,  and  another  to  use  the  hazardous  article  upon  the 
premises  for  the  purpose  of  illumination  or  manufacture.  A 
permission  to  keep  kerosene  or  gunpowder  for  sale,  it  is  obvi- 
ous, cannot  be  fairly  construed  into  a  permission  to  manufacture 
or  use  them  upon  the  premises,  since  the  risks  in  the  respective 
cases  may  widely  differ. 

§  235.  Hazardous  Goods  defined.  —  Under  the  prohibition  of 
the  storage  of  hazardous  articles,  a  distinction  has  been  taken 
between  those  articles  which  are  deemed  hazardous  by  reason 
of  their  greater  liability  to  injury  in  case  of  fire,  and  those 
which  increase  the  risk  of  fire  ;  and  it  has  been  said  that  it 
is  only  the  latter  class  of  articles  which  can  be  reasonably 
regarded  as  coming  within  the  prohibition,  so  as  to  avoid  the 
policy.^ 

1  See  Elliot  v.  Hamilton  Mut.  Ins.  Co.,  13  Gray  (Mass.),  139. 

2  Mead  v.  North  Western  fins.  Co.,  3  Seld.  (N.  Y.)  520;  Westfall  v.  Hudson 
River  Fire  Ins.  Co.,  2  Kern.  (N.  Y.)  289,  reversing  s.  c.  2  Duer  (N.  Y.  Superior 
Ct.),  490. 

3  Rathbun  v.  City  Fire  Ins.  Co.,  81  Conn.  193. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  253 

§  236.  Classification  of  Risks  —  Hazardous  Trades.  —  If  the 
terms  of  the  policy  classifying  the  risks  are  defined  in  the  pol- 
icy itself,  this  will  usually  control  the  meaning.  But  if  at  the 
time  of  issuing  the  policy  any  clause  is  inserted  which  is  incon- 
sistent with  the  definition,  or  renders  it  doubtful  whether  it 
ought  to  apply,  the  doubt  will  be  resolved  in  favor  of  the 
insured.  For  example,  a  policy  provides  in  writing,  after  a 
description  of  the  premises,  that  they  are  privileged  to  be  occu- 
pied as  hide,  fat-melting,  slaughter,  and  packing  houses,  and 
stores  and  dwellings,  and  for  other  extra  hazardous  purposes. 
In  the  second  class  of  risks  are  included  "  hazardous  No.  2," 
"  extra  hazardous  No.  2,"  "  extra  hazardous  No.  3,"  and  "  spe- 
cially hazardous."  The  occupations  specially  privileged,  such 
as  "  hide,  fat-melting,  slaughter,  and  packing  houses,  <fec.,"  do 
not  fall  within  any  definition  of  "  extra  hazardous,"  but  do  come 
within  the  definition  of  "  specially  hazardous,"  to  which  class 
distilleries  belong,  and  the  building  insured  was  used  as  a  dis- 
tillery. Upon  these  facts,  and  on  the  ground  that  where  there 
is  an  inconsistency  between  the  written  and  printed  portions  of 
the  policy,  the  former  must  prevail,  it  was  held  that  the  words  in 
the  policy,  "  or  other  extra  hazardous  purposes,"  must  be  taken 
to  mean  purposes  of  the  same  class,  and  those  like  fat-melting 
houses,  <fcc.,  as  if  they  read  "  other  like  purposes; "  and  as  these 
were  included  in  "  specially  hazardous,"  and  distilleries  were 
included  in  the  same  class,  the  use  of  the  building  as  a  distillery 
was  permissible  under  the  policy,  though  not  included  in  the 
definition  of  "  extra  hazardous  "  risks,  and  this  term  as  used  in 
the  policy  must  be  qualified  accordingly  as  applicable  to  the 
particular  case.^ 

§  237.  But  it  has  been  held  that  the  right  to  use  a  building 
for  one  hazardous,  or  -extra  hazardous,  purpose,  does  not  carry 
with  it  the  right  to  use  it  for  another  additional  and  different 
purpose,  though  it  be  in  the  same  class  of  risks.^  "While  a  sub- 
stitution of  one  use  for  another  in  the  same  class  of  risks  would 

1  Reynolds  v.  Com.  Fire  Ins.  Co.,  47  N.  Y.  597. 

^  Lee  V.  Howard  Fire  Ins.  Co.,  3  Gray  (Mass.),  592;  Wash.  Mut.  Ins.  Co.  v. 
Merch.  and  ^lanuf.  Mut.  Ins.  Co.,  5  Ohio  St.  450,  reversing  s.  c.  1  Handy  (Cin. 
Superior  Ct.),  185. 


25-i  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

not  increase  the  risk,  an  additional  use  or  business  would  have 
that  effect.  Yet  it  has  been  held  that  under  a  permitted  use, 
an  enlarged  use  for  the  same  purpose  is  not  such  an  increase 
of  risk  as  avoids  a  policy.  The  increase  of  risk  to  have  that 
effect  must  come  from  some  other  source.^ 

In  the  case  above  cited  from  Massachusetts,  the  designated 
property  was  "  a  pail  factory,  chair-shop,  saw-mill,  and  stores 
connected  therewith,"  with  a  provision  that  the  property  should 
not  be  "  applied  or  used  to  or  for  any  trade,  business,  or  vo- 
cation enumerated  in  the  class  of  hazards"  which  was  thus 
expounded  by  Shaw,  C.  J. :  — 

"  It  is  conceded  that  the  premises  insured,  in  addition  to  the 
purposes  specified  in  the  policy,  were,  at  the  time  of  the  fire, 
appropriated  to  carrying  on  a  grist-mill.     This  was  a  distinct 
use  of  one  of  the  buildings  insured,  not  assented  to  by  the 
defendants,  for  an  occupation  included  in  the  classes  of  haz- 
ards, annexed  to  the  policy,  as  a  '  special  hazard.'     It  was 
therefore  a  violation  of  the  express  stipulation  in  the  policy, 
and  by  its  terms  avoids  the  contract.     Nor  does  it  at  all  affect 
the  result,  that  this  additional  unauthorized  use  of  the  premises 
was  for  a  purpose  comprehended  within  the  same  class  of  haz- 
ards as  that  which  was  specified  in  the  policy,  and  originally 
covered  by  the  insurance.     The  manifest  purpose  of  this  stipu- 
lation was  to  prevent  any  use  of  the  premises  for  an  occupation 
or  business  included  in  any  of  the  classes  of  risks  denominated 
'  hazardous,  extra  hazardous,  or  special,'  without  the  express 
sanction  of  the  company  in  writing.     It  was  not  intended  to 
limit  the  assured,  in  the  use  of  his  property,  to  the  same  kind 
of  risks  as  those  specified  in  the  policy,  and  to  allow  him  to 
change  the  mode  of  its  occupation,  or  appropriate  the  premises 
to  additional  uses  of  the  same  grade  of  hazards,  at  his  pleasure. 
Such  is  not  the  import  of  the  language  used  in  the  policy,  nor 
would  such  a  construction  of  it  be  just  or  reasonable.     To  pre- 
vent the  accumulations  of  hazardous  occupations  in  the  same 
premises,  without  their  assent,  was  the  object  which  the  defend- 
ants sought  to  accomplish  by  this  agreement.     Each  distinct 

•  Mayor,  &c.  v.  Hamilton  Fire  Ins.  Co.,  10  Bosw.  (N.  Y.  Superior  Ct.)  537  ; 
Baxendale  v.  Harvey,  4  H.  &  N.  (Exch.)  445. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  255 

use  of  a  building  insured  for  a  purpose  or  business  of  a  hazard- 
ous nature  might,  in  the  opinion  of  the  insurers,  increase  the 
risk  by  fire ;  and  this  might  be  so,  whether  the  additional  use 
came  within  the  same  kind  of  hazards  as  that  specified  in  the 
policy,  or  belonged  to  a  higher  or  lower  class."  ^ 

§  238.  And  in  Massachusetts  ^  it  is  also  held,  contrary  to  the 
general  current  of  the  authorities  elsewhere,  that  an  insurance 
of  a  general  stock  which  includes  hazardous  articles,  without 
exception  or  qualification,  is  not  valid,  if  elsewhere  in  the  pol- 
icy there  is  a  provision  against  keeping  any  articles  denom- 
inated hazardous  in  the  classified  risks.     Bigelow,  C.  J. ;  — 

"  The  policy  declared  on  contains  a  stipulation  that  it  shall 
cease  and  be  of  no. force  or  effect  if  the  assured  shall  keep  on 
the  premises  any  of  the  articles,  goods,  wares,  or  merchandise 
denominated  hazardous,  or  extra  hazardous,  or  included  among 
the  special  hazards  enumerated  in  the  memorandum  annexed 
to  the  policy.  It  is  admitted  that  oil  and  sulphur,  which  are 
expressly  named  as  hazardous  articles,  and  matches,  which 
are  deemed  extra  hazardous,  and  all  of  which  subject  the  build- 
ing and  its  contents  to  an  increased  rate  of  premium,  were  kept 
on  the  premises  at  the  time  of  the  fire.  This  was  a  clear  vio- 
lation of  the  stipulation  in  the  contract  of  insurance,  and  put 
an  end  to  it  ex  vi  termini.  It  is  urged,  on  behalf  of  the  plain- 
tiff, that  the  general  description  in  the  application  and  the  pol- 
icy of  the  purpose  for  which  the  building  was  occupied,  '  as  a 
provision  and  grocery  store,'  gives  the  right  by  implication  to 
keep  these  hazardous  and  extra  hazardous  articles,  as  a  part 
of  the  stock  appertaining  to  such  business.  But  there  are  two 
difficulties  in  the  way  of  adopting  such  an  interpretation  of  the 
contract,  which  are  insurmountable.  In  the  first  place,  it  mili- 
tates with  the  clear  and  unambiguous  terms  of  the  agreement. 
Hazardous  and  extra  hazardous  articles  are  expressly  prohib- 
ited, '  if  not  specially  provided  for.'  In  the  face  of  this  lan- 
guage, it  is  impossible  to  hold  that  a  general  description  of  the 
building,  and  the  purpose  for  which  it  is  occupied,  will  allow 
the  assured  to  keep  articles  of  a  dangerous  and  inflammable 

1  Lee  I'.  Howard  Ins.  Co.,  3  Gray  (Mass.),  583. 

2  "Whitmarsh  v.  Charter  Oak  Fire  Ins.  Co.,  2  Allen  (Mass.),  581. 


256  INSUEANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

nature,  which  are  not  necessarily  comprehended  within  a  fair 
and  reasonable  interpretation  of  the  general  words  used.  In 
the  n.ext  place,  we  cannot  know,  judicially,  in  the  absence  of 
any  proof  or  agreement  of  the  parties,  that  such  articles  as  oil, 
sulphur,  and  matches  are  usually  or  properly  kept  in  stores 
occupied  for  the  sale  of  groceries  and  provisions." 

This  certainly  is  giving  the  insurer  instead  of  the  insured  the 
benefit  of  a  doubt ;  and,  if  carried  to  its  logical  results,  would 
permit  insurers  to  take  their  premiums  upon  a  stock  of  goods, 
every  article  of  which  is  excluded  from  protection  by  the  very 
policy  which  professes  to  insure  it.  No  one  can  suppose  that 
any  person  seeking  insurance  would  ever  intentionally  make 
such  a  contract  as  that,  and  it  is  quite  clear  that  if  there  are 
any  insurers  who  would,  they  ought  not  to  receive  any  encour- 
agement in  a  court  of  justice.  If  they  would,  it  would  be  a 
gross  fraud.  If  they  would  not,  this  construction  needlessly 
makes  for  the  parties  a  contract  which  neither  intended  to 
enter  into. 

§  239.  What  Keeping  or  Use  avoids  the  Policy.  —  And  it  may 
be  stated  as  a  general  proposition  that  where,  in  the  designa- 
tion of  the  subject-matter  of  insurance,  a  stock  of  goods,  or 
property  embarked  and  used  in  a  particular  trade  or  manufac- 
ture, or  any  branch  of  business,  is  stated  to  be  insured  without 
qualification  or  exception,  the  policy  covers  all  such  special  arti- 
cles of  merchandise,  processes,  practices,  subordinate  trades, 
and  manufactures  as  are  necessarily  or  usually  included  in 
and  incidental  to  the  general  subject-matter  of  insurance,  not- 
withstanding the  policy  may  provide,  by  a  general  printed  stip- 
ulation, that  if  the  premises  shall  be  used  for,  or  appropriated 
or  applied  to,  the  storing  or  vending  of  articles,  or  the  carrying 
on  of  any  trade,  vocation,  or  business  denominated  hazard- 
ous, extra  hazardous,  or  enumerated  in  the  memorandum  of 
special  rates,  the  policy  shall  be  void,  and  such  included  and 
incidental  matters  are  within  the  excepted  specifications.  This 
rule  is  based  upon  the  presumed  intent  of  the  parties  that  the 
entire  subject-matter  as  it  is,  and  as  it  must  necessarily  exist, 
if  it  exist  at  all,  with  all  its  incidents  and  without  essential 
1  And  see  Kelley  v.  Worcester  Mut.  Fire  Ins.  Co.,  97  Mass.  284. 


SPECIAL    PROVISIONS   OF   THE   CONTRACT.  257 

changes,  is  to  be  protected,^  and  upon  the  further  presumption 
that  the  written  special  description  of  the  particukir  subject- 
matter,  wherever  inconsistent  with  special  printed  clauses, 
must  control.^  And  this  general  proposition  has  been  estab- 
lished and  illustrated  by  numerous  adjudicated  cases.  Thus, 
though  the  trade  of  a  carpenter  is  excepted  as  a  hazardous 
trade,  yet,  as  in  the  manufacture  of  china  a  carpenter  is  usu- 
ally employed  in  the  factory  and  works  with  bench  and  tools 
in  making  shelves,  mouldings,  boxes,  and  racks,  in  further- 
ance of  the  general  purpose  of  the  business,  such  employment 
will  not  avoid  a  policy  issued  "  on  buildings  occupied  as  a 
china  factory,  and  on  stock  finished  and  unfinished  therein."  ^ 
So  an  insurance  of  a  "  printing  business  "  includes  all  that 
is  essential  in  conducting  such  business ;  and  as  camphene  is 
a  customary  and  necessary  article  used  in  such  business,  the 
keeping  of  that  article  is  permissible  under  the  policy,  though  it 
state  that  "  the  company  will  not  be  liable  for  a  loss  by  fire  occa- 
sioned by  camphene  or  other  inflammable  fluid,"  and  it  appear 
that  the  fire  was  occasioned  by  the  accidental  dropping  of  a 
match  into  a  pan  of  camphene  while  in  use.*  And  the  same 
is  true  under  a  like  insurance  and  a  similar  cause  of  the  loss, 
where  the  policy  provided  that  "  camphene,  spirit,  gas,  or  burn- 
ing fluid  cannot  be  used  in  the  building  where  insurance  is 
effected  unless  permission  for  such  use  be  endorsed  in  writing 
on  the  policy,  and  is  then  to  be  charged  an  extra  premium," 
though  no  such  premium  was  endorsed,  and  no  extra  premium 
paid.  Tiie  use  of  camphene  thus  prohibited  was  held  to  be  its 
use  for  the  purposes  of  illumination,  and  not  a  use  in  the 
processes  of  the  business.^     So  a  policy  issued  upon  "  stock 

1  Delonguetnare  v.  Tradesmen's  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  589. 

2  Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  (N.  Y.)  72 ;  Goss  r.  Citizens'  Ins.  Co., 
18  La.  An.  97  ;  Benedict  v.  Ocean  Ins.  Co.,  31  N.  Y.  389 ;  Phoenix  Ins.  Co.  v. 
Taylor,  5  Minn.  492  ;  Citizens'  Ins.  Co.  v.  McLaughlin,  53  Penn.  St.  425 ;  Cush- 
man  v.  North  Western  Ins.  Co.,  34  Me.  487  ;  Moore  v.  Protection  Ins.  Co.,  29 
Me.  97  ;  Leggett  v.  Mina.  Ins.  Co.,  10  Rich.  Law  (S.  C),  202. 

3  Delonguemare  v.  Tradesmen's  Ins.  Co.,  2  Hall  (N.  Y.),  589;  Loundsbury 
V.  Protection  Ins.  Co.,  8  Cora.  459. 

*  Harper  v.  City  Ins.  Co.,  22  N.  Y.  441,  affirming  s.  c.  1  Bosw.  (N.  Y.  Supe- 
rior Ct.)  520. 

5  Harper  v.  Albany  Mut.  Ins.  Co.,  17  N.  Y.  194.  The  keeping  of  camphene 
for  sale  was  also  prohibited  in  the  pohcy. 

17 


258  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

as  rope  manufactures"  covers  the  business  of  rope-making, 
though  that  business  is  excluded  as  specially  hazardous. ^ 

So  insurance  "  as  a  manufacturer  of  brass  clock  works  "  per- 
mits the  use  of  all  such  articles  as  are  ordinarily  employed 
in  that  manufacture,  and  the  keeping  them  on  hand,  and 
even  the  making  them  for  that  purpose,  if  such  be  the  ordi- 
nary course  of  the  business,  although  the  use  or  keeping  of 
such  articles  be  prohibited  by  the  printed  terms  of  the  policy 
as  extra  hazardous.^  So  where  tlie  written  portion  of  the 
policy  insured  a  steam-engine,  but  the  printed  condition  ex- 
cepted losses  "  caused  by  or  consequent  on  the  bursting  or 
collapsing  of  a  steam-boiler  or  steam-pump,"  it  was  held  that, 
there  being  a  repugnancy  between  the  written  and  printed 
portions  of  the  policy,  the  written  portion  must  prevail.^  So 
"  goods  usually  kept  in  a  country  store  "  covers  clean  white 
cotton  rags,  it  being  shown  that  such  rags  usually  form  part 
of  the  stock  of  country  stores,  though  in  the  application  which 
was  made  part  of  the  contract,  the  question  whether  "  cotton 
or  woollen  waste  or  rags  "  were  kept  in  or  near  the  premises 
was  answered  in  the  negative.*  So  a  policy  on  "  such  goods 
as  are  kept  in  a  general  retail  store  "  covers  such  an  amount 
of  gunpowder  as  is  usually  kept  for  sale  in  such  a  store,  though 
excepted  by  the  printed  condition  of  the  policy  from  being  de- 
posited, stored,  or  kept.^  "  Oils  and  other  spirituous  liquors  " 
may  be  kept  by  a  "  grocer,"  the  business  of  a  grocer  not  being 
specified  in  the  memorandum  of  excepted  risks,  though  the 
specific  articles  are.^  So  a  policy  on  a  stock  of  "  dry  goods  " 
covers  cotton  in  bales,  if  ordinarily  a  portion  of  such  a  stock, 
though  the  latter  are  enumerated  as  extra  hazardous.'^     So 

1  Wall  V.  Howard  Ins.  Co.,  14  Barb.  (N.  Y.)  383.  It  seems  that  "hackling 
hemp  and  spinning  it  "  is  not  "  rope  making."    lb. 

2  Bryant  v.  Poughkeepsie  Mut.  Ins.  Co.,  21  Barb.  (N.  Y.)  154 ;  s.  c.  17  N.  Y. 
200. 

«  Hayward  v.  North  Western  Ins.  Co.,  19  Abb.  Pr.  (N.  Y.)  116. 

*  Elliot  V.  Hamilton  Mut.  Ins.  Co.,  13  Gray  (Mass.),  139.  This  case,  how- 
ever, was  rather  one  of  representation,  and  turned  upon  the  point  that  "  cotton 
or  woollen  waste  or  rags  "  referred  to  waste  or  oily  rags,  such  as  are  easily 
inflammable,  rather  than  clean  white  rags. 

5  Phoenix  Ins.  Co.  v.  Taylor,  5  Minn.  492. 

6  New  York  Equitable  Ins.  Co.  v.  Langdon,  6  Wend.  (N.  Y.)  623. 
^  jNIoore  v.  Prot.  Ins.  Co.,  29  Me.  97. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  259 

insurance  on  a  "  steam-flouring  mill "  covers  and  permits  a 
corn-mill  in  connection  with  a  kiln  for  drying  corn  meal,  if 
they  are  a  usual  or  appropriate  part  of  the  business  insured. ^ 
But  the  introduction  and  prosecution  for  months  of  the  business 
of  coopering  into  an  unused  flour-mill,  is  an  appropriation  to 
another  purpose,  and,  if  it  increases  the  risk,  avoids  the  policy .^ 
And,  generally,  if  the  use  or  trade,  or  articles  kept  on  storage 
or  for  sale,  is  not  incidental  to  that  which  is  the  subject-matter 
of  insurance,  the  policy  not  only  does  not  cover  it  but  is  void. 
Hat-bleaching  has  been  held  to  be  no  part  of  the  dry-goods 
business.^ 

§  240.  Upon  the  same  general  principles  when,  from  the 
character  of  the  building  insured,  and  the  use  made  of  it,  it  is 
necessary  to  have  workmen  constantly  engaged  in  repairing, 
in  order  to  keep  it  in  proper  condition  for  the  business  done 
therein,  the  employment  of  such  workmen  is  not  a  breach  of 
the  condition  that  "  working  of  carpenters,"  &c.,  altering  or 
repairing  will  vitiate  the  policy.  Such  condition  has  for  its 
object  to  prohibit  such  hazardous  use  as  is  generally  denom- 
inated a  "  builder's  risk,"  which  arises  from  placing  the  build- 
ing in  the  possession  or  under  the  control  of  workmen  for 
alteration  or  repairs,  but  does  not  refer  to  such  indispensable 
repairs  as  are  necessary  to  the  proper  conduct  of  the  business 
to  which  the  building  is  appropriated.^ 

§  241.  Use  means  habitual  Use.  —  Use  for  any  purpose  pro- 
hibited means  habitual  use.^  The  introduction  of  a  tar  barrel, 
and  lighting  a  fire  for  the  purpose  of  repairing  the  building 
insured,  is  not  in  contravention  of  the  terms  of  a  policy  which 
provides  that  fire  shall  not  be  kept  nor  hazardous  goods  depos- 
ited on  the  premises.^  Nor  is  insurance  upon  a  "  kiln  for  dry- 
ing corn  in  use "  vitiated  by  the  fact  that  the  insured  in  a 
single  instance  allowed  the  cargo  of  a  vessel  laden  with  bark, 

1  Wash.  Mut.  Ins.  Co.  v.  Merch.  and  Manuf.  Ins.  Co.,  5  Ohio  St.  450. 

2  Harris  v.  Columbian  Mut.  Ins.  Co.,  4  Ohio  St.  285. 

'  Merrick  v.  Prov.  Ins.  Co.,  14  Upper  Canada  (Q.  B.),  439. 

4  Franklin  Fire  Ins.  Co.  v.  Chicago  Ice  Co.,  36  Md.  102. 

5  Dobson  V.  Sotheby,  1  Moo.  &  Mai.  90 ;  Barrett  v.  Jermy,  3  Wcls.  Hurl.  & 
Gor.  535 ;  Leggett  v.  ^tna  Ins.  Co.,  10  Rich.  Law  (S.  C),  202. 

6  Ibid. ;  Dobson  v.  Sotheby,  1  Moo.  &  Mai.  90 ;  s,  c.  22  E.  C.  L.  481. 


260  INSURANCE:    FIRE,   LIFE,    ACCIDENT,   ETC. 

which  had  sunk  near  by,  to  be  dried  at  the  kihi.  It  is  not  a 
change  of  business  in  the  sense  of  the  terms  of  the  policy, 
which  means  permanent  change.^  Repairing  the  building  in- 
sured by  the  ordinary  methods,  and  occupying  it  for  that  pur- 
pose, is  not  an  appropriation,  use,  or  application  thereof  for 
carrying  on  a  trade  or  business  of  house  building  or  repair- 
ing.^ Nor  is  the  making  a  fire  therein  for  the  purpose  of  ex- 
tracting fat  from  spoiled  meat.^  The  mixing  and  keeping  of 
paints  in  the  barn,  by  the  insured,  for  the  purpose  of  painting 
his  house,  is  an  ordinary  and  permissible  use  of  the  barn, 
although  it  is  described  as  used  for  "  hay,  straw,  grain  un- 
thrashed,  stabling  and  shelter."*  In  an  insurance  upon  a 
house  in  process  of  building,  a  statement,  in  reply  to  an 
inquiry,  that  there  are  no  stoves  in  it,  means  that  no  stove  is 
to  be  habitually  kept  and  used  in  it  as  stoves  are  ordinarily 
used  in  a  dwelling-house.  The  use  of  a  stove  for  a  few  days 
subsequent  to  the  effecting  of  the  insurance,  and  for  a  purpose 
connected  with  the  finishing  of  it,  is  no  violation  of  the  war- 
ranty,^ or  of  a  condition  against  alteration  in  use.^  The  casual 
use  of  camphene  and  friction-matches  by  workmen  employed 
about  the  premises,  without  the  knowledge  of  the  insured  and 
contrary  to  his  orders,  is  no  violation  of  a  proviso  that  they 
shall  not  be  kept,  used,  or  sold.  A  use  to  work  forfeiture 
must  be  a  use  known  to,  and  permitted  by,  the  insured.'^  The 
occasional  use  of  articles  denominated  hazardous,  or  the  occu- 
pation of  the  premises  insured  for  purposes  called  hazardous 
in  the  conditions  annexed  to  a  policy,  will  not  avoid  the  policy 
if  such  use  and  occupation  appertain  to  the  general  subject- 
matter  of  the  risk.^  But  a  description  of  an  insured  building 
as  "  occupied  as  a  store-house,"  will  not  admit  of  the  introduc- 

1  Shaw  V.  Robberds,  6  Adolph.  &  Ell.  75  (E.  C.  L.  12). 

2  O'Neill  V.  Buffalo  Fire  Ins.  Co.,  3  Comst.  (N.  Y.)  122;  Grant  v.  Howard,  5 
Hill  (N.  Y.),  10. 

3  Gates  V.  Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  469. 

*  Billings  V.  Tolland  County  Mut.  Fire  Ins.  Co.,  20  Conn.  139. 

*  Williams  v.  New  England  Mut.  Fire  Ins.  Co.,  31  Me.  219. 
6  Troy  Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  20. 

^  Farmers'  and  Mechanics'  Ins.  Co.  v.  Simmons,  30  Penn.  St.  299. 

8  Merch.  and  Manuf.  Ins.  Co.  v.  Wasliington  Ins.  Co.,  1  Handy  (Ohio),  181. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  261 

tion  into  it  of  the  business  of  hackling  hemp  and  spinning  it 
into  rope  yarn.^ 

§  242.  storing.  — "  Storing "  has  been  defined  to  mean 
"  keeping  for  safe  custody  to  be  delivered  out  again  in  the 
same  condition,  substantially,  as  when  received,"  and  to 
apply  only  "  when  the  storing  or  safe-keeping  is  the  sole  or 
principal  object  of  the  deposit,  and  not  when  it  is  merely  inci- 
dental, and  the  keeping  is  only  for  the  purpose  of  consump- 
tion. Wine  sent  to  a  warehouse  to  be  kept  and  returned  when 
called  for  is  "  stored."  But  wine  kept  in  one's  cellar  or  gar- 
ret, to  be  sold  or  consumed  as  occasion  may  require,  is  not. 
Thus,  a  grocer,  insured  as  such,  may  keep  wine  and  oil  for  sale, 
although  they  are  classed  as  hazardous  articles  ;  and  by  the 
terms  of  the  policy  hazardous  articles  are  not  to  be  "  stored." ^ 
It  is  the  appropriation  to  the  business  of  storing  that  is  prohib- 
ited in  a  policy  that  inhibits  the  use  of  the  insured  premises  for 
the  purpose  of  storing  and  keeping  certain  specified  articles, 
while  insuring  a  stock  of  goods  in  which  those  articles  are 
ordinarily  found.  And  it  seems  that  raw  material  used  in  a 
manufacture,  and  brought  into  and  kept  in  the  room  where  it 
is  to  be  manufactured,  is  not  stored  therein  in  the  sense  of  the 
policy  which  prohibits  the  use  of  any  part  of  the  premises 
for  storing  such  articles.^  So,  if  the  material  has  been  casu- 
ally and  temporarily  left  in  a  room,  without  any  purpose  to 
appropriate  that  room  to  the  use  of  keeping  and  storing  it.* 
To  use  for  "  keeping  and  storing  "  is  to  appropriate  the  prem- 
ises to  that  use  as  a  principal  use,  and  not  incidentally  and 
for  some  other  purpose  to  which  the  keeping  and  storing  is 
necessarily  incidental.  Articles  kept  in  a  store  are  kept  and 
stored  for  sale,  but  the  use  of  the  building  is  for  selling  and 
not  for  keeping  and  storing.^     Oil,  turpentine,  and  paint  may 

1  Wall  V.  East  River  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  370. 

2  N.  Y.  Equitable  Fire  Ins.  Co.,  1  Hall  (N.  Y.),  226;  s.  c.  6  Wend.  (N.  Y.) 
623  ;  Phoenix  Ins.  Co.  v.  Taj'lor,  5  Minn.  492;  Mayor,  &c.  v.  Hamilton  Ins.  Co., 
10  Bosw.  (N.  Y.)  537 ;  Rafferty  v.  N.  B.  Fire  Ins.  Co.,  3  Harr.  (N.  J.)  480. 

3  Vogel  V.  People's  Mut.  Fire  Ins.  Co.,  9  Gray  (Mass.),  23. 

*  Hynds  v.  Schenectady  County  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  119;  s.  c. 
affirmed,  1  Ker.  (N.  Y.)  5;54. 

5  Moore  v.  Prot.  Ins.  Co.,  29  Me.  97  ;  Leggett  v.  ^tna  Lis.  Co.,  10  Rich.  Law 
(S.  C),  202 ;  Phoenix  Ins.  Co.  v.  Taylor,  5  JHnn.  492. 


262  insurance:   fire,  life,  accident,  etc. 

be  kept  and  stored  in  a  building  in  process  of  erection  on  which 
they  are  to  be  used,  but  the  building  can  in  no  proper  sense  be 
said  to  be  used  for  keeping  and  storing  them.^  Gunpowder 
being  one  of  the  prohibited  articles,  it  appeared  that  the  in- 
sured had  kept  it  for  sale  in  his  general  stock.  At  the  time 
of  insurance  he  had  some  still  remaining  on  hand,  but  it  was 
not  offered  for  sale  after  the  policy  issued  ;  and  it  was  held 
that  this  was  neither  a  storing  nor  a  keeping  for  sale.^  So 
where  a  party  insured  a  building  which  had  been  used  for 
dressing  flax,  but  before  effecting  insurance  the  machinery  had 
been  removed  from  the  building,  though  some  unbroken  flax  — 
a  prohibited  article  —  remained  in  one  corner  of  a  room  till  the 
time  of  the  fire,  it  was  held  that  this  did  not  constitute  a  use 
of  the  building  for  the  purpose  of  storing  the  flax,  there  being- 
no  intention  of  having  it  regularly  stored  or  kept  there  except 
temporarily.^  In  Dobson  v.  Sotheby*  the  language  of  the 
policy  provides  against  the  use  of  the  buildings  to  "  store  or 
warehouse  "  any  hazardous  goods,  and  it  was  held  that  the 
introduction  of  a  barrel  of  tar  and  its  use  in  repairing  the  build- 
ing was  no  violation  of  the  conditions  of  the  policy.  But  the 
Supreme  Court  of  Massachusetts  has  repeatedly  taken  it  for 
granted  that  the  keeping  of  an  article  for  sale  in  a  general 
stock  was  an  appropriation,  application,  and  use  of  the  prem- 
ises for  the  purpose  of  keeping  and  storing  of  the  particular 
article.^  In  neither  case,  however,  was  the  point  discussed  or 
raised,  and  the  cases  are  certainly  counter  to  the  authorities 
where  the  point  has  been  deliberately  made.  So  the  introduc- 
tion of  the  prohibited  article  for  a  special  purpose,  even  though 
that  purpose  be  the  destruction  of  the  building  insured,  is  not 
a  "  storing  "  within  the  meaning  of  the  policy  ;  as  where  gun- 
powder is  introduced  into  a  building  for  the  purpose  of  blow- 
ing it  up  in  order  to  stay  the  progress  of  a  conflagration.^ 

1  O'Neill  V.  Buffalo  Fire  Ins.  Co.,  3  Comst.  (N.  Y.)  122. 
'^  Protection  Ins.  Co.  v.  Harmen,  2  Ohio  St.  (22  Ohio)  452. 
3  Hynds  v.  Schenectady  County  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  119;  s.  c. 
affirmed,  1  Ker.  (X.  Y.)  554. 
*  1  Moody  &  Malken,  90. 

5  Whitmarsh  v.  Charter  Oak  Fire  Ins.  Co.,  2  Allen  (Mass.)  23  ;  ante,  §  238  ; 
Macomber  v.  Howard  Fire  Ins.  Co.,  7  Gray  (Mass.),  257  ;  ante,  §  234;  Lee  v. 
Howard  Fire  Ins.  Co.,  3  Gray  (Mass.)  .583  ;  ante,  §  237. 

6  City  Fire  Ins.  Co.  v.  Corlies,  21  Wend.  (N.  Y.)  367. 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  263 

§  243.  A  very  nice  point  was  made  and  sustained  by  the 
Supreme  Court  of  South  Carolina  in  a  case  where  the  policy 
provided  that  "  the  keeping  of  gunpowder  for  sale  or  on  stor- 
age upon  or  in  the  premises  insured,  sliould  render  the  policy 
void."  The  insurance  was  upon  "  the  stock  of  goods  and  mer- 
chandise contained  in  the  applicant's  store,"  a  part  of  which 
consisted  of  gunpowder.  But  it  was  contended,  and  so  held, 
that  the  word  "  premises  "  referred  to  buildings  insured,  and 
as  there  was  no  insurance  upon  the  building  the  gunpowder 
was  not  kept  "  upon  or  in  the  premises  insured,"  within  the 
meaning  of  the  stipulation. ^  And  upon  the  same  principle  a 
false  representation  as  to  occupancy  of  a  building  not  itself 
insured  was  held  immaterial.'-^  A  general  prohibition  of  a 
particular  article  without  special  permission,  followed  by  a  sub- 
sequent provision  that  no  more  than  a  certain  amount  of  the 
same  article,  and  that  in  a  certain  way,  shall  be  kept,  will  be 
considered  as  modified- by  the  latter  so  as  to  permit  of  the  keep- 
ing the  limited  amount  in  the  mode  provided  without  special 
permission.^ 

§  244.  Increase  of  Risk  —  Change  in  surrounding  Circum- 
stances. —  Where  parties  have  entered  into  an  agreement, 
nothing  beyond  the  terms  of  the  agreement  can  be  required 
of  either  party  except  good  faith.  And  if  a  change  in  the  use 
of  the  premises  actually  insured  will  not  work  a  forfeiture, 
a  fortiori  a  change  in  the  use  of  adjoining  premises  will  not.*  If 
there  be  no  want  of  good  faith  in  bringing  about  or  permitting 
any  change  increasing  the  risk,  it  is  immaterial  whether  the 
change  causes  the  loss.  But  if  there  be  bad  faith,  and  the  loss 
is  chargeable  to  the  act  done  or  permitted,  then  it  becomes  a 
defence  to  the  action  to  recover  the  loss.  The  grounds  upon 
which  this  principle  rests  are  thus  stated  in  Stebbins  v.  Globe 
Insurance  Company  :  ^  — 

"  The  contract  of  insurance  has  its  foundation  in  the  mutual 

1  Leggett  V.  Mina.  Ins.  Co.,  10  Rich.  Law  (S.  C),  202. 

2  Howard  Fire  and  Mar.  Ins.  Co.  v.  Cormick,  24  III.  455. 

3  Bowman  v.  Pacific  Ins.  Co.,  27  Mo.  1.52. 

^  Western  Farmers'  Mut.  Ins.  Co.  v.  Miller,  1  Handy  (Superior  Ct.,  Cincin- 
nati), 325. 

5  2  HaU  (N.  Y.  Superior  Ct.),  631. 


264  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

good  faith  of  the  parties.  If  the  assured  violates  that  good 
faith  in  any  circumstance  entering  into  the  creation  of  the 
contract,  it  is  no  doubt  void.  But  if,  subsequently  to  its 
formation,  he  acts  with  fraud  or  gross  negligence,  or  in  bad 
faith,  with  respect  to  the  subject-matter  insured,  his  rights 
under  the  contract  are  not  impaired  unless  the  loss  which 
he  seeks  to  recover  is  the  result  of  his  own  misconduct.  It  is 
a  general  principle  that  no  man  can  derive  a  right  of  action 
against  another  from  his  own  violation  of  duty,  or  from  his 
own  illegal  acts.  Thus  there  is  no  stipulation  in  this  policy 
that  the  assured  shall  not  set  fire  to  the  buildings  insured.  If 
he  had  done  so  he  could  not  recover  the  loss,  on  the  ground 
not  that  he  had  violated  any  stipulation  in  the  contract,  but 
that  he  could  not  profit  by  the  consequences  of  his  own  illegal 
or  fraudulent  acts.  If,  however,  he  had  set  fire  to  an  adjoin- 
ing building  with  the  intent  to  consume  the  one  insured,  but 
no  injury  to  that  had  in  fact  ensued,  it  could  not  have  been 
contended  that  the  policy  was  thereby  rendered  void,  notwith- 
standing the  act  would  have  been  in  the  highest  degree  a  vio- 
lation of  the  good  faith  which  was  pledged  to  tbe  insurers, 
that  the  risk  should  not  be  increased  by  any  act  of  the  assured. 
An  erection  of  buildings  on  vacant  ground  by  the  assured 
subsequently  to  the  policy  and  contiguous  to  those  insured, 
whereby  the  risk  is  increased,  stands  upon  the  same  principle. 
If  buildings  thus  erected  should  be  removed  before  the  occur- 
rence of  any  loss,  it  could  not  be  maintained  that  the  policy 
would  be  thereby  annulled.  The  act  not  being  in  violation  of 
any  express  stipulation  in  the  policy,  and  not  resulting  in  any 
actual  injury  to  the  insurers,  the  law  would  regard  it  as  harm- 
less and  rightful ;  and  if  this  be  so,  it  seems  clearly  to  follow 
that  the  continuance  of  such  erections  (as  in  the  case  now 
before  us)  until  the  fire,  cannot  change  the  legal  consequences 
of  the  act-  of  erecting  them,  if  they  have  in  no  way  been  the 
cause  of  the  loss.  The  act  of  the  assured  in  erecting  them 
may  have  been  a  breach  of  an  implied  understanding  be- 
tween the  parties  that  the  situation  of  the  insured  premises, 
with  respect  to  the  contiguous  buildings,  should  not  be  changed 
by  the  act  of  the  assured  so  as  to  increase  the  risk ;  but  if 


SPECIAL   PROVISIONS   OP  THE   CONTRACT.  265 

such  increase  of  risk  has  in  fact  been  without  injury  to  the 
defendants,  the  policy  is  not  affected  by  it." 

§  24o.  Prohibited  Use  —  Suspension  of  Policy  —  Smoking  — 
Tavern-keeping  —  Bawdy-house.  —  Some  policies  in  prohibiting 
the  use  of  the  buildings  insured  for  certain  purposes  provide 
that  they  shall  be  void  only  so  long  as  the  prohibited  use  con- 
tinues. In  such  cases,  of  course,  although  there  may  have 
been  during  the  currency  of  the  policy  a  prohibited  use,  yet  if 
that  use  is  not  in  fact  made  at  the  time  of  the  fire,  but  has 
before  that  happens  been  discontinued,  there  is  no  forfeiture.^ 
But  under  a  policy  insuring  property  described  as  a  "  back 
building  and  stores,"  and  prohibiting  certain  hazardous  uses, 
the  introduction  of  a  prohibited  use  or  business  will  avoid  the 
policy  whether  continued  to  the  time  of  the  fire  or  not.^  So 
if  in  the  description  itself  one  use  is  permitted  but  another 
forbidden,  as  where  a  building  is  insured  to  be  occupied  as  a 
store,  but  not  as  a  coffee-house.^  So  also  if  there  be  a  prohi- 
bition against  the  introduction  of  any  specific  article,  as,  for 
instance,  steam  or  a  steam-engine,  the  introduction  of  the 
prohibited  thing,  whether  permanently  or  temporarily,  —  the 
policy  being  made  void  by  its  terms  by  such  introduction,  — 
and  whetlier  for  a  longer  or  shorter  time,  is  equally  fatal.^  Au 
agreement  that  smoking  shall  be  prohibited,  and  a  statement 
that  smoking  is  not  allowed  upon  the  insured  premises,  means 
simply  that  the  insured  will  not  himself  smoke  on  the  prem- 
ises, and  will  prohibit,  and  take  reasonable  precautions  to  pre- 
vent others  from  smoking  there.^  If  the  policy  stipulates 
against  an  occupation  of  tlie  premises  for  purposes  considered 
hazardous  at  any  time  when  a  fire  shall  happen,  but  does  not 
define  the  meaning  of  the  word,  nor  contain  any  class  of  risks 
denominated  hazardous,  nor  add  the  test  of  increase  of  risk, 

1  Loundsbury  v.  Prot.  Ins.  Co.,  8  Conn.  459 ;  N.  Y.  Fire  and  Mar.  Ins.  Co. 
r.  Wetraore,  32  111.  221 ;  Phoenix  Ins.  Co.  v.  Lawrence,  4  Met.  (K7.)  9. 

2  Mead  v.  N.  W.  Ins.  Co.,  3  Seld.  (N.  Y.)  530. 

3  Lawless  v  Tenn.  Mar.  and  Fire  Ins.  Co.,  Circuit  Ct.  St.  Louis,  Mo.  1852, 
cited  by  Angell,  Ins.  §  169  n. 

*  Glen  V.  Lewis,  8  Wels.  Hurl.  &  Gor.  (Exch.)  607. 

5  Ins.  Co.  of  North  America,  50  111.  12 ;  Aurora  Fire  Ins.  Co.  v.  Eddy,  55 
lU.  213. 


266  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

it  will  of  course  be  for  the  jury  to  determine  not  only  whether 
there  has  been  a  change  of  use,  but  whether  that  change  is 
considered  hazardous,  and  this  would  depend  upon  the  degree 
of  the  increase  of  the  risk.^  Keeping  a  bar-room  in  a  board- 
ing-house is  not  "  tavern-keeping ; "  ^  nor  is  the  keeping  a 
bawdy-house  in  a  house  insured  and  described  as  a  "  dwelling- 
house  "  a  concealment,  though  the  house  was  set  on  fire  and 
destroyed  by  a  mob,  such  a  result  not  being  the  natural  conse- 
quence of  such  a  use.^ 

§  246.  Increase  of  Risk  —  Unlawful  Use.  —  That  unlawful 
use  of  the  premises  insured  which  will  avoid  a  policy  stipu- 
lating against  it,  is  not  a  mere  casual  use,  or  permission  of 
use,  for  an  unlawful  purpose,  or  the  doing  of  a  particular  un- 
lawful act  therein,  as  the  commission  of  a  misdemeanor  or  even 
a  felony, —  it  must  be  in  some  substantial  sense  a  use  for  the 
alleged  unlawful  purpose.  But  where  there  is  a  constant, 
exclusive,  and  habitual  use  of  the  insured  premises  for  un- 
lawful purposes,  as  where  the  tenant  of  the  insured  for  three 
months  prior  to  the  fire  stored  and  kept  intoxicating  liquors 
for  sale,  and  nothing  else,  this  was  held  to  violate  a  proviso 
that  the  policy  should  be  void  if  the  building  insured  should 
be  "  occupied  or  used  for  unlawful  purposes,"  although  the 
owner  and  insured  had  no  knowledge  in  fact  of  such  unlawful 
use.*  On  the  other  hand,  it  has  been  held  in  Michigan,^  that, 
under  a  prohibition  against  keeping  any  article  "  subject  to 
legal  restriction  "  from  being  kept  in  "  greater  quantities  or 
in  a  different  manner  than  prescribed  by  law,"  the  illegal  keep- 
ing of  spirituous  liquors  for  sale  will  not  avoid  the  policy,  and 
the  illegally  kept  liquors  may  be  insured.  The  court  in  that 
case  say  :  "  It  is  claimed  that  if  these  liquors  can  be  allowed 
to  be  included  in  the  policy,  the  policy  will  be  to  all  intents 
and  purposes  insuring  an  illegal  traffic  ;  and  several  cases 
were  cited  involving  marine  policies  on  unlawful  voyages,  and 

'  Robinson  v.  Mercer  County  Mut.  Fire  Ins.  Co.,  3  Dutch.  (N.  J.)  134. 

2  Rafferty  v.  N.  B.  Fire  Ins.  Co.,  3  Harr.  (N.  J.)  480. 

3  Lochner  v.  Home  Mut.  Ins.  Co.,  17  Mo.  247  ;  s.  c.  19  Mo.  628. 
*  Kelly  V.  Worcester  Mut.  Fire  Ins.  Co.,  97  Mass.  284. 

5  Niagara  Fire  Ins.  Co.  v.  Be  GraflP,  12  Mich.  124. 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  267 

lottery  insurances,  which  have  been  held  void  on  that  ground. 
These  cases  are  not  at  all  parallel,  because  they  rest  upon  the 
fact  that,  in  each  instance,  it  is  made  a  necessary  condition  of 
the  policy  that  the  illegal  act  shall  be  done.  The  ship  being 
insured  for  a  certain  voyage,  that  voyage  is  the  only  one  upon 
which  the  insurance  would  apply,  and  the  underwriters  thus 
become  directly  parties  to  an  illegal  act.  So  insuring  a  lottery 
ticket  requires  the  lottery  to  be  drawn  in  order  to  attach  the 
insurance  to  the  risk.  If  this  policy  were  in  express  terms  a 
policy  insuring  the  party  selling  liquors  against  loss  by  fire  or 
forfeiture,  it  would  be  quite  analogous.  But  this  insurance  is 
only  upon  property,  and  the  risks  insured  against  are  not  the 
consequences  of  illegal  acts,  but  of  accident.  Our  statute  does 
not  in  any  way  destroy  or  affect  the  right  of  property  in  spirit- 
uous liquors,  or  prevent  title  being  transmitted,  but  renders 
sales  unprofitable  by  preventing  the  vendor  from  availing  him- 
self of  the  ordinary  advantages  of  a  sale,  and  also  affixes 
certain  penalties.^  By  insuring  this  property,  the  insurance 
company  have  no  concern  with  tlie  use  the  insured  may  make 
of  it,  and,  as  it  is  susceptible  of  lawful  uses,  no  one  can  be 
held  to  contract  concerning  it  in  an  illegal  manner,  unless 
the  contract  itself  is  for  a  directly  illegal  purpose.  Collateral 
contracts,  in  which  no  illegal  design  enters,  are  not  affected  by 
an  illegal  transaction  with  which  they  may  be  remotely  con- 
nected.''2 

§  247.    Occupancy  —  DTvelling-honse  —  Mode  of  Occupancy.  — 

If  in  the  application  the  property  on  which  insurance  is  sought 
is  denominated  a  '•  dwelling-house,"  without  any  stipulation 
touching  its  use  or  occupation,  this  is  mere  description,  and 
amounts  neither  to  a  representation  that  it  is  occupied,  nor  a 
warranty  that  it  shall  be.  If  the  property  be  denominated  as 
the  house  occupied  by  a  particular  person,  this  is  at  most  a 
warranty  that  it  is,  and  not  that  it  shall  continue  to  be  so  occu- 
pied.    And  in  ueitiier  case  does  the  fact  that  the  houses  are 

1  Hibberd  v.  People,  4  Mich.  125  ;  Bagg  v.  Jerome,  7  Mich.  145. 

-  The  court  cites,  in  support  of  their  last  proposition,  Ocean  Ins.  Co.  v.  Pol- 
leys,  13  Pet.  (U.  S.)  157;  Armstrong  v.  To'er,  11  Wheat.  (U.  S.)  258,  which 
were  respectively  cases  of  evasion  of  registry  and  revenue  laws. 


268  insurance:  fire,  life,  accident,  etc. 

for  a  time  unoccupied  —  whether  at  the  time  of  the  insur- 
ance ^  or  afterwards  2 — vitiate  the  policy,  even  though  the  loss 
happen  while  the  dwelling-house  is  vacant.     And  this  is  so, 
although  the  application  and  conditions  are  made  part  of  the 
policy,  and  one  of  the  conditions  provides  that  the  insurance 
shall  be  void  and  of  no  effect  if  the  risk  shall  be  increased  by 
any  means  whatever  within  the  control  of  the  insured.^    So,  if 
stated  to  be  used  and  occupied  for  farmer's  use."^   So  if  a  build- 
ing is  stated  to  be  fastened  up,  and  only  occupied  for  a  certain 
purpose,  though  the  statement  be  made  a  warranty  by  the  terms 
of  the  policy,  it  is  only  a  warranty  of  the  situation  at  the  time 
of  effecting  the  insurance,  and  not  that  it  shall  so  continue 
during  the  whole  term  of  the  risk.    It  would  be  unreasonable, 
if  not  absurd,  to  suppose  that  the  owner  of  a  building  which 
may  be  usefully  and  profitably  occupied  could  intend  by  such 
a  stipulation  to  deprive  himself  of  such  use  and  profit  during 
the  entire  term  covered  by  the  policy,  unless  so  explicitly 
stated.     That  such  is  not  the  intention  of  the  insurers  is  to 
be  inferred,  especially  if  they  provide  elsewhere  in  the  policy 
against  an  increase  of  risk.^     Nor  is  it  material  that  there  is  a 
change  in  tenants^  from  a  careful  to  a  negligent  one,'  or  from 
a  reputable  to  a  disreputable  one.^     In  Catlin  v.  The  Spring- 
field Fire  Insurance  Company,^  the  property  was  described  as 
"  at  present  occupied  by  one  Joel  Rodgers  as  a  dwelling-house, 
but  to  be  occupied  hereafter  as  a  tavern,  and  is  privileged  as 
such,"  and  the  latter  clause  was  held  not  to  be  either  a  warranty 
that  the  house  should  be  occupied  as  a  tavern,  or  even  a  repre- 
sentation of  the  intention  to  occupy  it  as  such.     The  insured 
was  the  mortgagee,  and  if  the  language  could  fairly  be  treated 
as  his,  it  would  import  no  more  than  a  representation.     But 

1  Diehl  V.  Adams  County  Mut.  Ins.  Co.,  58  Penn.  St.  443. 

2  O'Neil  V.  Buffalo  Fire  Ins.  Co.,  3  Comst.  (N.  Y.)  122. 
'  Joyce  V.  Maine  Ins.  Co.,  45  Me.  168. 

*  Gamwell  v.  Merchants'  and  Farmers'  Mut.  Fire  Ins.  Co.,  12  Cush.  (Mass.) 
167. 

5  Blood  V.  Howard  Fire  Ins.  Co.,  12  Cush.  (Mass.)  472. 

6  Hobson  V.  Wellington  Dist.  Ins.  Co.,  6  Upper  Canada  (Q.  B.),  536. 

7  Gates  V.  Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  469. 

8  Lyon  V.  Com.  Ins.  Co.,  2  Rob.  (La.)  266. 

9  1  Sumner  (U.  S.  C.  C),  435. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  269 

the  language  cannot  in  strictness  be  treated  as  the  language 
of  the  mortgagee.  He  cannot  be  presumed,  in  the  absence  of 
evidence,  to  intend  to  take  possession  and  control  of  the  prop- 
erty. It  is  to  be  privileged,  by  the  company  of  course,  to  be 
used  as  a  tavern.  This  is  their  language,  and  imports  a 
license  or  privilege  granted  by  tlie  insurers  to  use  the  house 
as  a  tavern  if  the  insured  so  desire,  but  by  no  means  an 
undertaking  on  his  part  that  it  shall  be  so  used.  And  in 
Boardman  v.  N.  H.  Mutual  Fire  Insurance  Company,^  it  was 
held  that  such  descriptive  words  in  an  application  were  not 
warranties,  but  mere  representations,  although  expressly  made 
part  of  the  contract  by  reference  ;  on  the  ground  that  it  could 
not  reasonably  be  supposed  that  the  insurers  could  intend  to 
make  the  validity  of  the  policy  dependent  upon  so  trifling  a 
matter  as  a  mere  change  of  tenants,  or  a  change  from  occu- 
pancy to  vacancy,  unless  they  said  so  expressly.  Nor  is  a 
statement  that  the  insured  buildings  are  "  occupied  as  stores  " 
a  warranty  that  they  shall  all  be  occupied. ^  A  change  from 
occupation  to  disuse  is  a  change  in  the  "  use  or  occupation" 
of  the  property  within  the  meaning  of  chapter  o-i  of  the  Laws 
of  Maine,  1861.3 

§  248.  Occupancy  —  Vacation.  —  A  statement  in  the  appli- 
cation that  the  unoccupied  building  insured  is  to  be  occupied 
by  a  tenant,  is  not  a  warranty  that  it  shall  be  so  occupied,  but 
rather  the  representation  of  the  insured's  expectation  that  it 
will  be  so  occupied,  and  not  by  himself,  and  a  reservation  of 
the  right  to  have  it  so  occupied,  to  avoid  the  inference  that  it  is 
to  remain  unoccupied.  Nor  does  it  exclude  the  insured  from 
the  right  to  occupy.     This  is  inferable  from  the  obvious  diffi- 

i  20  X.  H.  551. 

2  Carter  v.  Humboldt  Fire  Ins.  Co.,  17  Iowa,  456. 

'  Cannell  v.  PhcBnix  Ins.  Co.,  59  Me.  582.  That  statute  is  as  follows : 
"Xo  insurance  company  shall  avoid  payment  of  a  loss  by  reason  of  incorrect 
statements  of  value  or  title,  or  erroneous  description  by  the  insured  in  the  con- 
tract of  insurance,  if  the  jury  shall  find  that  the  difference  between  the  property 
described  and  as  really  existing  did  not  contribute  to  the  loss,  or  materially 
increase  the  risk  ;  any  change  in  the  property  insured,  its  use  or  occupation,  or 
breach  of  any  of  the  conditions  or  terms  of  the  contract  by  the  insured,  shall  not 
affect  the  contract  unless  the  risk  was  thereby  materially  increased."  Laws  of 
1861,  c.  34. 


270  INSURANCE  :   FIRE,  LIFE,   ACCIDENT,   ETC. 

culty  of  fixing  any  time  when  it  could  be  alleged  there  was 
a  breach  of  the  warranty,  if  it  were  a  warranty.*  Perhaps 
if  the  tioae  were  fixed  witliin  which  it  should  be  occupied  the 
rule  would  be  different.^  If  in  the  description  the  recital  is 
that  the  property  insured  is  only  to  be  used  or  occupied  in  a 
certain  way,  or  not  to  be  used  or  occupied  at  all,  this  is  an 
agreement,  and  must  be  complied  with  ;  ^  and  so  it  is  if  the 
policy  provides  tliat  unoccupied  buildings  must  be  insured 
as  such,  and  in  case  the  building  becomes  vacant  the  insured 
shall  give  notice,  or  forfeit  his  right  to  recover.'^  Not  unfre- 
quently  it  is  provided  that  if  the  occupant  personally  vacates 
the  premises  insured  the  policy  will  be  void,  unless  immediate 
notice  be  given  to  the  insurers  and  an  additional  premium 
paid.  In  such  case,  vacation  without  notice  and  payment  of 
the  additional  premium  is  of  course  fatal  to  the  right  of  the 
insured  to  recover  for  a  loss,  and  notice  to  a  special  agent, 
among  other  things,  authorized  to  receive  cash  for  premiums, 
is  not  sufficient,  if  the  premium  be  not  also  paid.  It  is  indeed 
doubtful  if  the  payment  of  the  premium  would  help  the  mat- 
ter, as  it  is  questionable  whether  an  agent  to  receive  premiums 
fixed  by  the  company  would  have  the  right  to  fix  the  rate 
of  additional  premium.^  If  there  is  no  express  stipulation 
that  the  premises  shall  not  be  left  vacant,  the  policy  will  not 
be  void,  although  the  risk  be  increased  by  the  fact  that  they 
are  so  left,  unless  perhaps  when  they  are  purposely  so  left.^ 
So,  although  there  be  an  express  oral  promise,  if  the  promise 
be  in  good  faith.'^  There  is  no  implied  obligation  to  keep 
a  watch  in  or  about  a  vacant  house. ^     But  when  by  express 

1  Hough  V.  City  Fire  Ins.  Co.,  29  Conn.  101 ;  Catlin  v.  Springfield  Fire  Ins. 
Co.,  1  Sumner  (U.  S.),  434  ;  Herrick  v.  Union  Mut.  Fire  Ins.  Co.,  48  Me.  558. 

2  Bilbrougli  i>.  Metropolitan  Ins.  Co.,  5  Duer  (N.  Y.),  587 

3  Stout  V.  City  Fire  Ins.  Co.,  12  Iowa,  371. 

*  Wustuni  V.  City  Fire  Ins.  Co.,  15  Wis.  138 ;  Harrison  v.  Same,  9  Allen 
(Mass.),  231. 

6  Harrison  v.  City  Fire  Ins.  Co.,  9  Allen  (Mass.),  231 ;  AVustum  v.  City  Fire 
Ins.  Co.,  15  Wis.  138. 

6  Gamwell  i'.  Merchants' and  Farmers' Mut.  Fire  Ins.  Co.,  12  Cush.  (Mass.)  167. 

7  Kimball  v.  JEtna.  Ins.  Co.,  9  Allen  (Mass.),  540 ;  Stout  v.  City  Fire  Ins.  Co. 
of  New  Haven,  12  Iowa,  371. 

8  Soye  V.  Merchants'  Ins.  Co.,  6  La.  An.  761. 


SPECIAL   PROVISIONS    OF  THE   CONTRACT.  271 

terms,  if  the  risk  is  increased  in  any  manner  by  the  permission 
of  the  insured  during  the  currency  of  the  policy,  it  is  void, 
the  voluntarily  leaving  a  house,  occupied  when  insured,  un- 
occupied for  such  a  length  of  time  and  under  such  circum- 
stances as  to  warrant  an  inference  that  it  was  purposely  so  left 
unoccupied,  will  have  the  effect  to  avoid  it.^ 

§  249.  Change  of  Possession  —  Occupancy  —  Vacation.  —  Un- 
der a  provision  that  the  policy  shall  cease  to  protect  the  prop- 
erty from  the  time  when  it  shall  be  "  levied  on  or  taken  into 
possession  or  custody  under  an  execution,  or  any  proceeding 
in  law  or  in  equity,"  an  unlawful  levy,  made  upon  the  prop- 
erty as  that  of  a  person  other  than  the  insured,  will  not  have 
the  effect  to  invalidate  the  policy .^  And  although  the  mere 
notice  of  the  levy,  by  the  officer  charged  with  the  duty,  to  the 
defendants, —  the  insured,  —  without  taking  the  property  into 
possession  or  custody,  may  be  good  as  a  levy,  it  will  not  be 
sufficient  to  defeat  the  policy.  It  is  an  actual,  not  a  construc- 
tive change  of  possession  that  is  contemplated. ^  And  the 
ordinary  going  out  of  one  tenant  is  not  a  change  of  tenancy 
till  the  advent  of  a  new  tenant;  nor  does  the  vacancy  during 
the  intervening  time  constitute  a  change  of  occupancy.  Thus, 
under  a  provision  tiiat  "  if  any  change  be  made  as  to  the 
tenants  or  occupancy  of  the  premises,"  without  notice,  the 
policy  shall  be  void,  the  fact  that  the  premises  were  unoccu- 
pied at  the  time  of  the  fire,  the  tenant  having  vacated  the 
premises  but  a  few  days  previous,  and  no  new  tenant  having 
taken  possession,  no  notice  at  all  is  necessary  until  the  change 
takes  place ;  that  is,  until  a  new  tenant  is  in  possession.  A 
mere  surrender  of  one  tenant  without  the  entry  of  another  is 
not  such  a  change  as  is  contemplated  by  the  words  of  the  pro- 
viso.^ Nor  is  the  leaving  a  building  unoccupied  after  it  has 
been  vacated  by  a  tenant  an  alteration  of  the  use  to  which  the 

1  Luce  V.  Dorchester  Ins.  Co.,  105  Mass.  297. 

2  Phila.  Fire  and  Life  Ins.  Co.  v.  Mills,  44  Penn.  St.  241. 
s  Com.  Ins.  Co.  v.  Bergen,  42  Penn.  St.  285. 

*  McAnally  v.  Somerset  County  Mut.  Ins.  Co.,  2  Pittsburgh  Rep.  (Crumrine) 
189. 


272  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

premises  are  applied. ^  Oii  the  other  hand,  it  is  not  sufficient 
to  constitute  occupancy,  within  tlie  meaning  of  a  stipulation 
that  the  property  insured  —  a  trip-hammer  shop  —  shall  not 
remain  unoccupied  over  thirty  days,  that  the  tools  remain  in 
the  shop,  and  an  employe  of  the  insured  goes  almost  every 
day  through  the  shop  to  look  around  and  see  if  every  thing  is 
right,  but  no  practical  use  is  made  of  the  building.^ 

§250.  Limitation  of  Risk  —  Care  —  Watch.  —  When  it  is 
warranted  that  a  watchman  shall  be  kept  on  the  premises,  this 
means  that  a  watchman  is  to  be  kept  in  the  manner  in  which 
men  of  ordinary  care  and  skill  in  similar  departments  keep  a 
watchman ;  and  to  show  this,  evidence  of  the  usage  in  similar 
establishments  may  be  introduced.  A  substantial  compliance, 
though  not  a  constant  watch  uninterrupted  either  by  unknown 
accident  or  negligence,  is  required.^  And  an  occasional  leav- 
ing of  the  premises  to  look  after  property  on  the  opposite  side 
of  the  street  is  no  breach  of  the  warranty.*  What  is  a  "  suit- 
able watch  "  depends  upon  the  circumstances."  In  Massachu- 
setts, the  questions  arose  in  Parker  v.  Bridgeport  Insurance 
Company,^  what  constituted  a  good,  suitable,  or  proper  watcli ; 
and  whether  such  an  one  was  kept,  and  at  the  times  required 
by  the  terms  of  the  contract,  —  and  were  held  to  be  questions 
for  tlie  jury.     The  case  was  thus  stated  by  Shaw,  C.J,:  — 

"  In  a  policy  of  insurance  upon  a  saw-mill,  the  assured 
covenanted  '  that  the  representation  given  in  the  application 
for  this  insurance  contains  a  just,  full,  and  true  exposition  of 
all  the  facts  and  circumstances  in  regard  to  the  condition,  sit- 
uation, value,  and  risk  of  the  property  insured,  so  far  as  the 
same  are  known  to  the  assured  and  material  to  the  risk  ;  and 
that  if  any  material  fact  or  circumstance  shall  not  have  been 
fully  represented,  the  risk  hereupon  shall  cease  and  determine, 
and  the  policy  be  null  and  void.'     The  applicant,  to  the  ques- 

'  Hawkes  v.  Dodge  County  Mut.  Ins.  Co.,  11  Wis.  188. 

2  Keith  V.  Quincy  Mut.  Fire  Ins.  Co.,  10  Allen  (Mass.),  228. 

3  Crocker  v.  People's  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  79. 

♦  Hovey  v.  Am.  Mut.  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct),  554. 

5  PerciTal  v.  Maine  Mut.  Ins.  Co.,  33  Me.  242. 

6  10  Gray  (Mass.),  202. 


SPECIAL    PROVISIONS    OF    THE    CONTRACT.  273 

tions,  '  Is  a  watch  kept  upon  tlie  premises  during  the  night  ? 
is  any  other  duty  required  of  the  watchman  than  watching  for 
the  safety  of  the  premises  ? '  answered,  '  A  good  watch  kept ; 
men  usually  at  work.  Watchmen  work  at  the  saws ; '  and 
answered  in  the  negative  this  question  :  '  Is  the  building  left 
alone  at  any  time  after  the  watchman  goes  off  duty  in  the 
morning  till  he  returns  to  his  charge  in  the  evening  ? '  In 
fact,  no  watch  was  ever  kept  on  the  premises  after  twelve 
o'clock  on  Saturday,  or  at  all  on  Sunday,  night,  other  than  the 
workmen  sleeping  there,  who  were  instructed  to,  and  habit- 
ually did,  examine  the  mill  with  reference  to  fires  before  going 
to  bed  ;  and  the  fire  occurred  on  Sunday  night,  when  no  one 
was  on  the  prenaises. 

"  The  inqviiry  is  not  as  to  watchman  or  watchmen  ;  the  more 
generic  term  '  watch,'  embracing  the  various  modes  of  watch- 
ing such  a  factory.  It  was  a  factory  the  machinery  of  which 
was  driven  by  water  ;  no  steam  was  used  ;  it  was  not  a  manu- 
factory of  metals,  or  one  that  required  the  use  of  fire. 

"  Upon  an  examination  of  the  bill  of  exceptions,  it  appears  to 
us  that  there  were  several  points  ruled  positively  as  matter  of 
law  which  should  have  been  left  to  the  jury  ;  and  this  on  sev- 
eral grounds.  In  the  first  place,  if  there  was  not  an  absolute 
stipulation  that  a  watch  should  be  kept  during  the  whole  of 
every  night  in  the  week,  such  a  watch  as  would  be  necessary 
and  proper  to  the  safety  of  such  an  establishment  against  fire, 
then  it  was  a  question  of  fact  whether  the  watch  actually  kept 
was  or  not  a  good  and  suitable  watch. ^ 

"  If  there  is  a  real  difference  between  the  requirement  of  a 
watch  immediately  after  a  working  day,  and  Sunday,  which  is 
a  day  of  rest,  then  a  watch  might  be  deemed  good  and  ade- 
quate on  Sunday  night,  which  might  not  be  after  a  working 
day.  The  causes  of  danger  of  fire  in  a  factory,  we  suppose,  are 
lamps  and  stoves,  after  work  is  done  ;  friction,  arising  from  the 
great  velocity  and  irregular  action  of  working  machinery  ;  spon- 
taneous combustion  ;  incendiaries  ;  and  lightning.  The  last, 
of  course,  no  watch  would  affect ;  the  three  first,  perhaps  the 

1  Crocker  v.  People's  Mut.  Fire  Las.  Co.,  8  Cush.  (Mass.)  79. 
18 


274  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

greatest,  would  be  likely  to  disclose  themselves  within  a  few 
hours  after  the  close  of  work,  and  therefore  would  seem  to 
exist  in  a  less  degree  on  Sunday  night.  If  there  was  ground 
to  except  Saturday  night,  when  the  workmen,  charged  as  watch- 
men, examined  the  premises  after  the  close  of  business,  having 
an  interest  in  the  safety  of  a  building  in  which  they  slept,  or 
if  there  was  ground  to  except  Sunday  night,  after  a  day  in 
which  no  work  had  been  done,  then  it  was  incorrect  to  charge 
the  jury  that  it  was  the  duty  of  the  assured  to  have  a  person 
to  keep  a  good  watch  in  the  building  during  the  whole  of  Sat- 
urday and  Sunday  nights  ;  otherwise  they  could  not  recover. 

"  But  suppose  the  sixteenth  question  and  answer,  by  their 
proper  construction,  could  be  held  to  be  a  representation  that 
the  plaintiffs  had  been  accustomed  to  keep,  and  would  in  future 
keep,  a  watch  on  the  premises  every  night  during  the  week, 
including  Sunday  and  Saturday,  still  the  stipulation  that  this 
was  a  just  and  true  exposition  is  not  absolute,  but  only  sub 
modo  ;  the  contract  is,  that  is,  so  far  as  they  are  known  to  the 
assured,  and  are  material  to  the  risk.  The  question  therefore  is, 
not  only  whether  the  assured  was  substantially  to  comply  with 
his  stipulation  that  the  representation  is  true  and  just,  but 
whether  such  compliance  was  material  to  the  risk.  This  is  a 
question  of  fact,  to  be  decided  by  the  evidence. 

"  The  insurer  may  prescribe  any  conditions  to  his  undertak- 
ing that  he  pleases,  and  if  he  makes  insurance  on  condition  that 
a  constant  watch  shall  be  kept  on  the  premises,  otherwise  the 
policy  shall  cease  and  be  void,  then  if  the  assured  fails  to  com- 
ply with  the  conditions,  his  policy  is  to  cease,  and  no  question 
can  be  made  whether  compliance  affected  the  risk  in  any  way. 
But  when  such  condition  is  qualified  by  the  limitation  that  it  is 
a  failure  dependent  on  the  question  whether  it  is  material  to 
the  risk,  it  opens  that  question  in  each  particular  case." 

§  251.  Limitation  of  Risk  —  Care  of  Premises  —  "Watchman. — 
Several  other  cases  upon  the  meaning  of  a  warranty  to  keep  a 
watchman  nights  have  been  before  the  courts.  In  Connecticut 
it  has  been  held  that  an  answer  to  the  question,  "  Is  there  a 
watchman  in  the  mill  during  the  night,"  tliat  "  There  is  a 
watchman  nights,"  carries  with  it  an  obligation  to  keep  a  watch- 


SPECIAL    PROVISIONS    OF    THE    CONTRACT.  275 

man  in  the  mill  every  night  in  the  week.  So  that  if  it  is  left 
without  a  watchman  on  Sunday  morning,  it  is  a  breach  of  the 
contract  which  avoids  the  policy.'  And  substantially  the  same 
doctrine  has  been  laid  down  in  New  York,  where  it  has  been 
held  that  a  statement  in  answer  to  a  specific  question,  that 
there  is  a  watchman  nights,  though  followed  by  a  statement 
that  the  mill  is  left  alone  after  the  watchman  goes  off  duty  in 
the  morning,  at  meal  times,  and  on  the  Sabbath,  and  other 
days  when  the  mill  does  not  run,  requires  that  there  should  be 
a  watchman  on  the  premises  as  late  after  shutting  down  on 
Saturday  night  as  three  or  four  o'clock  the  next  morning,  and 
that  loss  by  fire  occurring  at  that  hour  in  the  morning,  in  the 
absence  of  a  watchman,  is  not  covered  by  the  policy .^  But 
where  the  mill  was  said  to  be  constantly  worked,  and  in  answer 
to  a  question  whether  a  watch  was  kept,  it  was  said  that 
there  was  "  none,  except  people  working  in  the  mill  during  the 
night,"  it  was  held  that  this  did  not  amount  to  a  stipulation 
that  the  mill  should  be  run  every  night,  or  on  the  Sabbath.^ 

§  252.  Limitation  of  Risk  —  "Watchman  —  Excuse  for  Absence. 
—  In  First  National  Bank  of  Ballston  v.  Insurance  Company 
of  North  America,  it  appeared  that  the  following  interrogatory 
was  propounded  to  the  insured  :  "  Watchman,  —  Is  one  kept  in 
the  mill  or  on  the  premises  during  the  night,  and  at  all  times 
when  the  mill  is  not  in  operation,  or  when  the  workmen  are 
not  present."  Answer :  "  Yes."  And  this  was  held  to  be  a 
warranty  ;  and  that  the  fact  that  the  day  before  the  fire  the 
sheriff  levied  execution  on  the  personal  property  in  the  mill, 
excluding  and  locking  the  doors  against  the  employes,  was  no 
excuse  for  a  breach  ;  nor  could  the  deputy  sheriff  in  custody, 
or  a  trustee  of  the  insured,  both  of  whom  were  together  in  the 
office  of  the  mill,  some  two  rods  from  it,  but  who  did  not  in 
fact  keep  watch,  be  considered  a  watch  within  the  meaning 
of  the  policy.^ 

1  Sheldon  v.  Hartford  Fire  Ins.  Co.,  22  Conn.  235 ;  Glendale  Manuf.  Co.  v. 
Prot.  Ins.  Co.,  21  Conn.  19. 

2  Ripley  V.  ^Etna  Ins.  Co.,  30  N.  Y.  136,  reversing  s.  c.  29  Barb.  (N.  Y.)  550. 
^  Preiger  v.  Exchange  Ins.  Co.,  6  Wis.  89. 

*  N.  Y.  Ct.  of  App.  Jan.  1873. 


276  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

§  250.  Limitation  of  Risk  —  "Working  of  Mills.  —  All  answer 
to  the  question,  "  During  what  hours  is  the  factory  worked  ?  " 
stating  that  it  is  "  usually  "  worked  certain  hours  in  tlie  suna- 
mer,  and  certain  other  hours  in  the  winter,  and  adding,  "  Short 
time  now,"  is,  it  seems,  no  warranty  that  the  mill  shall  not  run 
at  other  hours. ^  "  Constantly  worked  "  means  worked  during 
the  usual  and  customary  working  hours  and  days  in  the  par- 
ticular business  with  reference  to  which  the  language  is  used.^ 
In  Mayall  v.  Mitford,^  it  was  said  that  where  certain  mills  were 
warranted  to  be  worked  by  steam,  and  by  day  only,  it  was  not 
enough  to  invalidate  the  policy  to  show  that  the  engine  was 
kept  running  by  night,  but  it  must  also  appear  that  the  mills 
were  kept  going.  The  words  "  worked  by  day  only  "  refer  to 
the  mills,  and  it  is  no  breach  of  the  warranty  that  the  engine 
is  kept  going  all  the  time. 

§  254.  Limitation  of  Risk  —  Examination  after  Work.  —  In 
Houghton  V.  Manufacturers'  Mutual  Fire  Insurance  Company,^ 
the  court  elaborately  discussed  the  meaning  and  effect  of  a 
statement  that  the  premises  insured  were  examined  after  work, 
both  as  to  what  constitutes  an  examination  and  when  it  should 
take  place,  that  is,  what  point  of  time  is  designated  by  the  words 
"  after  work."  The  opinion  was  by  Shaw,  C.  J.,  and  on  this 
point  was  as  follows  :  — 

"  One  other  point  was  taken,  respecting  which  an  opinion 
was  asked  for  and  given  at  the  trial.  It  related  to  the  repre- 
sentation and  the  practice  in  respect  to  the  examination  of  the 
factory.  The  representation  was  contained  in  the  answer  to 
the  fourteenth  question,  as  follows:  'Is  a  watch  kept  con- 
stantly in  the  building  ?  If  no  watch  is  constantly  kept,  state 
what  is  the  arrangement  respecting  it.  Ansiver :  No  watch 
is  kept  in  or  about  the  building ;  but  the  mill  is  examined 
thirty  minutes  after  tvork.  This  question  referred  to  the  re- 
quirements of  the  office  on  the  last  of  the  representations, 
amongst  which  is  this,  viz.,  that  an  examination  will  be  had, 
say  thirty  minutes  after  work. 

1  North  Berwick  Co.  v.  N.  E.  Fire  and  Mar.  Ins.  Co.,  52  Me.  336. 

2  Preiger  v.  Excliange  Mat.  Ins.  Co.,  6  Wis.  89. 

3  6  Adolph.  &  El.  670.  4  8  Met.  (Mass.)  114. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  277 

"  Question  21  was  this :  '  During  what  hours  is  the  factory 
worked  ? '  The  answer  was  :  '  From  5  o'clock  a.m.  to  8^  o'clock 
P.M.  Sometimes  extra  work  will  be  done  in  the  night.'  Two 
questions  were  made  at  the  trial.  First,  whether  the  represen- 
tation of  the  usual  practice  amounted  to  a  condition  or  stipu- 
lation that  it  should  be  continued.  It  was  ruled  at  the  trial, 
and  the  whole  court  are  now  of  opinion,  that  as  this  examina- 
tion was  manifestly  intended  as  a  substitute  for  a  constant 
watch  ;  as  it  was  one  which  the  assured  had  it  in  their  own 
power  to  make  or  cause  to  be  made;  as  it  was  one  of  the  pre- 
cautions tending  to  secure  the  property  against  danger  of  fire 
and  tending  to  its  safety, —  it  was  one  which,  as  a  general  prac- 
tice, the  assured  were  bound  to  follow,  although  an  occasional 
omission,  owing  to  accident,  or  to  the  negligence  of  subordinate 
persons,  servants,  or  workmen,  not  sanctioned  nor  permitted 
by  the  assured,  or  by  their  superintendent,  manager,  or  agent, 
miglit  not  be  a  breach  or  non-compliance. 

"  The  second  question  under  this  clause  regarded  the  time 
at  which  the  examination  was  to  be  made.  The  question,  as 
understood  at  the  trial,  was  this  :  Whether,  if  the  factory  work 
was  continued  during  extra  hours  in  the  night,  that  is,  after 
half-past  eight  p.m.,  the  examination  should  be  made  at  half 
an  hour  after  the  cessation  of  actual  work,  or  half  an  hour 
after  tiie  time  fixed  in  the  twenty-first  answer,  as  the  usual 
hour  of  the  cessation  of  work?  On  this  question,  considering 
the  purpose  of  the  examination,  and  considering  that  the  object 
of  the  examiner  would  be,  by  the  sense  of  sight  or  smell,  to 
detect  any  latent  fire,  or  fire  beginning  to  kindle,  arising  from 
sparks  from  the  extinguished  lamps,  spontaneous  combustion, 
friction  of  machinery,  or  otherwise ;  as  this  could  be  best 
accomplished  after  the  mills  were  stopped,  and  the  operations 
of  the  factory  for  the  night  had  ceased,  and  the  persons  em- 
ployed in  it  had  left,  I  was  of  opinion  that  the  examination 
must  be  made  at  thirty  minutes  after  the  cessation  of  the 
actual  work  of  the  factory,  and  that  an  examination  at  thirty 
minutes  after  the  time  fixed  by  the  twenty-first  answer,  as  the 
usual  time  for  closing  work,  if  the  factory  did  continue  in 
operation,  was  not  a  substantial  compliance  with  this  stipula- 


278  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

tion.  And  the  court  are  of  opinion  tliat  tliis  direction,  in  the 
case  supposed,  was  right,  and  that  sucli  is  the  correct  construc- 
tion of  the  contract.  The  answer  had  represented  that  the 
usual  hour  of  the  cessation  of  work  was  half-past  eight,  yet, 
having  represented  that  the  factory  would  sometimes  he  worked 
during  extra  hours  in  the  night,  they  had  a  right  so  to  work 
without  impairing  the  contract.  But  if  they  thought  fit,  for 
any  cause,  to  change  the  hour  of  work,  so  that  it  should  con- 
tinue to  a  later  hour  of  the  night,  they  must  see  that  the  exam- 
ination be  made  at  thirty  minutes  after  the  actual  cessation  of 
work. 

"  But  anotlier  question  is  now  presented,  which  was  not  dis- 
tinctly raised  at  the  trial,  and  in  regard  to  which  the  evidence 
was  not  fully  reported  ;  and  it  is  this :  Wiiat  is  the  cessation 
or  termination  of  work  ?  or,  in  other  words.  What  is  the  mean- 
ing of  thirty  minutes  after  work,  within  the  meaning  of  the 
answer  to  the  fourteenth  question  ?  As  there  is  to  be  a  new 
trial  on  other  grounds,  we  think  it  proper  to  state  the  opinion 
of  the  court  upon  this  point ;  although,  through  misapprehen- 
sion of  the  counsel,  or  of  the  court,  or  otherwise,  it  was  not 
raised  at  the  trial,  or  presented  on  the  report. 

"  The  question  as  to  what  is  a  termination  of  work,  within 
the  meaning  of  this  contract,  is  partly  a  question  of  law  and 
partly  a  question  of  fact.  The  intentions  of  the  parties,  if  they 
can  be  ascertained,  are  to  govern  ;  and  these  are  to  be  learned 
from  the  language  used  construed  in  connection  with  every 
part  and  clause  in  the  contract,  the  subject-matter  respecting 
which  they  are  used,  and  the  obvious  purposes  of  each  stipu- 
lation. 

"  That  the  assured  were  bound  to  make  an  examination  at 
thirty  minutes  after  work  is  the  construction  of  law  on  the 
contract.  What  is  the  cessation  of  work  is  a  question  of  fact 
for  the  jury,  depending  upon  the  circumstances,  and  having  in 
view  the  object  and  purpose  of  the  stipulation,  which  was  to 
have  an  examination  at  such  time  as  will  conduce  to  the  safety 
of  tiie  building.  As  some  of  the  sources  of  danger  are  the 
continuance  of  fires  and  lights,  and  the  friction  of  machinery, 
so  long  as  the  general  work  of  the  factory  and  operation  of  the 


SPECIAL   PROVISIONS   OF   THE    CONTRACT.  279 

machinery  continues,  a  jury  must  find  that  tlie  work  had  not 
then  ceased,  and  could  not  be  warranted  in  finding  otherwise. 
If,  on  the  contrary,  the  gates  were  slmt,  the  machinery  all 
stopped,  the  fires  and  lights  extinguished,  and  the  operatives 
generally  retired,  it  could  hardly  be  said  that  the  work  had  not 
ceased,  altiiough  one  or  two  persons  should  remain  to  do  some- 
thing which  should  create  no  danger  of  fire.  The  fact  to  be 
looked  to  is  not  that  the  persons  employed  have  all  left,  or  that 
the  lights  are  all  extinguished,  or  that  the  machinery  has 
wholly  stopped,  but  the  termination  of  the  time  during  which 
the  factory  is  worked  ;  and  this  is  an  inference  of  fact,  which 
may  be  influenced  more  or  less  by  all  these  considerations. 

"  Now  between  the  full  operation  of  the  factory  and  the 
entire  cessation  of  work,  extremes  may  be  supposed  on  either 
hand,  respecting  which  there  could  be  no  doubt.  There  may 
be  various  intermediate  stages  in  which  it  would  be  the  duty 
of  the  jury  to  determine,  upon  the  particular  combination  of 
circumstances,  whether  tliey  constituted  a  cessation  of  work- 
ing of  tiie  factory  or  not.  If  the  general  work  of  the  factory 
has  ceased,  although  a  single  machine  may  remain  in  operation 
for  a  special  purpose,  we  think  a  jury  should  be  instructed,  that 
if  such  machine  should  cause  no  danger  of  fire,  the  examination 
should  be  made  at  thirty  minutes  after  the  cessation  of  the 
general  work,  and  not  after  the  stopping  of  the  particular 
machine ;  and  this  the  rather  because  the  contract  stipulates 
but  for  one  examination  after  the  cessation  of  the  general  work, 
being  apparently  most  for  the  interest  of  both  parties,  may  be 
presumed  to  be  most  conformable  to  their  intentions.  And  so 
in  the  various  cases  it  will  be  for  the  jury  to  say,  under  the 
direction  of  the  court,  taking  into  view  the  purpose  of  the 
examination,  and  the  nature  of  the  work  done,  and  the  risk 
attending  it,  whether,  within  the  meaning  of  this  contract,  the 
work  of  tlie  factory,  in  the  particular  case,  had  terminated." 

§  255.   Limitation    of     Risk  —  Warming — Care    of    Stoves  — 

Ashes  —  Shutters. — In  Aurora  Fire  Insurance  Company  v. 
Eddy,^  one  of  the  questions  in  the  application  was,  "  How 
warmed,  —  are    any  stoves    used?"    to   which    the    answer 

1  55  111.  213. 


280  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

was,  "  No  stoves  used ;  "  and  it  was  held  that  this  was  a  repre- 
sentation that  stoves  were  not  used  at  the  time  when  the  rep- 
resentation was  made,  and  not  a  warranty  that  the}--  should 
not  be  used  at  all.  And  a  warranty  that  stoves  and  pipes  are 
well  secured,  and  shall  be  kept  so,  is  not  to  be  so  strictly  con- 
strued as  to  be  considered  violated  by  an  accidental  occur- 
rence, as  by  the  fact  that  the  wife  of  the  insured,  a  few  days 
after  the  pipe  had  been  partly  removed  in  preparation  for 
removing  both  stove  and  pipe  during  summer,  as  was  usual, 
in  a  moment  of  forgetfulness  carelessly  kindled  a  fire  in  the 
stove.i  And  a  warranty  that  ashes  are  kept  in  brick  is  com- 
plied with  if  they  are  kept  in  some  other  equally  safe  way.^ 
But  a  statement  in  the  description  of  the  building  insured 
that  it  has  "iron  doors  and  shutters,"  is  no  warranty  that  they 
shall  be  kept  closed  at  any  particular  time.^ 

§  256.  Description  —  Representation.  —  Matter  of  description, 
unless  by  the  terms  of  the  policy  made  to  have  greater  force, 
stands  upon  the  footing  of  representations,  and  if  facts  mate- 
rial to  the  risk  are  omitted  it  is  a  concealment."^  And  mere 
matter  of  immaterial  description,  so  immaterial  as  not  pre- 
sumably to  have  been  regarded  by  either  party  as  of  impor- 
tance, contained  in  the  application,  will  not  by  reference  be 
converted  into  a  warranty.  This  was  the  doctrine  declared 
in  a  case  where  a  detailed  description  was  given  as  to  the  occu- 
pancy of  tiie  several  rooms  of  a  building  on  which  insurance 
was  obtained,  which  was  not  in  all  respects  true,  even  at  tlie 
time  when  the  insurance  was  effected.^  And  to  the  same 
effect  is  Frisbie  v.  Fayette  Mutual  Insurance  Company,*^  where 
amongst  other  statements  in  the  application  which  was  made 
part  of  the  policy,  it  was  said  that  a  clerk  slept  in  the  store. 
But  this  was  held  to  be  mere  description  of  the  mode  of  occu- 

1  Mickey  v.  Burlington  Ins.  Co.  (Sup.  Ct.  Iowa),  2  L.  J.  15. 

2  Underiiill  v.  Agawam  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  440. 

*  Scott  V.  Quebec  Ins.  Co.,  1  Stuart,  Lower  Canada,  147. 

*  Carey  v.  Goldsmid,  4  Lower  Canada  (Q.  B.),  107,  reversing  s.  c.  2  ib. 
200 ;  Perry  Ins.  Co.  v.  Stewart,  19  Penn.  St.  45 ;  Baxendale  v.  Harvey,  4  H.  & 
N.  (E.xch.)  445. 

s  Boardman  v.  N.  H.  Mut.  Fire  Ins.  Co.,  20  N.  H.  551. 
6  27  Penn.  St.  325. 


SPECIAL    PROVISIONS    OF    THE    CONTRACT.  281 

paiicy  at  the  time,  and  not  a  warranty  that  the  clerk  should 
sleep  there  every  night. 

A  call  for  a  true  description  of  the  house,  building,  or  place 
where  the  insured  goods  are  kept,  refers  to  the  characteristics 
of  the  house,  not  tlie  interest  of  the  insured  in  it.^  And  when 
the  particular  interest  is  the  subject-matter  of  the  insurance, 
a  misdescription  of  the  ownership  or  of  the  property  to  which 
the  interest  attaches,  in  the  absence  of  express  stipulation  to 
that  effect,  will  not  avoid  the  policy.^ 

§257.  Description  —  Warranty.  —  But  it  has  been  held  in 
some  cases  that  mere  matter  of  description  may  amount  to  a 
warranty.  Thus  it  is  said  in  Fowler  v.  ^tna  Fire  Insurance 
Company  2  that  mere  description  of  the  subject-matter  of  in- 
surance, as,  for  instance,  that  a  house  is  "  filled  in  with  brick," 
is  a  warranty,  after  the  analogy  of  marine  insurance,  as  the 
estimate  of  the  risk  must  generally  depend  upon  the  descrip- 
tion. But  the  case  cited  in  support  of  the  opinion^  does  not 
support  it.  The  question  in  that  case  was  one  of  the  mate- 
riality of  an  alteration  of  the  building  insured.  And  the  same 
was  said  in  Sillem  v.  Thornton,^  where  the  house  was  described 
as  a  two-story  house,  when  in  fact  it  was  at  the  time  of  insur- 
ance being  converted  into  a  three-story  house,  —  a  change  which 
was  commenced  some  months  after  the  application  was  made.^ 
And  this  case  states  the  doctrine  with  the  limitation  that  only 
such  descriptive  matter  as  relates  to  the  risk  amounts  to  a  war- 
ranty. Probably  that  is  all  that  was  intended  in  either  case, 
as  that  was  all  that  was  required  by  the  facts.  In  Sillem  v. 
Thornton,  the  case  was  one  where  the  policy  was  not  issued 
till  some  months  after  the  application  was  made,  and  there 
had  been  a  change  in  the  mean  time  in  the  status  of  the  prop- 

1  Friedlander  v.  London  Ass.  Co.,  1  M.  &  Rob.  171. 

'^  Fox  V.  Phoenix  Fire  Ins.  Co.,  52  Me.  333 ;  Longhurst  v.  Conway  Fire  Ins. 
Co.,  U.  S.  Dist.  Ct.  Iowa,  1861. 

3  G  Cowen  (N.  Y.),  673;  s.  c.  7  Wend.  (X.  Y.)  270. 

*  Stetson  V.  Mass.  Mut.  Fire  Ins.  Co.,  4  Mass.  337. 

5  3  E.  &  B.  868. 

•i  See  also,  to  the  same  effect,  Wood  v.  Hartford  Fire  Ins.  Co.,  13  Conn.  533, 
where,  however,  the  point  decided  was  that  there  had  been  no  change  from  a 
permitted  to  a  prohibited  use. 


282  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

erty,  —  a  two-story  liouse  having  been  converted  into  a  three- 
story  house.  As  it  is  a  case  which  goes  to  the  extreme  limits 
of  strictness  in  holding  matter  of  description  a  warranty,  and 
is  an  able  statement  of  the  reasons  therefor,  we  give  here  lib- 
eral extracts  from  the  opinion  by  Lord  Campbell,  C.  J. :  ^  — 

"  But  we  are  further  of  opinion  that  the  description  in  the 
policy  amounts  to  a  warranty  that  the  assured  would  not,  dur- 
ing the  time  specified  in  the  policy,  voluntarily  do  any  thing 
to  make  the  condition  of  the  building  vary  from  this  descrip- 
tion, so  as  thereby  to  increase  the  risk  or  liability  of  the 
underwriter.  In  this  case,  the  description  is  evidently  the  basis 
of  the  contract,  and  is  furnished  to  the  underwriter  to  enable 
him  to  determine  whether  he  will  agree  to  take  the  risk  at  all, 
and  if  he  does  take  it,  what  premium  shall  he  demand.  The 
assured,  no  doubt,  wished  him  to  understand  that  not  only 
such  was  the  condition  of  the  premises  when  the  policy  was 
to  be  effected,  but,  as  far  as  depended  upon  them,  it  should 
not  be  altered  so  as  to  increase  the  risk  during  the  year  for 
which  he  was  to  be  liable  if  a  loss  should  accrue.  Without 
such  an  assurance  and  belief  tlie  statement  introduced  into 
the  policy  of  the  existing  condition  of  the  premises  would  be 
a  mere  delusion.  Identity  might  continue,  and  yet  the  quality, 
condition,  and  incidents  of  the  subject-matter  insured  might 
be  so  changed  as  to  increase  tenfold  tlie  chances  of  loss,  which, 
upon  a  just  calculation,  might  reasonably  be  expected  to  fall 
upon  the  underwriter.  Can  it  be  successfully  contended  that, 
having  done  so,  the  assured  retain  a  right  to  the  indemnity  for 
which  they  had  stipulated  upon  a  totally  different  basis. 

"  With  respect  to  marine  policies,  we  conceive  that  if  there 
be  a  warranty  of  neutrality,  or  of  any  other  matter  which 
continues  of  importance  till  the  risk  determines  whether  the 
policy  be  for  a  voyage  or  for  a  time  certain,  such  a  warranty 
is  continuous  ;  and  if  it  be  broken  by  a  default  of  the  assured, 
the  underwriter  is  discharged.  The  implied  warranty  of  sea- 
worthiness applies  only  to  the  commencement  of  the  voyage ; 
but  even  here,  if  the  assured,  during  the  voyage,  were  volun- 

^  In  Stokes  v.  Cox,  1  H.  &,  N.  (Excli.)  531,  the  court  seemed  to  regard  the 
case  as  one  not  to  be  followed  except  upon  identical  facts. 


SPECIAL   PROVISIONS    OF   THE    CONTRACT.  283 

tarily  to  do  any  act  whereby  the  ship  was  rendered  unsea- 
worthy,  and  thereby  a  loss  were  to  accrue,  we  conceive  that 
they  would  have  no  remedy  on  the  policy.  A  distinction,  how- 
ever, is  taken  in  this  respect  between  a  marine  policy  and  in- 
surances of  houses  against  fire.  It  would  probaljly  be  allowed 
that  if  during  war  there  was  a  policy  on  a  merchant  ship 
described  as  carrying  ten  guns,  and  employed  in  the  coal- 
trade,  and  after  the  policy  was  effected  the  owner  should 
reduce  her  armament  to  five  guns,  or  load  her  with  oil  of  vit- 
riol, the  underwriter  would  not  be  liable  for  a  subsequent  loss. 
"  But  it  is  strenuously  asserted  that  if  there  be  an  insur- 
ance against  fire  upon  a  house,  which  is  described  in  the 
policy  as  being  of  a  particular  specified  description,  and  in 
which  it  is  stated  that  tiie  occupier  carries  on  a  certain  speci- 
fied trade,  —  this  being  true  at  the  date  of  the  policy,  the 
assured,  preserving  the  identity  of  the  house,  may  alter  its 
construction,  so  as  to  render  it  more  exposed  to  fire,  and  may 
carry  on  in  it  a  diiferent  and  more  dangerous  trade,  without 
prejudice  to  the  right  to  recover  for  a  subsequent  loss  by  fire, 
the  warranty  extending  only  to  the  state  and  use  of  the  prem- 
ises at  the  moment  when  the  policy  was  signed.  This  seems 
quite  contrary  to  the  principles  on  which  contracts  are  regu- 
lated. The  construction  and  use  of  the  premises  insured,  as 
described  in  the  policy,  constitute  the  basis  of  insurance,  and 
determine  the  amount  of  the  premium.  But  this  calculation 
can  only  be  made  upon  the  supposition  that  the  description  in 
the  policy  shall  remain  substantially  true  while  the  risk  is  run- 
ning, and  that  no  alteration  shall  subsequently  be  made  by 
the  assured  to  enhance  the  liability  of  the  insurer.  It  seems 
strange,  then,  that  if  a  house  be  described  in  the  policy  as 
occupied  by  the  owner,  carrying  on  the  trade  of  a  butcher,  so 
that  the  premium  is  on  the  lowest  scale,  he  may  immediately 
afterwards,  merely  taking  care  that  the  walls  and  floors  and 
roof  remain,  so  that  it  is  still  the  same  identical  house,  con- 
vert it  into  a  manufactory  for  fireworks,  a  trade  trebly  hazard- 
ous, for  which  the  highest  scale  of  premium  would  be  no  more 
than  a  reasonable  consideration  for  the  stipulated  indemnity. 


284  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

"  Now,  assuming  the  law  to  be  that  upon  an  insurance 
against  fire  there  is  an  implied  engagement  that  the  assured  will 
not  afterwards  alter  the  premises  so  that  they  shall  not  agree 
with  the  description  of  them  in  the  policy,  and  so  that  thereby 
the  risk  and  liability  of  the  insurer  shall  be  increased,  we  have 
only  to  consider  whether,  in  this  instance,  the  assured  have  not 
done  so  by  converting  the  house  insured  from  "  a  house  com- 
posed of  two  stories  "  into  a  house  composed  of  three  stories ; 
and  this  really  admits  of  no  reasonable  doubt.  Mr.  Bramwell 
very  candidly  admitted  that  if  tiie  policy  remained  in  force 
after  the  alteration,  it  covered  the  third  story  as  well  as  the 
other  two.  This  being  so,  the  increase  of  the  area  of  the 
building  by  a  third  story  must  be  considered  by  the  court  to 
have  necessarily  increased  the  hazard  or  probability  of  fire 
about  as  much  as  if  the  addition  to  the  house  had  been  lateral 
instead  of  vertical. 

"  But  there  is  another  consideration,  which  is  quite  decisive 
to  show  that  by  the  alteration  the  liability  of  the  insurer  is 
increased,  and  that  his  premium,  if  previously  fair,  has  now 
become  inadequate.  Upon  an  insurance  of  a  house  against 
fire,  the  insurer  must  make  good  the  whole  of  any  partial  loss, 
the  owner  not  being  considered  to  stand  his  own  insurer  for 
the  excess  of  the  value  of  the  house  beyond  the  sum  for 
which  the  insurance  is  effected.  The  value  of  the  additional 
property,  here  sought  to  be  covered  by  the  insurance,  must  be 
taken  to  be  <£1,000,  and  for  the  whole  of  this,  or  any  part  of 
it,  the  defendant  is  now  liable  to  the  full  amount  of  the  sum 
for  which  he  has  subscribed  the  policy  till  he  lias  paid  <£  1,600, 
plus  his  liability  to  this  amount  for  the  destruction  of  any  part 
of  the  original  house,  valued  at  X4,000.  We  are  of  opinion 
that  this  additional  liability  could  not  be  thrown  upon  him, 
without  any  consideration  and  against  his  consent,  by  the  act 
of  the  assured  in  altering  the  house  so  as  to  make  it  no  longer 
correspond  with  the  description  of  the  house  in  the  policy. 
If  the  liability  cannot  be  carried  to  this  extent,  it  is  entirely 
gone ;  and,  therefore,  we  pronounce  judgment  for  the  de- 
fendant." 

§  258.  Limitation  of  Risk  —  Description  —  Surroundings  —  Dis- 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  285 

tauce.  —  With  regard  to  the  situation  of  the  property  insured, 
its  surroundings,  its  relation  to  other  buildings,  and  its  expos- 
ure to  risk  from  external  sources,  if  the  insured  warrant  that 
he  has  made  a  full  and  true  statement,  on  penalty  of  forfeit- 
ure, he  must  take  the  consequences  of  any  real  omission.  If 
he  will  undertake  to  state  all  the  buildings  exposed  within  a 
given  distance,  the  penalty  of  failure  will  be  the  loss  of  his 
right  to  recover.^  We  say  real  omission,  becaiise  if  the  omis- 
sion 130  of  some  insignificant  out-houso,  it  will  be  of  no  im- 
portance.^ It  is  a  question  of  the  substantial  truth  of  the 
warranty.  The  more  guarded  warranty,  qualified  by  the  limi- 
tation, "  so  far  as  is  known  to  the  assured,"  will  throw  upon 
the  insurers  the  burden  of  proving  the  knowledge  of  the  in- 
sured, witliout  which  proof  their  responsibility  cannot  be 
avoided.^  So  where  the  question  calls  for  the  relative  situa- 
tion of  other  buildings  and  the  distance  of  the  building  in- 
sured from  each  other  building  within  a  given  distance.*  And 
the  same  is  true  whether  the  answer  be  in  detail,  or  generally, 
as  by  saying  "  see  diagram,"  or  "  see  plan,"  the  diagram  or 
plan  being  annexed  to  the  application,  which  was  made  part  of 
the  policy  by  its  terms."  If  the  diagram,  however,  be  not  an- 
nexed to  the  application,  although  referred  to  therein,  it  will 
not  necessarily  be  regarded  as  a  warranty,  certainly  not  except 
as  to  sucii  matters  contained  therein  as  are  responsive  to  tiie 
particular  interrogatories  in  the  application.^  And  it  may  be 
said  generally  with  regard  to  such  statements  as  are  imported 
into  the  contract  by  reference,  and  thus  made  warranties,  and  it 
is  to  be  observed  that,  while  the  courts  will  not  readily  yield  to 
the  claim  that  a  merely  literal  and  technical  breach  will  avoid 

J  Chaffee  v.  Cattaraugus  County  Mut.  Fire  Ins.  Co.,  18  N.  Y.  376. 

2  White  V.  Mut.  Fire  Ass.  Co.,  8  Gray  (Mass.),  567. 

8  Hall  V.  People's  Mut.  Ins.  Co.,  6  Gray  (Mass.),  185. 

*  Frost  V.  Saratoga  County  Mut.  Fire  Ins.  Co.,  5  Denio  (N.  Y.),  154;  Susque- 
hanna Ins.  Co.  V.  Perrine,  7  Watts  &  Serg.  (Penn.)  348;  Jennings  v.  Ciienango 
County  Mut.  Ins.  Co.,  2  Denio  (N.  Y.),  75 ;  Burrett  v.  Saratoga  County  Mut.  Ins. 
Co.,  5  Hill  (N.  Y.),  188;  Trench  v.  Chenango  County  Mut.  Ins.  Co.,  7  Hill 
(N.  Y.),  122  ;  Hardy  r.  Union  Mut.  Fire  Ins.  Co.,  4  Allen  (Mass.),  217. 

5  Tebbetts  v.  Hamilton  Mut.  Ins.  Co.,  1  Allen  (Mass.),  305 ;  Abbott  v.  Shaw- 
raut  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  213. 

6  Sayles  v.  North  Western  Ins.  Co.,  2  Curtis  (U.  S.  C  Ct.),  610. 


286  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  policy,  they  will  be  disposed  to  hold  that  a  technical  com- 
pliance will  be  sufficient  to  prevent  a  forfeiture.  Thus,  where 
in  answer  to  the  question  as  to  the  relative  situation  of  other 
buildings,  it  was  said  that  there  were  two  within  fifty  feet,  this 
was  held  to  be  a  literally  truthful  answer,  and  sufficient  to  pre- 
vent a  forfeiture,  although  in  point  of  fact  one  of  the  build- 
ings was  within  two  feet  of  the  insured  premises.^ 

§  259.  Surroundings  —  How  bounded  —  Situation.  —  But  a 
slight  variation  in  the  language  of  the  application  may  make 
a  very  material  difference.  Thus  where  the  question,  instead 
of  calling  for  the  relative  distance  from  other  buildings  and 
distance  from  each,  is,  "  How  bounded  ?  and  the  distance  from 
other  buildings  if  less  than  ten  rods  ?  "  it  has  been  held  that  a 
statement  of  the  nearest  contiguous  buildings,  without  stating 
all  within  ten  rods,  was  all  that  was  required.  To  say  the 
least,  such  a  form  of  inquiry  left  it  fairly  open  to  the  insured 
to  infer  that  all  he  was  called  upon  to  mention  was  guch  build- 
ings as  were  contiguous  to,  and  bounded,  the  insured  prem- 
ises.2  The  less  specific  inquiry,  as  to  "  the  relative  situation  of 
other  buildings,"  without  any  limitation  as  to  distance,  leaves 
the  matter  open  to  the  judgment  of  the  assured ;  and  it  would 
seem  to  be  all  that  can  reasonably  be  required  that  he,  having 
regard  to  the  object  of  the  inquiry  and  to  the  circumstances  of 
the  case,  should,  in  good  faith,  designate  such  buildings  as  he 
believes,  or  has  reason  to  believe,  will  fairly  answer  this  ques- 
tion.^ Upon  this  point  a  very  interesting  case  was  early  tried 
before  Siiepley,  C.  J.,  in  Maine,  where  the  policy  was  to  be  void 
"  if  any  circumstances  material  to  the  risk  be  suppressed,"  and 
where  to  the  questions,  "  What  are  the  buildings  occupied  for 
that  stand  within  four  rods  ?  how  many  buildings  are  there  to 
the  fires  of  which  this  may  be  in  any  case  exposed  ?  "  there 
was  no  answer ;  and  to  the  further  question,  "  What  distances 
from  other  buildings  ? "  the  answer  was,  "  East  side  of  the 

I  Allen  V.  Charlestown  Mut.  Ins.  Co.,  5  Gray  (Mass.),  384.  See  also  Sayles 
V.  North  Western  Ins.  Co.,  2  Curtis  (U.  S.  C.  Ct.),  GIO. 

-  Gates  V.  Madison  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  43;  s.  c.  1  Seld. 
(N.  Y.)  4G9,  reversing  s.  c.  3  Barb.  (N.  Y.)  73 ;  Masters  v.  Madison  County  Mut. 
Ins.  Co.,  11  Barb.  (N.  Y.)  624. 

'  Hall  V.  People's  Mut.  Ins.  Co.,  6  Gray  (Mass.),  185. 


I 


SPECIAL   PROVISIONS   OF  THE   CONTRACT.  287 

block  small  one-story  sheds,  and  would  not  endanger  the  build- 
ing if  they  should  burn."  The  fact  was  that  the  fire  broke 
out  in  a  building  across  the  street,  within  less  than  fifty  feet  of 
the  insured  premises,  extended  to  the  sheds,  through  which 
it  was  communicated  to  the  property  of  the  insured.  It  was 
claimed  that  there  was  concealment  in  not  stating  the  exist- 
ence of  the  building  in  wliich  the  fire  originated,  and  misrep- 
resentation in  stating  that  the  sheds  were  such  that  if  burned 
they  would  not  be  a  source  of  danger.  But  the  court  ruled  that 
if  the  answers  were  in  good  faith,  and  according  to  the  best 
judgment  of  the  insured,  if  the  opinion  which  he  gave  (and 
the  questions  were  such  as  to  involve,  in  the  answer,  to  a  con- 
siderable extent  matter  of  opinion)  was  honestly  entertained, 
however  erroneous  it  might  be  viewed  in  the  light  of  subse- 
quent events,  he  was  entitled  to  recover.  The  plaintiff  had  a 
verdict,  and,  upon  exceptions,  the  ruling  was  sustained. ^ 

§  260.  Description  of  Person.  —  A  statement  of  relationship 
in  the  description  of  the  person  whose  life  is  insured  is  usually 
a  matter  of  warranty,  as  where  the  applicant  states  that  the 
person  for  whose  benefit  the  insurance  is  made  is  his  wife.  If 
it  be  not  expressly  made  a  warranty,  there  can  be  no  doubt 
of  its  materiality.  The  interest  of  a  mistress  in  the  preserva- 
tion of  the  life  might  be  much  less  than  that  of  a  wife. 
Whether  therefore  such  a  statement  be  a  warranty  or  a  mis- 
representation it  would  be  fatal  to  the  policy .^ 

§  261.  Description.  —  In  the  description  of  buildings  on  which 
insurance  is  sought  care  should  be  taken  to  give  not  only  a 
description  of  the  main  building,  but  also  of  the  subordinate 
structures  attached,  such  as  kitchens,  sheds,  store-houses,  and. 
the  like,  as  these  latter,  save  in  exceptional  cases,  are  part 
and  parcel  of  the  structure,  and  are  therefore  material. ^  Yet 
if  tiie  insurers  have  such  a  description  of  the  premises  as, 
though  leaving  the  matter  open  and  doubtful,  puts  them  on 

1  We  have  given  the  opinion  in  another  connection.  Dennison  v.  Thomaston 
Mut.  Ins.  Co.,  20  Me.  125  ;  ante,  §  211. 

'•*  Steward  v.  Am.  Pop.  Life  Ass.  Co.,  Superior  Ct.  city  of  Buffalo,  cited  by 
Bliss,  Ins.  1G4. 

8  Chase  v.  Hamilton  Ins.  Co.,  20  N.  Y.  52 ;  Day  v.  Conway  Ins.  Co.,  52  Me. 
60. 


288  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

inquiry,  and  thej  do  not  choose  to  make  further  inquiry,  but 
accept  the  application  as  it  is,  and  issue  a  policy  thereon, 
they  cannot  afterwards  set  up  misrepresentation  in  defence, 
although  the  description  was  inaccurate. ^  So  if  the  answer  be 
imperfect  upon  its  face,  and  does  not  convey,  or  pretend  to 
convey,  the  information  required  by  the  question,  the  company 
issuing  a  policy  upon  such  obviously  imperfect  answer  will 
not  be  allowed  to  set  up  the  imperfection  in  defence.^ 

§262.  Description  —  Evidence. — A  technically  untrue  de- 
scription may  be  shown  to  be  true  by  proof  of  a  usage,  as  by 
showing  that  a  house  filled  in  with  brick  in  front  and  rear, 
and  supported  by  brick  buildings  on  the  sides,  is  regarded 
among  insurers  as  a  house  "  filled  in  with  brick."  ^  And  so  a 
builder  may  be  permitted  to  testify  that  buildings,  built,  the  first 
two  stories  of  brick,  and  above  that  by  being  filled  in  with  brick, 
would  be  regarded  as  "brick  buildings."^  Indeed,  a  false 
description  is  in  many  policies  only  made  a  ground  of  defence 
when  it  has  the  effect  to  obtain  insurance  at  a  lower  rate  than 
if  a  true  description  had  been  given.  And  this  would  seem  to 
be  a  sensible  as  well  as  practical  standard  ;  for  if  the  insurers 
would  have  taken  the  risk  at  the  same  rate  had  they  known  the 
truth,  they  ought  not  to  complain.^ 

§  263.  Description  —  Estoppel.  —  But  knowledge  of  the  com- 
pany or  its  agents  of  the  untruthfulness  of  the  statements  as 
to  the  distance  of  neighboring  buildings,  at  the  time  when  the 
insurance  is  effected,  by  the  general  concurrence  of  the  more 
recent  decisions,  will  estop  the  insurers  from  setting  up  such 
untruthness  in  defence.^ 

1  Woods  V.  Atlantic  Mut.  Ins.  Co.,  Superior  Ct.  Mo.,  12  Am.  Law  Reg.  (N.  S.) 
47. 

*  Peoria  IVIar.  and  Fire  Ins.  Co.  v.  Perkins,  16  Mich.  381. 
3  Fowler  v.  ^Etna  Fire  Ins.  Co.,  7  Wend.  (N.  Y.)  270. 

*  Mead  v.  North  Western  Ins.  Co.,  3  Seld.  (N.  Y.)  530. 

5  Columbian  Ins.  Co.  v.  Lawrence,  2  Pet.  (U.  S.)  25;  Dobson  v.  Sotheby, 
1  Moo.  &  Mai.  90  ;  Moliere  v.  Penn.  Fire  Ins.  Co.,  5  Eawle  (Penn.),  342. 

6  Ante,  §  143;  Clark  v.  Union  Mut.  Fire  Ins.  Co.,  40  N.  H.  333;  Longhurst 
V.  Conway  Fire  Ins.  Co.,  U.  S.  Dist.  Ct.  Iowa,  1861 ;  Plumb  v.  Cattaraugus 
County  Mut.  Ins.  Co.,  18  N.  Y.  399. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT,  289 


CHAPTER    X. 

OF    SPECIAL    PROVISIONS    OF    THE    CONTRACT    {continued). 

§  264.  Limitation  of  Risk  —  Alienation.  —  It  follows  from  the 
general  principle  that  the  insured  cannot  recover  save  in  ex- 
ceptional cases  for  a  loss,  unless  it  appear  that  lie  had  an  inter- 
est in  the  subject-matter  of  insurance,  as  well  at  time  of  the 
loss  as  at  the  time  when  the  insurance  was  effected,  that  if  he 
parts  with  his  interest  subsequent  to  the  insurance,  and  at  the 
time  of  the  loss  has  no  longer  an  insurable  interest,  he  will 
have  no  claim  upon  the  company.  This  parting  with  his  inter- 
est is  termed  in  the  law  of  insurance  an  alienation.  The  term 
is  derived  from  the  law  of  real  property,  and  is  there  defined  to 
be  "  any  method  of  acquiring  title  wherein  estates  are  volunta- 
rily resigned  by  one  man  and  accepted  by  another,  whether  that 
be  effected  by  sale,  gift,  marriage  settlement,  devise,  or  other 
transmission  of  property  by  the  mutual  consent  of  the  parties." 
It  is  title  by  purchase  in  contradistinction  to  title  by  descent.^ 
And  this  alienation,  if  absolute,  works  a  forfeiture  whether  so 
stipulated  in  the  policy  or  not,  if  the  property  remains  out 
of  the  insured  at  the  time  of  the  loss.^  So  does  a  donation 
inter  vivos,  without  restriction,  except  that  the  donor  shall  not 
alienate,  or  dispose  of,  except  by  will.^  And  an  absolute  deed, 
whether  warranty  or  quitclaim  with  a  mortgage  back,  is  an  alien- 
ation.* And  so  is  a  transfer  to  the  assignee,  by  decree  of  the 
court,  of  a  bankrupt's  estate,  under  the  bankrupt  laws  of  the 
United  States,  upon  the  bankrupt's  petition.  He  is  thereby 
divested  of  all  his  property,  and  it  becomes  vested  in  the  assignee. 

1  Bl.ackstone,  Comm.  2,  287. 

2  Wilson  0.  Hill,  3  Met.  (Mass.)  66  ;  iEtna  Ins.  Co.  v .  Tyler,  16  Wend.  (N.  Y.) 
385. 

3  McCarty  v.  Cora.  Ins.  Co.,  17  La.  365. 

*  Ibid. ;  Home  Mut.  Fire  Ins.  Co.  v.  Hauslein,  Sup.  Ct.  111.,  1  Ins.  L.  J.  818; 
Abbott  V.  Hampden  Ins.  Co.,  30  Me.  414.     See  also  post,  §  269. 

19 


290  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

That  the  proceedings  may  be  stayed,  and  thus  the  property 
become  revested  in  him,  is  a  contingency  too  remote  to  be  con- 
sidered the  foundation  of  a  remaining  insurable  interest  in  the 
bankrupt.  He  has  no  power  to  reclaim  the  property,  and  has 
uo  right  to  it  in  law  or  equity  by  any  contract  executed  or  execu- 
tory. One  may  be  interested  in  the  avails  of  property  alien- 
ated, and  yet  have  no  right  to  the  property  itself.^  And  of 
course  a  voluntary  assignmeut  for  the  benefit  of  creditors 
is  equally  a  transfer,^  unless  possession  be  retained  by  the 
assignor.^  Even  an  assignment,  fraudulent  and  void  as 
against  creditors,  by  virtue  of  the  insolvent  laws,  has  been 
held  an  alienation.  As  the  case  stood  before  the  court  the 
assignment  was  as  if  it  were  valid,  since  the  court  held  the 
assignor  estopped  from  setting  up  his  own  fraud  for  the  pur- 
pose of  getting  back  to  his  original  title.'^  And  so,  perhaps,  is 
a  sale  by  a  master  in  chancery  of  a  mortgagor's  interest  under 
a  decree  of  foreclosure,  with  part  payment  of  the  purchase- 
money  and  execution  by  the  vendee  of  the  articles  of  sale, 
although  tlie  decree  is  not  enrolled,  and  no  deed  is  delivered. 
The  deed,  when  delivered,  relates  to  the  time  of  the  sale.^  We 
say  "  perhaps,"  because  the  rule  is  admitted  to  be  different  in 
England,  and  the  decision  seems  to  rest  upon  the  practice  in 
New  York.  The  weight  of  authority  undoubtedly  is,  that  the 
"  transfer  and  change  of  title,"  to  use  the  language  of  the  policy 
in  this  case,  does  not  take  place  till  the  deed  is  delivered. 

§  265.  Temporary  Alienation.  —  If,  however,  the  alienation 
be  temporary,  and  the  property  be  restored  before  the  loss 
happens  to  the  insured,  the  policy  will  reattach  to  the  prop- 
erty, or  to  so  much  thereof  as  is  restored,  and  protect  it. 
Such  temporary  alienation  has  only  the  effect  to  suspend  the 
operation  of  the  policy  so  long  as  the  interest  in  the  sulj>ject- 

1  Young  V.  Eagle  Fire  Ins.  Co.,  14  Gray  (Mass.),  150,;  Adams  v.  Rockingham 
Mut.  Fire  Ins.  Co.,  29  Me.  (16  Shep.)  292. 

2  Dey  V.  Poughkeepsie  Mut.  Ins.  Co.,  23  Barb.  (N.  Y.)  623  ;  Hazard  v.  Frank- 
lin Mut.  Fire  Ins.  Co.,  7  R.  I.  429. 

3  Phoenix  Ins.  Co.  v.  Lawrence,  4  Met.  (Ky.)  9. 

*  Dadmun  Manufacturing  Co.  v.  Worcester  Mut.  Fire  Ins.  Co.,  11  Met.  (Mass.) 
429. 

5  McLaren  v.  Hartford  Fire  Ins.  Co.,  1  Seld.  (N.  Y.)  151. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  291 

matter  of  insurance  is  out  of  the  insured,  whether  there  be  a 
special  provision  proiiibiting  alienation  or  not.^  This  subject 
was  recently  very  elaborately  considered  in  the  Supreme  Court 
of  Massachusetts,  and  the  same  conclusion  arrived  at  as  above 
stated.-  And,  in  general,  a  change  of  title  which  does  not  put 
an  end  to  the  insurable  interest  is  not  an  alienation.^ 

§  206.  Title  by  Descent  no  Alienation.  —  A  transfer  of  title 
by  descent  is,  tlierefore,  according  to  the  definition  given,^ 
no  alienation.  By  the  death  of  the  ancestor  the  property 
descends  to  the  heir,  it  is  true ;  but  his  title  is  not  by  what  is 
technically  understood  to  be  a  conveyance,  purchase,  or  alien- 
ation.^ 

§  267.  If  Title  not  conveyed,  no  Alienation  —  Executory  Agree- 
ment. —  In  discussing  its  meaning  as  bearing  upon  the  sub- 
ject of  insurance,  it  has  been  said  to  import  a  conveyance  of 
the  title,  and  that  nothing  short  of  this  would  amount  to  an 
alienation.'^  "  Transfer  of  the  title  in  the  property  insured," 
means  the  title  and.  ownership  of  the  property  insured,  and 
not  the  interest  of  the  insured  therein.'^  And  whether  applied 
to  real  or  personal  estate,  it  is  a  disposition  by  the  owner  of 
the  property,  by  which  he  parts  with  all  his  interest,  and  it 
passes  to  another.  An  agreement,  therefore,  to  sell,  though 
in  writing  and  with  delivery  of  possession,  and  a  receipt  of 
part  of  the  purchase-money  in  payment,  is  no  alienation,  so 
long  as  the  title  has  not  passed,  and  the  property  remains  at 
the  risk  of  the  vendor.^ 

1  Lane  v.  Maine  Mut.  Fire  Ins.  Co.,  3  Fairfield  (Me.),  44;  Power  v.  Ocean 
Ins.  Co.,  19  La.  28. 

2  Worthington  v.  Bearse,  12  Allen  (Mass.),  382,  cited  ante,  §  101.  And  see 
also  Hooper  v.  Hudson  River  Ins.  Co.,  17  N.  Y.  424,  affirming  s.  c.  15  Barb. 
(N.  Y.)  413  ;  West  Branch  Ins.  Co.  v.  Helfenstein,  40  Peun.  St.  289. 

3  Hitchcock  V.  North  Western  Ins.  Co.,  26  N.  Y.  68. 
*  Ante,  §  204. 

5  Burbank  v.  Rockingham  Mut.  Fire  Ins.  Co.,4  Fost.  (N.  H.)  550. 

«  Masters  v.  Madison  County  Mut.  Ins.  Co.,  11  Barb.  (N.  Y.  S.  C.)  624. 

7  Brown  v.  Springfield  Fire  and  Mar.  Ins.  Co.,  1  Ins.  L.  J.  57. 

8  Boston  and  Salem  Ice  Co.  v.  Royal  Lis.  Co.,  12  Allen  (Mass.),  381 ;  Davis 
V.  Quiucy  Mut.  Fire  Ins.  Co.,  10  Allen  (Mass.),  113  ;  Masters  v.  Madison  County 
Mut.  Ins.  Co.,  11  Barb.  (N.  Y.)  624  ;  Norcross  f.  Franklin  Ins.  Co.,  17  I'enn.  St. 
(5  Hivrris)  429  ;  Trumbull  v.  Portage  Mut.  Fire  Ins.  Co.,  12  Ohio,  305 ;  Hill  v. 


292  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

§  268.  Alienation  —  Personal  Property  —  Delivery. —  In  cases 
of  personal  property,  as  tlie  title  passes  by  delivery,  unless 
there  is  an  agreement  to  the  contrary,  it  is  probable  that  an 
unconditional  delivery  would  be  held  to  amount  to  an  aliena- 
tion, and  not  otherwise.^  Worthington  v.  Bearse^  —  a  case  of 
marine  insurance  —  shows  that  an  agreement  for  a  transfer, 
so  long  as  it  is  not  completely  executed,  and  so  long  as  a  scin- 
tilla of  interest  remains  in  the  insured,  will  not  be  treated 
as  an  alienation. 

The  facts  of  the  case  were,  as  follows :  The  action  was  on  a 
policy  of  insurance  for  two  thousand  dollars,  payable  to  the 
plaintiff  in  case  of  loss,  issued  by  the  defendants  to  David  P. 
Nickerson,  upon  seven-eighths  of  the  schooner  William  B. 
Castle,  for  one  year  from  April  8,  1860. 

Nickerson  had  mortgaged  his  interest  in  the  schooner  to 
the  plaintiff;  and  afterwards,  on  the  11th  of  October,  1860, 
conveyed  thirteen-sixteenths  of  the  schooner  to  George  T. 
Lovell,  receiving  notes  of  Lovell,  Atwood,  &  Co.  in  payment, 
and  Nickerson  was  to  pay  to  the  plaintiff  what  was  then  due 
to  him,  namely,  about  four  thousand  dollars.  About  the  20tli 
of  the  same  month,  Lovell  reconveyed  said  interest  to  Nicker- 
son, and  took  back  the  notes  which  had  been  given  in  pay- 
ment therefor,  none  of  them  having  become  due.  This  interest 
was  reconveyed  to  Nickerson,  because  he  could  not  carry  out 
his  contract  to  obtain  a  release  from  the  plaintiff,  as  the  latter 
would  not  accept  said  notes  in  payment  thereof ;  and  on  the 
part  of  Lovell,  because  a  person  who  was  to  be  her  master  was 
dissatisfied  with  her ;  so  that  the  parties  acted  from  different 
motives,  and  each  party  was  ignorant  of  the  motives  of  the 
other.  Upon  both  of  these  transfers,  the  papers  were  changed 
in  the  custom-house.     The  schooner  was  totally  lost  on  or 

Cumberland  Valley  Mut.  Prot.  Co.,  9  P.  F.  Smith  (Penn.),  474 ;  Gilbert  v.  North 
Am.  Fire  Ins.  Co.,  23  Wend.  (N.  Y.)  43;  Perry  Ins.  Co.  v.  Stewart,  19  Penn. 
St.  45  ;  Shotwell  v.  Jefferson  Ins.  Co.,  5  Bosw.  (N.  Y.  Superior  Ct.)  247, 

1  iEtna  Ins.  Co.  v.  Jackson,  16  B.  Mon.  (Ky.)  242;  Phoenix  Ins.  Co.  v.  Law- 
rence, 4  Met.  (Ky.)  9;  Norcross  v.  Ins.  Co.,  17  Penn.  St.  429  ;  Boston  and  Salem 
Ice  Co.  V.  Royal  Ins.  Co.,  12  AUen  (Mass.),  381;  Tallman  v.  Atlantic  Ins.  Co., 
40  N.  Y.  87. 

*  12  Allen  (Mass:^,  882. 


I 


SPECIAL    PROVISIONS    OF    THE    CONTRACT.  293 

about  the  16th  of  March,  1861.     Nickerson  then  owned  seven- 
eighths  of  her,  subject  to  the  mortgage  of  Worthington. 

Upon  these   facts,  the  opinion   of  the  court,   delivered  by 
Bigelow,  C.  J.,  was  as  follows :  — 

"  We  entertain  no  doubt  tliat  the  defendants  are  liable  for 
the  full  amount  insured  by  the  policy.  This  liability  rests 
upon  two  grounds,  either  of  which  is  sufficient  to  sustain  the 
plaintiff's  claim.  In  the  first  place,  on  the  facts  stated,  the 
alleged  sale  by  the  assured  of  thirteen-sixteenths  of  the  vessel 
covered  by  the  policy  was  incomplete,  and  never  took  effect  so 
as  to  extinguish  his  insurable  interest  therein.  One  of  the 
essential  stipulations  of  the  agreement  of  sale  was  not  com- 
plied with.  The  vendor  expressly  agreed  to  pay  the  amount 
due  on  the  mortgage  of  his  share  of  the  vessel,  and  to  procure 
a  release  from  the  mortgagee.  This,  the  case  finds,  he  did 
not  and  could  not  do.  Until  this  part  of  the  contract  was 
complied  with,  the  vendee  had  a  right  to  avoid  the  sale  and 
rescind  the  whole  bargain.  The  delivery  of  the  bill  of  sale 
passed  a  title  only  at  the  election  of  the  vendee.  He  might, 
within  a  reasonable  time  after  the  failure  of  the  assured  to 
fulfil  his  contract  of  sale  by  procuring  a  release  of  the  mort- 
gage on  the  vessel,  elect  to  restore  the  legal  title  and  recover 
back  the  consideration  of  the  transfer.  During  this  time  the 
plaintiff  had  a  continuing  and  subsisting  interest  in  the  vessel. 
The  transfer  could  not  be  regarded  as  absolute  and  complete, 
but  only  conditional  on  a  compliance  with  the  terms  of  the 
bargain.  A  mere  transfer  of  the  legal  title  of  a  vessel  does 
not  extingnish  a  right  to  recover  on  a  policy,  if  the  party 
making  the  transfer  still  retains  any  right  or  interest  in  the 
vessel  or  her  proceeds.^ 

"  The  insured  clearly  had  an  interest  in  the  pi'eservation  of 
the  vessel,  until  it  was  certain  that  the  contract  for  her  sale 
had  become  complete,  and  the  title  to  her  had  vested  abso- 
lutely in  the  vendee.  In  this  view  of  the  facts,  the  insured 
did  not  forego  his  right  to  recover  on  the  policy  pending  the 
transactions  in  relation  to  the  transfer  of  the  vessel."  ^ 

1  Gordon  v.  Mass.  Ins.  Co.,  2  Pick.  249 ;  Lazarus  v.  Commonwealth  Ins.  Co. 
19  Pick.  81 ;  Wilson  v.  Hill,  3  Met.  66,  71. 

2  The  other  ground  of  decision  is  stated  ante,  §  101. 


294  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

§  269.  Mortgage,  before  Foreclosure,  no  Alienation  or  Change 
of  Title  —  Entry  for  Foreclosure.  —  Tlie  charter  of  a  mutual 
insurance  company  provided  that  "  when  any  property  insured 
in  the  company  shall  in  any  way  be  alienated  the  policy  there- 
upon shall  be  void ;  "  and  a  by-law  provided  that  "  when  the 
title  of  any  property  insured  shall  be  changed  by  sale,  mort- 
gage, or  otherwise,  the  policy  shall  thereupon  be  void ; "  and 
it  was  held  that  a  mere  mortgage  did  not  avoid  the  policy.  A 
mortgage  is  not  an  alienation,  nor  is  it,  without  foreclosure,  a 
change  of  title.  If  the  company  had  stipulated  that  the  policy 
should  be  void  if  the  property  insured  should  be  mortgaged, 
there  would  have  been  no  room  for  doubt.  If,  however,  that 
was  their  design,  the  language  by  which  they  had  attempted 
to  express  it  had  not  been  fortunately  chosen.  They  had  left 
it  in  doubt;  and  contracts  will  not  be  avoided  and  rendered 
ineffectual  by  doubtful  phrases.^  The  contrary  doctrine  has, 
however,  been  held  in  Indiana,  though  with  some  hesitation.^ 
And  in  Michigan  ^  it  has  been  held  that  a  conveyance  absolute 
in  form,  but  in  fact  merely  as  security  for  a  debt,  though  not 
a  sale,  is  a  transfer  or  change  of  title  which  avoids  a  policy. 
"  The  words,"  say  the  court,  "  transfer  or  change  of  title,  are 
more  comprehensive  than  the  word  sale,  which  immediately 
precedes  them.  A  sale  is  a  parting  with  one's  interest  in  a 
thing  for  a  valuable  consideration.  This  is  what  is  generally 
understood  by  tiie  word,  and  in  every  sale  there  is  a  transfer 
or  change  of  title  from  the  vendor  to  tlie  vendee.  But  there 
may  be  a  transfer  or  change  of  title  without  a  sale.  Should 
A.  convey  a  piece  of  property  to  B.  to  hold  in  secret  trust  for 
him,  there  would  be  a  transfer  or  change  of  title  from  A.  to 
B.,  but  there  would  not  be  a  sale  of  the  property,  or  an  actual 

1  Shepherd  v.  Union  Mut.  Fire  Ins.  Co.,  38  N.  II.  232  ;  Folsom  v.  Belknap 
County  Mut.  Fire  Ins  Co.,  10  Fost.  (N.  H.)  231  ;  Howard  Ins.  Co.  v.  Bruner, 
23  Penn.  St.  (11  Harris)  50;  Jackson  v.  Massacliusetts  Mut.  Fire  Ins.  Co.,  23 
Pick.  (Mass.)  418;  Conover  v.  Mut.  Ins.  Co.  of  Albany,  3  Denio  (N.  Y.),  254  ; 
8.  c.  1  Comst.  (N.  Y.)  290 ;  Pollard  v.  Somerset  Mut.  Fire  Ins.  Co.,  42  Me.  221 ; 
Smith  V.  Monmouth  Mut.  Fire  Ins.  Co.,  50  Me.  96;  Button  v.  New  England 
Mut.  Fire  Ins.  Co.,  9  Fost.  (N.  H.)  153  ;  Rollins  v.  Columbian  Mut.  Fire  Ins.  Co., 
5  Fost.  (N.  H.)  200 ;  Rice  et  al.  v.  Tower  &  Trs.,  1  Gray,  426. 

2  McCullock  V.  Indiana  Mut.  Fire  Ins.  Co.,  8  Blackf.  50 ;  Indiana  Mut.  Fire 
Ins.  Co.  V.  Coquellard,  2  Carter,  645. 

3  Western  Mass.  Ins.  Co.  v.  Riker,  10  Mich.  279. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  295 

parting  with  it  to  B.  for  a  valuable  consideration,  although 
the  conveyance  on  its  face  would  import  a  sale  from  A.  to  B. 
And  if  the  trust,  instead  of  being  secret,  appeared  on  the  face 
of  the  conveyance,  there  would  still  be  a  change  of  title.  The 
title  would  no  longer  be  in  A.,  but  in  B.,  his  grantee.  We 
think  such  a  conveyance  would  clearly  come  within  the  condi- 
tion of  the  policy  and  put  an  end  to  the  insurance."  ^ 

In  Mclntire  v.  Norwich  Fire  Insurance  Company,^  the  policy 
contained  among  its  various  conditions  a  stipulation  in  these 
words  :  "  If  the  title  of  the  property  is  transferred  or  changed," 
"  this  policy  shall  be  void  ;  and  the  entry  of  a  foreclosure  of  a 
mortgage  .  .  .  shall  be  deemed  an  alienation  of  the  property, 
and  this  company  shall  not  be  holden  for  loss  or  damage  there- 
after." Upon  the  meaning  of  this  provision  in  the  policy  the 
court  held  the  following  language  :  — 

"  What  are  we  to  understand  by  the  expression,  '  the  entry 
of  a  foreclosure  of  a  mortgage,'  which,  according  to  the  terms 
of  the  contract,  '  shall  be  deemed  an  alienation  of  the  prop- 
erty,' after  which  the  defendants  '  shall  not  be  holden  for  loss 
or  damage  '  ?  It  is  a  somewhat  peculiar  form  of  expression, 
not  strictly  and  teclinically  accurate,  perhaps ;  but  to  be  inter- 
preted in  such  a  manner  as  to  carry  out  the  true  intent  of  the 
parties,  so  far  as  that  intent  is  discoverable.  In  the  case  of  a 
mortgage  upon  real  estate,  the  mortgagee,  on  breach  of  condi- 
tion, may  enter  for  the  purpose  of  foreclosure  ;  and,  although 
his  title  may  become  al)Solute  by  mere  lapse  of  time,  no  other 
entry  or  formality  may  be  required  on  his  part ;  and  there  is 
nothing  in  any  public  record,  or  in  any  proceeding,  which  can 
literally  be  said  to  be  an  entry  of  foreclosure. 

"  In  the  case  also  of  a  mortgage  of  personal  property,  the 
mortgagee  gives  notice  of  his  intention  to  foreclose,  in  the  form 
prescribed  by  statute,  and  his  title  afterwards  may  become 
absolute  without  any  further  act  or  ceremony  on  his  part.  He 
cannot  be  said  to  enter  upon  the  property,  nor  can  it  in  a 
literal  sense  be  said  that  there  is  an  entry  of  foreclosure. 

"  In  both  cases,  the  first  step  towards  foreclosure  is  the 
manifestation  of  the  intent  to  foreclose,  which  is  to  be  indi- 

1  And  see  ante,  §  264.  -  102  Mass.  230. 


296  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

cated  in  such  manner  aa  the  law  points  out,  accompanied  with 
a  formal  registration  in  the  public  records.  It  is  very  mani- 
fest, as  we  think,  that  the  words  '  the  entry  of  a  foreclosure,' 
as  used  in  the  policy,  are  not  to  be  interpreted  as  meaning 
exactly  the  same  thing  as  a  consummated  and  finished  fore- 
closure. The  policy  provides  not  merely  for  the  transfer,  but 
the  change  of  title,  and  the  insurer  may  very  naturally  have 
considered  an  entry  for  foreclosure  as  a  material  change  in 
the  title  of  the  assured,  and  in  his  relation  to  the  property. 
The  parties,  in  their  contract,  have  taken  pains  to  avoid  say- 
ing simply  tliat  '  the  foreclosure  of  a  mortgage '  shall  be 
deemed  an  alienation.  There  would  be  no  occasion  for  them 
to  say  that,  inasmuch  as  the  law  would  plainly  have  said  it  for 
them. 

"  The  meaning  of  the  policy,  in  our  judgment,  is,  that 
something  short  of  an  actual  and  complete  foreclosure  shall 
be  considered,  for  the  purposes  of  their  contract,  as  a  transfer 
or  change  of  title,  and  that  an  entry  for  foreclosure,  or  an 
act  which  of  itself,  and  without  aiiy  further  formality  or  pro- 
cess on  the  part  of  the  mortgagee,  will  deprive  the  assured  of 
all  right  and  title  in  the  property,  unless  he  pay  the  debt,  shall 
be  deemed  sufficient  to  terminate  the  risk.  Tiie  defendant 
might  well  be  unwilling  to  continue  to  insure  property  which 
is  so  situated  that  its  destruction  by  fire  might  be  the  easiest 
or  only  way  to  make  it  beneficial  to  the  assured."  ^ 

When,  however,  the  title  becomes  absolute  in  the  mort- 
gagee or  his  assigns,  by  foreclosure,  or,  what  is  tantamount  to 
a  foreclosure,  as  by  merger  in  the  purchaser  of  the  equity,  who 
subsequently  takes  an  assignment  of  the  mortgage,  the  trans- 
fer is  complete  and  the  change  of  title  is  an  alienation;^ 
unless  the  insurance  is  by  the  mortgagor,  for  the  benefit  of  the 
mortgagee,  who  signs  the  premium  note  and  pays  assessments, 
in  which  case,  as  the  title  and  property  remains  in  the  hands 
of  the  person  liable  to  the  company,  foreclosure  is  no  aliena- 

1  102  Mass.  231. 

'^  Macomber  v.  Cambridge  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  133  ;  McLaren 
V.  Hartford  Fire  Ins.  Co.,  1  Seld.  (N.  Y.)  151 ;  Mt.  Vernon  Manufacturing  Co. 
V.  Summit  County  Mut.  Fire  Ins.  Co.,  10  Ohio  St.  347. 


I 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  297 

tion.^  And  the  foreclosure  must  be  absolute.  If  it  be  incom- 
plete, and  there  is  an  outstanding  equity  of  redemption,  it  is 
no  sale  or  conreyance.^ 

§  270.  Alienation  —  Chattel  Mortgage.  —  And  a  mortgage  of 
personal  property  would  seem  to  stand  upon  the  same  ground,^ 
certainly  while  the  mortgagor  has  the  possession.*  A  mort- 
gage is  something  less  than  an  alienation.^  But  in  Tallraan 
V.  Atlantic  Fire  and  Marine  Insurance  Company,  it  was  held 
that  the  execution  and  delivery  of  a  cliattel  mortgage  was  a 
"  sale,  transfer,  or  change  of  title,"  though  it  was  not  neces- 
sary for  the  court  to  go  so  far,  as  in  fact  there  had  been  in 
that  case,  prior  to  the  loss,  a  foreclosure,  with  possession  in 
the  mortgagee,  and  no  outstanding  equity  of  redemption.  The 
case  was  afterwards  reversed,^  under  such  a  state  of  facts  as 
brings  the  case  into  accord  with  the  other  authorities. 

§  271.  Mortgage  is  an  Alteration  of  Ownership. —  But  a  mort- 
gage is  an  "  alteration  of  ownership"  within  the  meaning  of  a 
policy  which  inliibits  an  alteration  of  ownership  upon  penalty 
of  forfeiture.'  And  so  it  is  a  violation  of  a  provision  against 
a  sale  or  alienation  "  in  whole  or  in  part."  And,  indeed,  any 
disposition  of  the  subject-matter  of  insurance,  such  that  any 
property  therein  passes  to  another,  amounts  to  an  alienation 
of  the  property  in  part.^  And  where  the  insured  sells  the 
insured  property,  receives  pay  in  part,  and  retains  a  lien  for  a 
portion  of  the  purchase-money,  it  is  a  "  change  of  interest " 
which  avoids  the  policy.^ 

§  272.  Conditional  Sale  no  AUenation.  —  But  a  conditional 
sale  is  no  alienation  ;  as  where  the  assured  executed  a  war- 

1  Bragg  V.  N.  E.  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  289. 

2  Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  (Mass.)  40. 

3  Holbrook  v.  Am.  Ins.  Co.,  1  Curtis  (U.  S.  C.  Ct.),  193;  Deusen  v.  Charter 
Oak  Fire  and  Mar.  Ins.  Co.,  1  Robt.  (N.  Y.  Superior  Ct.)  55. 

*  Rice  V.  Tower,  1  Gray  (Mass.),  426 ;  Plioenix  Ins.  Co.  v.  Lawrence,  4  Met. 
(Ky.)  9. 

5  Orrell  v.  Hampden  Fire  Ins.  Co.,  13  Gray  (Mass.),  431. 

6  3Keyes(N.  Y.),87. 

7  Edmonds  i'.  Mut.  Safety  Fire  Ins.  Co.,  1  Allen  (Mass.),  311. 

8  Abbott  V.  Hampden  Mut.  Fire  Ins.  Co.,  30  Me.  414. 

9  Bates  V.  Com.  &c.,  Ins.  Co.,  2  Cincinnati  Superior  Ct.  Reptr.  195. 


298  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

ranty  deed  of  the  premises,  and  at  the  same  time  received 
back  from  the  grantee  a  deed  of  the  same  premises,  with  a 
condition  that  if  he  should  pay  to  the  assured  a  specified 
sum  within  a  limited  time,  meanwhile,  and  until  that  sum 
should  be  paid,  the  assured  to  retain  possession  of  the  prem- 
ises, and,  upon  payment,  tiie  second  deed  to  be  void,  but 
otherwise  in  force ;  and  it  appeared  the  grantee  in  the  first 
deed  never  paid,  or  agreed  to  pay  the  sum  mentioned,  and 
it  was  entirely  optional  with  him  whether  to  do  so  or  not. 
The  two  deeds,  being  executed  at  the  same  time,  are  to  be 
regarded  as  one  contract,  and  were  in  effect  the  same  as  if  the 
condition  had  been  inserted  in  the  first  deed.^  Nor  will  a  sale, 
absolute  in  form,  if  intended  as  security  for  a  debt,  nor  any 
conveyance  which  a  court  of  equity  will  treat  as  a  mortgage, 
be  deemed  an  alienation,  whether  there  be  any  agreement  in 
writing  to  that  effect  or  not.^  And  a  sale,  with  an  agreement 
for  resale,  intended  as  a  security,  is  no  "  transfer  or  termina- 
tion of  interest."  ^  Nor  is  an  assignment  as  collateral  secu- 
rity.^ Nor  is  a  conveyance  by  the  insured,  with  a  simultaneous 
reconveyance  to  be  held  in  trust  for  him.^  Nor  is  a  lease.^ 
And  when  the  policy  stipulates  against  a  "  sale,  transfer,  or 
change  of  title,"  a  mere  agreement  between  the  owner  of  per- 
sonal property  insured  and  another  person,  to  represent  to  the 
creditors  of  the  owner,  in  order  to  prevent  attachment,  that 
it  had  been  sold  to  such  other  person,  amounts  to  neither  ; 
althougli,  doubtless,  something  less  than  an  alienation  —  as, 
for  instance,  a  mortgage,  or  a  conveyance  of  a  portion  of  the 
interest  of  the  insured,  or  one  invalid  as  against  creditors  — 
would  be  a  violation  of  the  stipulation.'^ 

1  Tittmore  v.  Vermont  Mut.  Fire  Ins.  Co.,  20  Vt.  (5  Washb.)  546. 

2  Hodges  V.  Tenn.  Mar.  and  Fire  Ins.  Co.,  4  Seld.  (N.  Y.)  416. 

3  Holbrook  v.  Am.  Ins.  Co.,  1  Carter  (U.  S.  C.  C),  193. 

*  Ayres  v.  Hartford  Ins.  Co.,  21  Iowa,  198  ;  Same  v.  Home  Ins.  Co.,  21  Iowa, 
185. 

5  Morrison  v.  Tenn.  Mar.  and  Fire  Ins.  Co.,  18  Mo.  (3  Bennett)  262. 

<>  Lane  v.  Maine  Fire  Ins.  Co.,  3  Fairf.  (Me.)  44  ;  West  Branch  Ins.  Co.  v. 
Helfenstein,  40  Penn.  St.  289 ;  Hobson  v.  Wellington  Dist.  Ins.  Co.,  6  Upper 
Canada  (Q.  B.),  536. 

'  Orrell  v.  Hampden  Fire  Ins.  Co.,  18  Gray  (Mass.),  431. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  299 

§  273.  Transfer  or  Change  of  Title.  —  As  the  object  of  pro- 
vidino;  against  a  transfer  or  change  of  title  is  to  guard  against 
a  diminution  in  the  strength  of  the  motive  which  the  insured 
may  have  to  be  vigilant  in  the  care  of  his  property,  the  sub- 
stantial diminution  of  interest  in  the  property  insured  has 
been  suggested  as  a  test  of  the  kind  of  transfer  or  change  of 
title  which  will  avoid  the  policy.  Thus,  in  Ayres  v.  Hartford 
Fire  Insurance  Company,^  the  court,  in  discussing  what  trans- 
fer or  change  of  title  would  avoid  the  policy,  held  the  follow- 
ing language :  "  The  object  of  the  insurance  company  by  this 
clause  is,  that  the  interest  shall  not  change  so  that  the  assured 
shall  have  a  greater  temptation  or  motive  to  burn  the  prop- 
erty, or  less  interest  or  watchfulness  in  guarding  and  preserv- 
ing it  from  destruction  by  fire.  Any  change  in  or  transfer  of 
the  interest  of  the  insured  in  the  property  of  a  nature  calcu- 
lated to  have  this  effect  is  in  violation  of  the  policy.  But  if 
the  real  ownersliip  remains  the  same,  —  if  there  is  no  change 
in  thQfact  of  tithy  but  only  in  the  evidence  of  it,  and  if  this 
latter  change  is  merely  nominal,  and  not  of  a  nature  calculated 
to  increase  the  motive  to  burn,  or  diminish  the  motive  to 
guard  the  property  from  loss  by  fire,  the  policy  is  not  violated." 
And  the  following  very  recent  case  in  New  York  may  perhaps 
be  taken  as  an  illustration  of  the  same  rule.  One  Marilla 
Kirk,  as  testamentary  trustee,  held  a  certain  grist-mill  for  the 
heirs  of  one  Andrew  Kirk,  which  she  caused  to  be  insured  to 
"  the  heirs  and  representatives  of  Andrew  Kirk,  deceased." 
Afterwards,  and  during  the  currency  of  the  policy,  she,  as 
trustee,  conveyed  the  mill  for  one  thousand  dollars,  and  took 
a  mortgage  back  for  seven  thousand  dollars.  The  mill  was 
burned  during  the  year  for  which  it  was  insured,  and  before 
the  fire  said  Marilla  Kirk  resigned,  and  the  plaintiff  was  ap- 
pointed in  her  place.  The  policy  was  to  be  void  if  the  prop- 
erty were  sold  or  transferred,  or  any  change  took  place  in  the 
title  or  possession,  whether  by  legal  process  or  judicial  de- 
cree or  voluntary  transfer  or  conveyance  ;  and  also  when  the 
property  was  disposed  of,  so  that  all  interest  or  liability  of  the 
insured  ceased,  the  insurance  was  also  to  cease.     The  plain- 

'  17  Iowa,  176. 


300  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

tiff  had  a  verdict  and  judgment,  and  on  appeal  the  judgment 
was  affirmed. 1 

§  274.  Alienation  —  Levy  of  Execution.  —  Nor  is  a  seizure 
of  the  goods  insured,  tliough  taken  into  the  actual  possession 
of  the  sheriff,  an  alienation.  The  general  property  in  goods 
seized  on  execution  remains  in  the  debtor  till  they  are  sold. 
The  right  of  the  sheriff,  by  virtue  of  the  seizure,  is  defeasible, 
it  being  his  duty  to  release  and  restore  the  goods  to  the  de- 
fendant in  the  execution,  upon  a  tender  of  the  amount  due.^ 
In  the  last  case  cited,  Metcalf,  J.,  said:  "There  are  obiter 
dicta  in  the  books,  that  by  a  seizure  on  a  ji.  fa.  the  debtor's 
property  in  the  goods  is  lost ;  that  the  sheriff  acquires  a  special 
property,  but  that  the  general  property  of  the  debtor  is  devested 
and  is  in  abeyance.^  But  the  law  never  was  so."  ^  The  same 
is  true  of  a  seizure  of  an  equity  of  redemption  of  real  estate ; 
for  after  a  sale  of  the  equity  there  is  still  left  a  right  to 
redeem,  —  a  right  which  may  constitute  a  valuable  interest. 
So,  at  least,  will  the  law  presume,  in  the  absence  of  evidence 
to  the  contrary.^ 

§  275.  Change  of  Title  —  Increase  of  Interest.  —  It  seems  hardly 
necessary  to  say  that  any  change  of  title  whereby  the  interest 
of  the  insured  becomes  enhanced,  and  his  incentives  to  vigi- 
lance increased,  as  would  be  tlie  case  where  a  title  becomes 
absolute  in  the  mortgagee  by  foreclosure,  or  a  tenant  for  years 
or  for  life  purchases  the  fee,  —  in  other  words,  a  sale  or  con- 
veyance to  the  assured,  —  though  within  the  words  of  the  pro- 
viso against  sale  or  transfer,  is  not  within  its  spirit  and  purpose, 
and  will  not  vitiate  the  policy.^ 

§  276.   Alienation  by  Mortgagor  after  Assignment  of  Policy.  — 

1  Savage  v.  Howard  Ins.  Co.,  N.  Y.  Sup.  Ct.,  3(1  Dist.,  Sept.,  1872,  Alb.  L.  J. 
Mar.  1,  1873. 

2  Clark  V.  New  England  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  342;  Campbell  v. 
Hamilton  Mut.  Ins.  Co.,  51  Me.  69  ;  llice  et  al.  v.  Tower  &  Trs.,  1  Gray  (Mass.), 
427. 

8  Referring  to  1  Lev.  282 ;  1  Vent.  53 ;  6  Mod.  293  ;  Holt,  647  ;  4  Mass.  403 ; 
2  Mass.  517. 

*  Franklin  Fire  Ins.  Co.  v.  Findley,  6  Whart.  (Penn.)  483. 

5  Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  (Mass.)  44. 

6  Bragg  V.  New  England  Mut.  Fire  Ins.  Co.,  5  Post.  (N.  H.)  289;  Heaton  v. 
Manhattan  Fire  Ins.  Co.,  7  R.  I.  502. 


SPECIAL   PROVISIONS   OF   THE    CONTRACT.  301 

Though  it  be  stipulated  that  tlie  policy  shall  be  void  by 
alienation,  this  must  be  held  to  mean  alienation  by  the 
party  insured.  If  the  original  insured,  by  the  consent  of  the 
insurers,  assigns  the  policy,  and  the  assignees  agree  with 
the  insurers  to  pay  all  assessments  which  shall  thereafter  be 
made  upon  the  policy,  and  tliat  the  property  insured  shall 
remain  subject  to  the  same  lien  as  before,  the  legal  effect  of 
the  transaction  is  to  create  a  new,  substantive,  and  distinct 
contract  with  the  assignees.  It  is  substantially  the  same  as  if 
the  policy  had  been  issued  to  them.  An  alienation,  therefore, 
by  a  mortgagor  of  his  equity  of  redemption,  after  an  assign- 
ment of  the  policy,  under  the  circumstances  just  stated,  is  not 
an  alienation  by  the  assured,  but  rather  by  a  stranger,  over 
whom  the  assignees  have  no  control,  and  for  whose  acts  they 
are  not  at  all  responsible,  and  does  not  avoid  the  policy.^ 

§  277.  Alienation  —  Entire  Contract.  —  As  a  general  rule,  a 
breach  of  condition,  where  the  contract  is  entire,  affects  all  the 
property  insured,  though  it  may  be  of  different  kinds  and  sepa- 
rately appraised  in  the  policy.  Thus  the  alienation  of  a  house 
vitiates  the  policy  both  as  to  the  house  and  the  furniture  in 
it.^  So,  also,  the  sale  by  a  partner  of  his  undivided  interest 
avoids  a  policy  containing  a  prohibition  of  such  sale  as  to  tlie 
interests  of  the  other  partners.^  Misrepresentation  as  to  tlie 
title  to  a  store,  or  amount  of  incumbrance  thereon,  vitiates 
the  insurance  both  upon  the  store  and  the  stock  of  goods 
therein.*  Additional  insurance,  without  notice,  on  stock  viti- 
ates the  policy  both  on  the  stock  and  fixtures.^     The  appro- 

1  Foster  et  al.  v.  Equitable  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  416  ;  Bragg  v. 
New  England  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  289 ;  Boynton  v.  Clinton  and 
Essex  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  254.  And  see  also  Fogg  v.  Middlesex 
Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  337. 

2  Barnes  v.  Union  Mut.  Fire  Ins.  Co.,  51  Me.  110. 
'  Dix  V.  Mercantile  Ins.  Co.,  22  111.  272. 

*  Gould  V.  York  County  Mut.  Fire  Ins.  Co.,  47  Me.  403  ;  Lovejoy  v.  Augusta 
Mut.  Fire  Ins.  Co.,  45  Me.  472 ;  Friesmoutli  v.  Agawam  Mut.  Ins.  Co.,  10  Cush. 
(Mass.)  587  ;  Brown  v.  People's  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  280  ;  Kicliardson 
V.  Maine  Ins.  Co.,  46  Me.  394 ;  Day  v.  Charter  Oak  Fire  Ins.  Co.,  51  Me.  91. 

8  Kimball  v.  Howard  Fire  Ins.  Co.,  8  Gray,  33;  Associated  Firemen's  Ins. 
Co.  V.  Assum,  5  Md.  165  ;  Ramsay  et  al.  v.  Mut.  Fire  Ins.  Co.,  11  Upper  Canada 
(Q.  B.),  516. 


302  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

priation  of  one  of  two  buildings,  both  included  in  the  policy 
and  insured  for  distinct  amounts,  to  a  more  hazardous  use, 
vitiates  the  policy  as  well  upon  the  one  not  so  appropriated  as 
upon  the  other.  ^  And  an  alienation  by  a  mortgagor  of  part 
of  the  premises  upon  which  he  had  effected  insurance,  after 
an  assignment  of  the  policy  with  the  consent  of  the  insurers 
to  the  mortgagee,  who  signed  the  premium  note,  will  avoid  the 
policy  in  toto  as  to  the  mortgagor's  interest.^  If  the  premium 
be  entire,  and  likewise  the  deposit  note,  and  the  lien  for  the 
assessment  on  the  same  attach  to  all  the  separate  parcels, 
the  contract  is  entire,  and  if  void  at  all  is  void  in  toto^ 
altliough  several  sums  are  designated  as  insured  upon  the 
several  parcels.  But  if  the  several  parcels  are  insured  in 
several  sums,  each  having  its  specific  premium  and  deposit 
note,  and  for  which  a  distinct  lien  can  be  asserted,  then  an 
alienation  of  one  parcel  is  only  an  avoidance  of  the  policy  pro 
tanto.^ 

§  278.  Alienation  of  one  of  several  distinct  Parcels  of  Prop- 
erty. —  But  the  authorities  are  not  all  agreed  upon  the  point 
that  a  violation  of  a  condition,  or  a  misrepresentation  as  to 
part  of  the  property  insured,  avoids  the  policy  as  to  the  whole 
when  the  contract  is  entire.  In  Loehner  v.  Home  Mutual 
Fire  Insurance  Company,'^  it  was  held  that  a  misrepresentation 
as  to  the  title  of  the  house  insured  only  vitiates  the  policy  as 
to  the  house,  and  that  a  recovery  might  be  had  for  the  loss  of 
furniture  insured  in  the  same  policy  under  a  separate  valua- 
tion. "  With  respect  to  the  furniture  and  the  piano,"  say  the 
court,  "  although  they  may  be  regarded  as  being  insured  in 
the  building  covered  by  the  policy,  yet,  because  the  statute  arbi- 
trarily avoids  the  policy  as  to  the  building  for  want  of  a  dis- 
closure of  the  fact  which  did  not  at  all  atfect  the  risk,  we 
cannot  come  to  the  conclusion  that  the  policy  was  likewise 
void  as  to   the  furniture  and  piano."     And  in  Plioenix  Insur- 

1  Lee  V.  Howard  Fire  Ins.  Co.,  3  Gray  (Mass.),  583;  Fire  Association  of 
Phila.  V.  Williamson,  26  Penn.  St.  196. 

2  Boynton  v.  Clinton  anil  Essex  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  25-i. 
'  Friesrauth  v.  Agawam  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  587. 

<  17  Mo.  247 ;  s.  c.  aflarmed,  19  Mo.  628. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  303 

ance  Company  v.  Lawrence,^  where  the  interest  of  the  insured 
in  a  storehouse  was  untruly  stated,  it  was  nevertheless  held 
that  the  plaintiff  might  recover  for  the  goods  therein  insured 
in  the  same  policy,  and  upon  a  distinct  and  separate  valua- 
tion, although  the  premium  paid  was  an  entire  sum.  In  the 
last  case,  the  case  of  Clarke  v.  New  England  Mutual  Fire 
Insurance  Company  was  relied  upon,^  where  the  court  held 
that,  tiiere  being  separate  and  distinct  insurance  upon  two 
buildings,  alienation  of  one  would  not  avoid  the  policy  as  to 
the  other.'^  And  a  sale  by  the  insured  of  one  of  several  dis- 
tinct parcels  of  real  estate  covered  by  the  policy,  tiiat  part 
forming  a  distinct  item,  with  separate  and  distinct  valuation, 
does  not  avoid  the  policy  except  pro  tanto :  as  to  the  property 
still  held  by  the  insured  at  the  time  of  the  loss,  he  is  entitled 
to  recover  according  to  the  terms  of  the  policy."^  Nor  does 
the  assignment  of  part  of  a  mortgage  debt.^  Nor  upon  prin- 
ciple does  it  seem  to  be  of  any  consequence  whether  the  valu- 
ation be  separate  and  distinct  or  not.  Surely  a  merchant  who 
insures  his  store  and  stock  in  trade,  or  a  farmer  who  insures 
his  barn  and  contents,  may  recover  for  the  unsold  balance  of 
his  stock,  notwithstanding  he  daily  sells  a  portion  of  it.  The 
diminution  of  insurable  interest  coincides  with  a  diminution 
of  the  right  to  claim  for  loss,  and  relatively  there  is  no  change 
in  the  situation.  To  say  that  the  policy  is  i\\QrQhy  pro  tanto 
avoided,  is  not  so  correct  an  expression  as  to  say  that  the 
amount  which  the  insured  would  have  the  right  to  recover 
under  it  is  pro  tanto  reduced.^   Nor  will  the  result  be  different, 

1  4  Met.  (Ky.)  9.  2  6  Cusli.  (Mass.)  342. 

3  The  report  does  not  show  whetlier  tlie  premium  was  an  entire  sura  or  not ; 
but  on  reference  to  tlie  record  it  is  found  tliat  the  plaintiff  was  insured  for 
$2,500, — S2,200  on  his  taveru-house  and  S300  on  liis  sliop, —  for  whicli  was 
paid  a  casli  premium  of  So,  and  a  deposit  note  of  §371  given.  Upon  these  facts 
the  case  is  not  now  law  in  Massachusetts,  though  it  does  not  appear  to  have 
been  overruled  or  even  referred  to  in  the  subsequent  cases.  See  the  preceding 
section. 

*  Clark  V.  New  England  Mut.  Fire  Ins.  Co.,  6  Cush.  (Mass.)  342.  And  see 
also  Bodle  et  al.  v.  Chenango  Mut.  Ins.  Co.,  2  Comst.  (X.  Y.;  53. 

s  Rex  V.  Ins.  Co.,  2  Pliila.  (Penn.)  357. 

6  Lane  v.  Maine  Mut.  Fire  Ins.  Co.,  3  Fairf.  (Me.)  44;  Hobbs  et  al.  v.  Mem- 
phis Ins.  Co.,  1  Sneed  (Tenn.),  444. 


304  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

though  it  be  stipulated  that  the  policy  is  to  be  void  upon  a 
sale  of  the  whole  or  any  part  of  the  property  insured.  Noth- 
ing short  of  a  sale  of  the  whole  will  deprive  the  insured  of 
his  right  to  recover  at  all.  If  he  sells  a  part,  he  merely  for- 
feits the  right  to  claim  for  the  loss  of  that  part,  and  for  tlie 
simple  and  obvious  reason  that,  having  sold  it  prior  to  the  fire, 
he  did  not,  and  could  not,  lose  it.  But  if  he  keeps  up  his 
stock  he  recovers  to  the  full  amount. ^  In  some  cases  the 
policy  provides  that  the  insurance  shall  be  void  only  as  to  those 
parcels  with  reference  to  which  the  breach  takes  place.^ 

§  279.  Alienation  by  one  joint  Owrner  to  another,  —  Much  dis- 
cussion has  been  had  in  the  courts  upon  the  question  whether 
a  sale  by  one  joint  owner  to  another  is  an  alienation  which 
avoids  the  policy ;  but  the  better  opinion  seems  to  be  that  it  is 
not  strictly  speaking  an  alienation,  a  transfer  from  one  to 
another,  but  rather  a  shifting  of  interests  amongst  joint  owners, 
without  the  introduction  of  any  stranger  to  the  number  of  the 
insured.  So  far  as  the  contract  is  based  upon  the  personal 
qualities  of  the  insured,  there  is  no  increase  of  risk,  because 
no  element  of  improvidence  or  carelessness  is  introduced,  and 
the  property  insured  will  still  be  under  the  care  and  manage- 
ment of  the  original  parties.^  But  the  rule  was  held  to  be 
otherwise  in  Dey  v.  Poughkeepsie  Mutual  Insurance  Com- 
pany,* if  by  the  change  in  the  partnership  a  new  member  is 
introduced. 

§  280.  Change  amongst  joint  Owners.  —  On  the  Other  hand, 
there  are  numerous  and  respectable  authorities  not  only  that 
a  dissolution  of  the  partnership  and  a  division  of  the  property 
amongst  the  copartners  is  a  "  transfer  or  change  of  title," 

1  Wolfe  V  Security  Fire  Ins.  Co.,  39  N.  Y.  49. 

2  Daniel  v.  Robinson,  Batty  (Irish),  650. 

3  Hobbs  V.  Memphis  Ins.  Co.,  1  Sneed  (Tenn.),  444  ;  Hoffman  v.  ^tna  Fire 
Ins.  Co.,  1  Robt.  (N.  Y.  Superior  Ct.)  501 ;  8.  c.  affirmed,  32  N.  Y.  405;  Pierce 
V.  Nashua  Fire  Ins.  Co.,  50  N.  H.  2y7  ;  Burnett  v.  Eufala  Home  Ins.  Co.,  Sup. 
Ct.  Ala.,  1872 ;  Buffalo  Steam-Engine  Works  v.  Sun  Mut.  Ins.  Co.,  17  N.  Y. 
412  ;  Tallman  v.  Atlantic  Ins.  Co.,  29  How.  (N.  Y.)  71 ;  Tillou  v.  Kingston  Mut. 
Fire  Ins.  Co.,  7  Barb.  (N.  Y.  Sup.  Ct.)  570;  Wilson  v.  Genessee  County  Mut. 
Ins.  Co.,  16  Barb.  (N.  Y.  Sup.  Ct.)  511. 

*  23  Barb.  (N.  Y.)  623. 


SPECIAL   PROVISIONS   OP   THE    CONTRACT.  305 

within  the  meaning  of  a  provision  making  the  policy  void  on 
such  transfer  or  change,^  but  also  that  a  sale  by  one  partner 
to  his  copartners  of  his  interest,  and  withdrawal  from  the  firm, 
is  an  alienation.^  And  so  also  that  a  sale  by  one  tenant  to  his 
co-tenant  is  an  alienation.^  So  a  division  on  petition  for  parti- 
tion by  one  co-tenant  against  another  has  been  held  to  be  a 
change  in  the  title,  though  not  strictly  an  alienation.'* 

§281.  Change  of  Ownership  —  Right  of  Action.  —  And  the 
same  difference  of  opinion  prevails  as  to  the  proper  parties  to 
the  action  in  the  respective  cases.  By  some  of  the  authorities 
it  is  held  that,  in  case  of  the  sale  and  transfer  by  one  partner 
to  his  copartners  of  his  interest,  and  his  retirement  from  the 
firm,  an  action  cannot  be  maintained  in  the  name  of  tlie  joint 
insurers,  since  it  cannot  be  truly  alleged  that  all  the  parties 
were  interested  at  the  time  of  the  loss,  and,  of  course,  there 
being  no  joint  property  there  could  be  no  joint  loss.^  The 
prudent  course  in  cases  where  the  title  to  the  property  has 
been  so  changed  is  to  assign  the  policy  and  obtain  the  assent 
of  the  insurers  to  the  assignment,  when,  upon  all  the  authori- 
ties, the  remaining  owner  or  owners  may  sue  in  their  own 
names. 

It  is,  however,  elsewhere  held  that  the  action  must  be  joint, 
and  that  if  the  sale  or  transfer,  as  of  one  partner  of  his  inter- 
est to  the  other,  is  without  the  consent  of  the  insurers,  the 
plaintiff  will  recover  only  the  value  of  his  interest ;  while,  if 
it  is  with  their  consent,  he  will  recover  to  the  same  extent  as 
if  there  had  been  no  transfer.^     And  in  still  another  case  it 

1  Dreher  v.  Etna  Ins.  Co.,  18  Mo.  (3  Bennett)  128. 

2  Di.x  V.  Mercantile  Ins.  Co.,  22  lU.  272 ;  Keeler  v.  Niagara  Fire  Ins.  Co.,  16 
"Wis.  523  ;  Hartford  Fire  Ins.  Co.  v.  Ross,  23  Ind.  179 ;  Finley  v.  Lycoming 
County  Mut.  Ins.  Co.,  30  Penn.  St.  311. 

8  Buckley  i'.  Garnett  et  al.,  47  Penn.  St.  404. 

*  Barnes  v.  Union  Mut.  Fire  Ins.  Co  ,  51  Me.  110. 

5  Dix  V.  Mercantile  Ins.  Co.,  22  111.  272;  Murdock  r.  Chenango  County  Mut 
Ins.  Co.,  2  Comst.  (N.  Y.)  210;  Howard  et  al.  v.  Albany  Ins.  Co.,  3  Denio 
(N.  Y.),  301. 

6  Hobbs  et  al.  v.  Memphis  Ins.  Co.,  1  Sneed  (Tenn.),  444.  In  this  case  the 
court  say,  referring  to  the  New  York  cases  in  the  2d  of  Comstock  and  the  3d  oi 
Denio,  before  cited,  that  they  have  carefully  considered  them,  and  do  not  concur 
in  the  doctrine  thereof,  nor  consider  it  founded  in  principle  or  authority. 

20 


306  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

was  held,  that  where  the  surviving  partner,  by  one  of  the  arti- 
cles of  copartnership,  became  sole  owner  on  the  death  of  his 
copartner,  he  might  recover  in  his  own  name  for  the  loss  of 
the  goods  formerly  the  property  of  the  firm,  destroyed  by  fire, 
though  the  insurers  were  ignorant  of  the  agreement.^  And 
wliere  a  sole  trader  sells  an  undivided  interest  in  the  insured 
property  to  another,  who  thereby  becomes  a  partner,  the  insur- 
ers assenting  to  the  transfer,  and  that  the  policy  should  remain 
good  to  the  new  firm,  and  making  the  alienee  a  member  of 
their  company  by  the  entry  of  his  name  in  their  books  as  such, 
it  has  been  held,  somewhat  strictly,  perhaps,  that  no  action  at 
law  could  be  maintained  by  either  of  the  parties  severally,  or 
by  both  jointly,  since  neither  jointly  nor  severally  did  they 
own  the  property  at  the  time  of  the  insurance  and  at  the  time 
of  the  loss.  But  since,  under  the  circumstances,  there  was 
no  adequate  remedy  at  law,  a  joint  bill  in  equity  to  recover  the 
loss  was  sustained.^ 

§  282.  Waiver.  —  But  a  forfeiture  by  alienation  may  be 
waived  by  the  insurers  or  their  agent ;  and  a  consent  by  the 
agent,  who,  after  notice  of  the  alienation  by  the  insured,  for- 
wards the  policy  to  his  principals  for  their  approval,  that  the 
policy  shall  remain  good  till  the  assent  of  the  insurers  to  the 
assignment  can  be  procured,  is  such  waiver. ^ 

1  Wood  V.  Eutland  and  Addison  Mut.  Fire  Ins.  Co.,  31  Vt.  552.  And  see 
also  Baltimore  Fire  Ins.  Co.  v.  McGowan,  16  Md.  47. 

2  Bodle  et  al.  v.  Chenango  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  63.  But 
see  Foster  et  al.  v.  Equitable  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  416. 

3  Illinois  Mut.  Fire  Ins.  Co.  v.  Stanton,  Sup.  Ct.  111.,  1872,  2  Las.  L.  J.  29. 
And  see  also,  post,  chapter  on  Waiver  and  Estoppel. 


SPECIAL   PROVISIONS   OP  THE   CONTRACT.  307 


CHAPTER    XL 

OF   THE   SPECIAL   PROVISIONS   OF   THE   CONTRACT    (continued). 

§  283.  Title  and  Property  distinguished.  —  "  Title  "  has  re- 
spect to  that  which  is  the  subject  of  ownership,  and  is  that 
which  is  the  foundation  of  ownership,  and  with  a  change  of 
title  the  right  of  property  —  the  ownership  —  passes.  "Prop- 
erty "  is  a  thing  owned,  that  to  which  a  person  has,  or  may 
have,  a  legal  title.  Both  words  are  inappropriate  to  describe 
the  insurable  interest  which  exists  solely  by  reason  of  the 
personal  liability  of  the  insured  for  the  payment  of  a  sum  of 
money  charged  upon  the  building  or  goods  insured.  When, 
therefore,  the  word  "  property  "  is  used  in  the  clause  forbidding 
alienation,  it  is  used  to  designate  the  thing  insured,  and  not 
the  interest  of  the  insured  in  the  thing  ;  and  "  change  or  trans- 
fer of  title  "  in  the  property  insured  is  change  or  transfer  of 
title  and  ownership  of  the  thing  insured. ^  The  title  or  inter- 
est of  the  assured  in  the  property  insured  is  no  part  of  the 
description  of  the  property,  and  need  not  therefore  be  men- 
tioned in  answer  to  a  call  for  a  true  description  of  the  prop- 
erty.2 

§  28-i.  Title.  —  In  general,  unless  the  title,  ownership,  or 
interest  in  the  insured  property  is  required  by  the  conditions  of 
the  policy  to  be  specifically,  and  with  particularity  and  accu- 
racy, set  forth,  it  will  be  sufficient  if  the  insured  has  an  insur- 
able interest,  under  any  status  of  ownership  or  possession. 
And  the  fact  that  the  statements  in  the  application  are  by  refer- 
ence made  a  part  of  the  contract,  and  thus  become  warranties, 
will  have  no  effect  in  extending  the  force  or  effect  of  these 
statements  beyond  their  actual  import.     Thus,  where  a  mar- 

1  Springfield  Fire  and  Mar.  Ins.  Co.  v.  Brown,  43  N.  Y.  389. 

2  Franklin  Ins.  Co.  v.  Coates,  14  Md.  285. 


308  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

ried  woman  had  been  abandoned  by  her  husband,  but,  with 
the  family,  remained  on  tlie  homestead,  which  had  been  occu- 
pied by  tliem  before  the  separation,  and  with  her  own  earnings 
made  improvements  from  time  to  tune,  it  appearing  that  the 
husband,  on  leaving,  made  a  verbal  gift  of  the  property  to  her, 
it  was  held  that  she  had  an  insurable  interest.  Application 
was  made  for  insurance  upon  one  dwelling-house  and  cer- 
tain personal  property  therein  contained,  and  to  the  question 
whether  the  title  was  a  warranty  deed  or  a  bond,  the  answer 
was,  "  W.  D."  And  to  the  further  question,  "  Is  your  prop- 
erty incumbered?"  the  answer  was,  "None."  These  being 
all  the  statements  in  the  application  touching  the  title  of  the 
insured,  it  was  alleged  in  defence  that  there  was  a  breach  of 
warranty,  and  no  proof  of  ownership  in  fee.  But  the  court 
said,  "  We  fail  to  find  by  the  application  of  the  meaning 
attached  to  words  that  the  insured  represented  herself  as  hold- 
ing any  particular  kind  of  title.  The  words  '  one  dwelling- 
house  '  do  not  import  title  of  any  kind.  The  letters  '  W.  D.' 
have  no  such  meaning  ;  nor  has  the  question,  '  Is  your  prop- 
erty incumbered  ? '  If  the  letters  '  W.  D.'  mean  a  warranty 
deed,  it  must  appear  from  extrinsic  evidence,  if  that  could  be 
received.  They  have  no  such  fixed  and  definite  meaning  in 
the  law,  nor  in  any  common  use,  nor  even  in  the  connection 
in  which  they  are  employed.  That  may  be  their  meaning, 
but  it  is  not  apparent.  But  if  it  was  conceded  that  they 
mean  that  the  insured's  title  was  a  warranty  deed,  still  that  is 
not  an  assertion  that  such  title  is  a  fee.  A  warranty  deed 
may  pass  a  term  of  years,  a  life-estate,  a  fee,  or  less  estate,  or 
it  may  pass  no  estate  whatever.  It  conveys  only  the  estate  of 
the  grantee,  whatever  that  may  be.  If  he  have  none,  it  can 
pass  none  to  the  grantee.  We  then  look  in  vain  for  any  asser- 
tion in  the  application  as  to  the  kind  of  title,  or  the  nature  of 
the  estate  she  claimed.  It  then  does  not  appear  from  the  appli- 
cation that  she  was  required  to  prove  that  she  held  a  fee  or 
other  absolute  estate  in  the  lot  and  house.  Then,  under  the 
averment  in  the  declaration,  what  was  she  bound  to  prove  ? 
Manifestly  that  she  held  and  owned  an  insurable  interest,  — 


SPECIAL  PROVISIONS  OP   THE  CONTRACT.  309 

such  a  title  as  if  there  should  be  loss  it  would  fall  upon,  and 
have  to  be  borne  by  her.  In  a  declaration  on  a  policy  of 
insurance,  the  averment  that  the  insured  was  the  owner  of  tiie 
property  destroyed  must  be  considered  with  reference  to  the 
contract  of  insurance.  It  amounts  to  an  averment  that  the  in- 
sured had  an  insurable  interest,  and  not  that  he  was  the  abso- 
lute owner  of  the  property.  When  he  sues,  his  right  to  recover 
depends  upon  whether  he  was  the  owner  of  an  insurable  inter- 
est, and  not  whether  he  was  the  absolute  owner,  and  the  aver- 
ment must  be  so  construed.  It  cannot  be  construed  as  it 
would  be  in  a  contract  or  covenant  to  convey  land,  as  in  such 
case  the  thing  sold  and  purcliased  is  the  land,  and  when  the 
vendor  says,  in  his  covenant,  that  he  is  the  owner,  and  agrees 
to  convey  it  to  another,  the  law  holds  that  as  the  parties  under- 
stood by  the  covenant  that  it  was  the  land  that  was  sold,  that 
the  assertion  of  ownership  implied  that  the  vendor  held  the 
absolute  title,  and  had  agreed  to  convey  such  a  title  as  would 
vest  in  the  vendee  absolute  ownership.  Language  not  hav- 
ing a  technical  meaning  must  be  construed  with  reference  to 
the  subject  to  which  it  is  applied.  Thus,  under  either  the 
application  for  the  insurance,  or  tlie  averment  in  the  decla- 
ration, the  insured  was  bound  only  to  prove  that  she  held  an 
insurable  interest,  and  all  questions  beyond  that  were  imma- 
terial." 1 

§  285.   Title  —  Ownership  —  Interest.  —  The    insured    is    not 

1  Rockford  Ins.  Co.  v.  Nelson,  Sup.  Ct.  111.,  2  Ins.  L.  J.  341.  In  Catron  v. 
Tennessee  Insurance  Company,  6  Humph.  (Tenn.)  176,  a  tenant  in  common, 
owning  one-lia,lf,  applied  for  insurance  in  these  words :  "  I  wish  a  furnace  and 
forge  insm-ed,"  without  any  thing  further  said,  or  required  to  be  said,  about  the 
title  or  interest  of  the  insured.  And  the  court  held  this  a  misrepresentation  as 
to  the  interest,  which  avoided  the  policy.  But  neither  the  cases  cited  and 
relied  upon  by  the  court,  nor  any  others  that  we  have  been  able  to  find,  support 
so  extravagant  a  doctrine.  There  were  other  and  sufficient  grounds  for  the 
decision,  and  it  is  evident,  from  an  examination  of  the  opinion,  that  the  court 
were  penetrated,  if  not  influenced,  by  a  confident  belief  that  the  insured  set  fire 
to  his  own  property.  And  the  early  cases  in  the  Supreme  Court  of  the  United 
States  (Columbian  Ins.  Co.  v.  Lawrence,  2  Peters,  25;  s.  c.  10  Peters,  507  ;  and 
Carpenter  v.  Prov.  Wash.  Ins.  Co.,  16  Peters,  495),  opposed  to  the  doctrine  stated 
in  the  text,  have  not  received  the  approbation  of  the  State  courts.  Franklin 
Fire  Ins.  Co.  v.  Coates,  14  Md.  285.    And  see  §  2a5. 


310  insurance:  fire,  life,  accident,  etc. 

bound  to  state  the  nature  or  particulars  of  his  title,  unless 
they  are  inquired  about,  or  required  to  be  disclosed  by  the 
provisions  of  the  policy.  A  statement  that  the  property  is  his, 
if  in  fact  it  be  his  in  some  substantial  sense,  is  sufficient ;  as 
where  the  property  insured  stands  upon  the  land  of  another, 
subject  to  the  right  of  removal  in  the  assured  ;  ^  or  has  been 
seized  on  execution  ;  ^  or  is  an  equity  of  redemption ;  ^  or  the 
insured  is  tenant  for  years  ;  *  or  there  is  an  outstanding  agree- 
ment to  convey,  upon  which  a  portion  of  the  purchase-money 
has  been  advanced  ;  °  or  the  insured  is  a  joint  owner,  in  which 
case  he  may  recover  to  the  extent  of  his  interest,^  especially  if 
his  copartner  be  only  interested  in  the  profits."  The  interest 
of  the  partner  in  such  a  case,  who  in  fact  owns  the  stock  of 
goods,  is  an  absolute  equitable  interest,  and  is  protected  by  a 
policy  which  is  to  be  void  if  the  interest  of  the  insured  be  not 
an  absolute  one.^  So  where  the  insured,  in  reply  to  a  ques- 
tion,—  the  policy  containing  no  stipulation  as  to  disclosure  of 
title,  —  answered  that  the  land  on  which  the  insured  building 
stood  was  hers,  when  in  fact  she  had  only  a  life-estate  thereon, 
but  her  husband's  will  had  made  no  disposition  of  the  remain- 
der, and  the  heirs,  during  the  twelve  years  which  had  passed 
since  the  probate  of  the  will,  had  made  no  claim  to  the  prop- 
erty, it  was  held  that  the  answer  was  substantially  true.^  So 
if  the  insured  is  in  possession  of  a  house  under  an  executory 
contract  on  which  part  payment  has  been  made.^^    If  the  in- 

1  Curry  v.  Commonwealth  Ins.  Co.,  10  Pick.  (Mass.)  535;  Fletcher  v.  Same, 
18  Pick.  (Mass.)  419;  Morrison  v.  Tenn.  Mar.  and  Fire  Ins.  Co.,  18  Mo.  262; 
Sussex  County  Mut.  Ins.  Co.  v.  WoodruflF,  2  Dutch.  (N.  J.)  541. 

-  Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  (Mass.)  40. 

3  Bufifum  V.  Bowditch  Mut.  Ins.  Co.,  10  Cush.  540. 

*  Niblo  V.  North  American  Ins.  Co.,  1  Sand.  (N.  Y.  Sup.  Ct.)  551. 

5  Davis  V.  Quincy  Mut.  Fire  Ins.  Co.,  10  Allen  (Mass.),  113. 

6  Hartford  Prot.  Ins.  Co.  v.  Harmer,  2  Ohio  St.  452.  And  see  also  Peck  v. 
New  London  Mut.  Ins.  Co.,  22  Conn.  575. 

^  Irving  V.  Excelsior  Fire  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct.)  507. 

8  Ibid.  And  see  also  Collins  v.  Charlestown  Mut.  Fire  Ins.  Co.,  10  Gray 
(Mass.),  155;  Gould  v.  York  County  Mut.  Ins.  Co.,  47  Me.  403. 

9  Allen  V.  Charlestown  Mut.  Fire  Ins.  Co.,  5  Gray  (Mass.),  384. 

w  Tyler  i;.  ^tna  Ins.  Co.,  16  Wend.  (N.  Y.)  385;  s.  c.  12  Wend.  (N.  Y.) 
507. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  311 

surer  be  the  owner  of  an  equity  of  redemption,  it  is  likewise 
sufficient ;  since  an  equity  of  redemption  is  a  right,  and  is  a 
real  interest  in  the  land,  created  and  secured  by  the  law,  to 
which  a  lien  will  attach,  so  that  when  the  insured  states  the 
property  in  his  possession  to  be  his,  he  sufficiently  states  the 
true  title,  in  the  absence  of  specific  inquiries. ^  And  though 
the  vendor  make  out  a  bill  of  sale  of  personal  property,  and 
receives  a  note  secured  by  a  mortgage  in  consideration  for  the 
sale,  if  there  be  no  delivery  of  the  bill  of  sale,  the  property 
will  not  thereby  be  devested  out  of  the  vendor,  so  that  a  war- 
ranty that  the  property  is  his  will  be  broken  .^ 

§  286.  Mortgagor  of  Personal  Property.  —  And  in  lowa  it  is 
also  held  that  the  mortgagor  of  chattels  is  the  "  sole  and  un- 
conditional owner  "  of  the  mortgaged  property.^  But  Miller, 
J.,  in  his  dissenting  opinion  in  the  last-cited  case,  takes  a  dis- 
tinction between  mortgages  of  real,  and  mortgages  of  personal 
property,  based  upon  the  statute,  which,  as  the  statutes  of 
other  States  may  have  similar  provisions,  it  may  be  of  impor- 
tance to  note.  "  Without  stopping  to  inquire,"  says  the  learned 
judge,  "  into  the  rights  of  mortgagors  at  common  law,  it  is 
sufficient  to  show  that  by  our  statute,  in  the  absence  of  stip- 
ulations to  the  contrary,  the  mortgagor  of  real  p'operty  re- 
tains the  legal  title  and  right  of  possession  thereof,  hut  in  the 
case  of  personal  property^  the  mortgagee  holds  that  title  and 
right.  Here  the  statute  confers  the  title  and  the  rights  of  pos- 
session on  the  mortgagee  of  chattels,  the  mortgagor  having  a 
naked  equity  of  redemption,  a  mere  right  to  defeat  the  title 
of  the  mortgagee  by  a  performance  of  the  condition  of  the 
mortgage,  and  on  a  failure  to  comply  with  those  conditions  the 
mortgagee  becomes  the  absolute  owner.**  The  mortgagor  of 
personal  property  is  so  far  from  having  any  ownership  in  the 
goods  covered  by  the  mortgage,  that  he  has  no  interest  therein 

»  Buffum  r.  Bowditch  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  540. 

2  Vogel  V.  People's  Mut.  Fire  Ins.  Co.,  9  Gray  (Mass.),  23. 

3  Hubbard  et  al.  v.  Hartford  Fire  Lis.  Co.,  Sup.  Ct.  Iowa,  1871,  1  Ins.  L.  J. 
178,  33  Iowa,  325. 

4  Bean  v.  Barney  &  Scott,  10  Iowa,  498. 


312  insurance:  fire,  life,  accident,  etc. 

which  can  be  levied  upon  and  sold  under  execution  ;  unless 
hy  the  terms  of  the  mortgage  he  is  entitled  to,  and  in  fact  re- 
tains, the  possession.^  In  what  sense,  then,  can  it  be  said  that 
the  mortgagor  of  personal  property  is  '  considered  the  owner  '  ? 
None  whatever ;  much  less  can  it  be  maintained  that  he  is  the 
'  sole  and  unconditional  owner.'  " 

§  287.  True  Title.  —  If,  however,  the  "true  title"  is  called 
for,  and  this  is  generally  the  case  in  mutual  insurance  com- 
panies, as  the  lien  which  they  rely  upon  as  security  depends 
upon  the  title,  a  failure  to  set  forth  the  title  with  substantial 
accuracy  will  amount  to  a  misrepresentation  or  a  concealment, 
as  the  case  may  be.  As  where  the  insured  describes  the  prop- 
erty as  his  when  he  has  only  a  bond  for  a  deed  ;  '^  or  is  a  stock- 
holder in  a  corporation  which  owns  the  property ;  ^  or  is  only 
a  tenant  by  the  curtesy  ;  *  or  a  lessee  with  or  without  an  agree- 
ment for  purchase ;  ^  of  the  assignee  of  a  lessee  with  right  to 
purchase ;  ^  or  a  mortgagee ; "  or  has  only  an  imperfect  tax 
title ;  ^  or,  for  the  purpose  of  defrauding  his  creditors,  has  con- 
veyed away  his  estate,  without  consideration,  to  another,  who 
promises  to  reconvey  upon  request  ;^  or  is  the  owner  of  only 
one  of  seven  parcels  of  the  property  insured. i*^  In  such  case 
the  policy  will  not  cover  even  that  the  title  to  which  is  truly 

1  Campbell  v.  Leonard,  11  Iowa,  489 ;  Bindskopf  Bros.  &  Co.  v.  Ljman,  16 
Iowa,  260. 

2  Smith  V.  Bowditch  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  448  ;  Brown  v.  Williams, 
28  Me.  262 ;  Falis  v.  Conway  Mut.  Fire  Ins.  Co.,  7  Allen  (Mass.),  46  ;  Birming- 
ham V.  Empire  Ins.  Co.,  42  Barb.  (N.  Y.)  457. 

3  Philips  V.  King's  County  Mut.  Ins.  Co.,  20  Oliio,  174 ;  Abbott  v.  Shawmut 
Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  213. 

*  Leathers  v.  Ins.  Co.,  4  Fost.  (N.  H.)  259 ;  Eminence  Mut.  Ins.  Co.  v.  Jesse, 
1  Met.  (Ky.)  523. 

5  Shaw  V.  St.  Lawrence  County  Mut.  Ins.  Co.,  11  Upper  Canada  (Q.  B.),  73 ; 
Marshall  v.  Columbian  Mut.  Ins.  Co.,  7  Fost.  (N.  H.)  157. 

6  Walroth  v.  St.  Lawrence  County  Mut.  Ins.  Co.,  10  Upper  Canada  (Q.  B.), 
525. 

7  Jenkins  v.  Quincy  Mut.  Fire  Ins.  Co.,  7  Gray  (Mass.),  870 ;  Brown  v.  Gore 
Dist.  Mut.  Ins.  Co.,  10  Upper  Canada  (Q.  B.),  383. 

8  Pinkham  v.  Morang,  40  Me.  587. 

*  Treadway  v.  Hamilton  Mut.  Ins.  Co.,  29  Conn.  68. 

w  Day  V.  Charter  Oak  Fire  and  Mar.  Lis.  Co.,  51  Me.  91. 


SPECIAL  PROVISIONS    OP   THE   CONTRACT.  313 

represented.^  If,  however,  the  policy  of  a  mutual  insurance 
company,  whose  charter  gives  a  lien  upon  real  estate,  does 
not  call  specifically  for  the  true  title,  no  description  of  the 
title  need  be  given.  A  general  answer  that  the  property 
belongs  to  the  insured,  or  to  that  effect,  is  sufficient.^  And 
in  Clapp  V.  Union  Mutual  Insurance  Company ,3  a  judgment 
creditor,  to  whom  the  insured  property  had  been  set  off  on 
execution,  subject  to  two  mortgages  to  other  parties,  and  to 
the  debtor's  unexpired  equity  of  redemption,  was  held  not  to 
have  misrepresented  his  title  and  interest  in  stating  the  prop- 
erty to  be  his  own.  In  like  manner,  in  Chase  v.  Hamilton 
Mutual  Insurance  Company,*  the  insured,  who  had  been  in  pos- 
session of  the  land  several  years  under  an  executory  agree- 
ment for  the  purchase  thereof,  and  had  erected  thereon  the 
building  insured,  and  before  the  application  for  insurance  had 
paid  all  tlie  purchase-money,  though  he  had  not  then  taken 
the  legal  title,  was  held  to  have  stated  his  "  true  title  and  inter- 
est," in  representing  the  house  and  land  to  be  his.  So  where 
the  purchase  was  at  a  sale  under  foreclosure  of  a  mortgage, 
and  the  property  was  destroyed  before  the  deed  was  passed,  it 
was  held  that  when  the  deed  was  passed  it  took  effect  as  of  the 
day  of  the  sale,  and  that  the  insured  then  had  the  legal  title, 
subject  to  an  equity  of  redemption,  and  truly  answered  that 
they  were  the  owners.^  An  answer  to  a  question  as  to  incum- 
brances, stating  that  the  applicant,  a  mortgagee  in  possession, 
was  first  mortgagee,  taken  together  with  the  fact  that  the 
application  was  for  insurance  on  "  dwelling-house,"  not  stated 
to  be  the  applicant's,  is  a  sufficient  statement  of  the  "  true 
title  "  of  the  insured.*^     And  a  description  of  the  insured  as 

1  Wilbur  V.  Bowditch  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  446. 

-  Allen  V.  Mut.  Fire  Ins.  Co.,  2  Md.  HI.  In  this  case  the  title  was  in  point 
of  fact  such  as  to  give  a  lien.  Allen  v.  Charlestown  Mut.  Fire  Lis.  Co.,  5  Gray 
(Mass.),  384.  In  this  case  the  title  was  a  life-estate  under  a  will  subject  to  con- 
tingent possible  reduction  to  an  estate  in  dower.  Sussex  County  Mut.  Ins.  Co. 
V.  Woodruff,  2  Dutch.  (X.  J.)  541.  Contra,  Mahar  v.  Mut.  Ass.  Co.,  o  Call  (Va.), 
517  ;  Mut.  Ins.  Co.  v.  Deale,  18  Md.  26. 

3  7  Fost.  (N.  H.)  143.  *  22  Barb.  (N.  Y.)  527. 

5  Gaylord  v.  Lamar  Fire  Ins.  Co.,  40  Mo.  13. 

6  Wyman  v.  People's  Equity  Ins.  Co.,  1  Allen  (Mass.),  301. 


314  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

mortgagees  is  a  sufficient  statement  of  tlie  interest  of  the 
insured,  under  a  provision  that  if  the  interest  of  the  insured 
be  "  any  other  than  the  entire,  unconditional,  and  sole  owner- 
ship of  the  property  for  the  use  and  benefit  of  the  insured,"  it 
must  be  so  expressed  in  the  written  part  of  the  policy,  and 
is  a  true  statement  of  their  interest  as  "  mortgagee  or  other- 
wise." '  And  a  mortgage  must  be  disclosed  where  the  "  true 
title  and  interest "  are  required.^ 

§  288.  Title  —  Absolute  Interest  — Leasehold  Interest. — When 
the  policy  provides  that  if  the  interest  to  be  insured  be  a  lease- 
hold interest,  or  any  interest  not  absolute,  it  must  be  so  repre- 
sented, upon  penalty  of  forfeiture,  reference  is  made  to  the 
character,  not  the  quantity,  of  the  interest.  An  absolute  inter- 
est is  equivalent  to  vested  interest,  or  an  interest  so  completely 
vested  that  the  party  owning  it  cannot  be  deprived  of  it  with- 
out his  consent.  Interest  and  title  are  not  synonymous. 
Thus,  where  the  insured  had  entered  into  possession,  and 
made  valuable  improvements,  under  a  parol  contract  of  pur- 
chase at  an  agreed  price,  part  of  which  had  been  paid,  and 
his  interest  was  such  that  the  loss  would  fall  upon  him  if  the 
property  should  be  destroyed,  it  was  held  that  a  statement  by 
the  insured  that  the  property  was  his,  was  true^  and  his  inter- 
est was  an  absolute  one.^  And  where  the  insured  owned  the 
building  insured,  —  a  four-story  brick  building,  —  and  had  a 
lease  of  the  land  upon  which  it  stood,  stipulating  that  a  two- 
story  brick  building  should  be  left  upon  the  land  at  the  expira- 
tion of  the  term,  the  interest  was  held  to  be  properly  stated 
as  his  own,  and  was  not  a  leasehold  interest.'*  So  where  the 
policy  was  to  be  void  if  the  Interest  in  the  property  insured 
was  a  leasehold,  or  other  interest  not  absolute,  and  the  in- 
sured owned  the  buildings,  but  had  only  a  lease  for  years  of 
the  land  upon  which  they  stood,  with  the  right  to  remove  the 
buildings  at  the  end  of  the  term,  it  was  held  that  the  insured 

1  Williams  v.  Roger  Williams  Ins.  Co.,  107  Mass.  377. 

2  Bowditch  Mm.  Fire  Ins.  Co.  v.  Winslow,  3  Gray  (Mass.),  415  ;  s.  c.  8  ib.  38. 
'  Hough  V.  City  Fire  Ins.  Co.,  29  Conn.  10.     And  see  also  Irving  v.  Excelsior 

Fire  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct.)  507 ;  ante,  §  285. 
*  David  V.  Hartford  Fire  Ins.  Co.,  13  Iowa,  69. 


SPECIAL   PROVISIONS   OP   THE    CONTRACT.  315 

might  recover.^  But  where  the  insured  was  in  possession  only 
under  an  agreement  to  purchase,  having  paid  but  a  part  of  the 
purchase-money,  the  policy  was  held  to  be  void,  the  insured 
not  having  an  absolute  estate.^  So  an  interest  under  a  statu- 
tory mechanic's  lien,  not  yet  confirmed  by  a  decree  of  court, 
upon  a  building  standing  upon  leased  land,  is  covered  by  a 
policy  which  is  by  its  terms  to  be  void  if  the  interest  of  the 
insured  be  a  leasehold  or  other  interest  not  absolute.^  But  a 
building  standing  on  leased  land,  and  not  described  as  such, 
will  not  be  protected  by  a  policy  expressly  excluding  such 
property  from  its  protection,  unless  specifically  so  described 
and  insured  as  such.'* 

§  289.  Fee-simple  —  Good  and  perfect  unincumbered  Title. — 
An  equitable  fee-simple  is  a  title  in  fee-simple,  though  the  legal 
title  do  not  pass.  Thus,  a  purchaser  in  possession,  but  under 
a  defectively  executed  deed,  has  an  equitable  title  in  fee-simple. 
A  "  less  estate  "  than  a  fee-simple  means  an  estate  of  less 
duration  than  a  fee-simple.^  "  A  good  and  perfect  unincum- 
bered title  "  implies  a  title  good  both  at  law  and  in  equity  ; 
and  an  outstanding  mortgage,  undischarged  of  record,  though 
in  fact  paid,  is  a  breach  of  a  condition  that  the  property  in- 
sured has  such  a  title.  An  insurance  company  which  relies 
upon  its  lien  might  find  difficulty  in  enforcing  its  lien  against 
such  an  outstanding  mortgage.  The  proof  of  payment  might 
not  be  obtainable,  and  it  is  not  unreasonable  to  suppose  that 
a  perfect  title  is  required  expressly  to  avoid  such  difficulties.^ 
Nor  can  a  husband  truly  state  that  real  estate  belonging  to 
his  wife  is  his,  when  the  charter  of  the  company  requires  that 
the  assured  must  have  a  fee-simple  estate,  or  if  less  than  that, 
the  true  interest  must  be  stated  or  the  policy  will  be  void.' 

1  Hope  Ins.  Co.  v.  Brolasky,  35  Tenn.  St.  282. 

2  Reynolds  v.  State  Mut.  Ins.  Co.,  2  Grant  (Penn.),  326. 

3  Longliurst  v.  Conway  Fire  Ins.  Co.,  U.  S.  Dist.  Ct.  Iowa,  1861,  cited  in 
Digest  of  Fire  Insurance  Decisions,  2d  ed.,  by  Clarke,  p.  584. 

4  Kibbe  v.  Hamilton  Mut.  Ins.  Co.,  11  Gray  (Mass.),  163. 

5  Swift  V.  Vermont  Mut.  Fire  Ins.  Co.,  18  Vt.  305. 

6  Warner  v.  Middlesex  Mut.  Ass.  Co.,  21  Conn.  444.     But  see  post,  §  202. 

'  Eminence  Mut.  Ins.  Co.  v.  Jesse,  1  Met.  (Ky.)  563.    In  this  case  the  ques- 


316  INSURANCE  :   FIRE,   LIFE,    ACCIDENT,   ETC. 

§  290.  Incumbrance.  —  The  general  object  of  the  inquiry  as 
tp  incumbrance  is  to  ascertain  the  amount  of  the  interest  of 
the  insured  in  the  property  as  affecting  the  judgment  of  the 
insurers  upon  the  value  of  the  risk,  by  taking  into  considera- 
tion the  motive  which  the  insured  may  have  in  the  preservation 
of  the  property.  Mutual  insurance  companies  are  also  inter- 
ested to  know  the  amount  of  the  incumbrance  with  reference 
to  the  value  of  any  lien  which  they  may  have  for  the  security 
of  the  payment  of  assessments.  Statements  as  to  incum- 
brance are  material,  and  have  regard  to  the  risk.^  Where  the 
fact  of  incumbrance  is  required  to  be  stated  by  special  condi- 
tions or  by  specific  inquiry,  a  general  statement  of  the  fact, 
without  giving  the  particulars,  or  the  amount,  is  sufficient, 
even  though  the  amount  be  called  for,  if  a  policy  be  issued 
upon  the  incomplete  and  general  answer.  The  acceptance 
of  the  risk  and  issue  of  the  policy  on  the  general  answer 
will  be  deemed  a  waiver  on  the  part  of  the  insured  of  further 
particulars.^  But  if  no  answer  at  all  be  given  to  the  inquiry, 
it  has  been  held  to  be  the  equivalent  of  a  negative  answer, 
and  to  avoid  the  policy.^  And  if  the  insured  undertake  to 
state  the  number  of  mortgages,  and  does  not  state  them  truly, 
his  policy  will  be  void.*  And  if  both  real  and  personal  prop- 
erty be  insured,  and  two  mortgages  exist,  one  on  both  the  real 
and  personal  property,  and  the  other  on  the  real  alone,  a  fail- 
ure to  state  either  mortgage  will  avoid  the  policy  as  to  both 
kinds  of  property  insured.^    And  a  substantially  untrue  state- 

tion  was,  "  Have  you  a  clear  title  to  the  property  which  you  wish  to  be  insured "?  " 
to  which  the  answer  was,  "  It  was  the  house  of  J.  P.  Force,  whose  title  was  as 
good  as  any  man's  in  the  country,  and  who  was  the  father  of  my  wife." 

'  Friesmuth  v.  Agawam  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  588;  Patten  v. 
Merchants'  and  Farmers'  Ins.  Co.,  38  N.  H.  338 ;  Kichardson  v.  Maine  Ins.  Co., 
46  Me.  394 ;  Gahagan  v.  Union  Mut.  Ins.  Co.,  43  N.  H.  176. 

2  Nichols  V.  Fayette  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  63 ;  Wyman  v.  Peo- 
ple's Equity  Ins.  Co.,  1  Allen  (Mass.),  301. 

3  Lbehner  v.  Home  Mut.  Ins.  Co.,  17  Mo.  247. 

4  Towne  v.  Fitchburg  Mut.  Fire  Ins.  Co.,  7  Allen  (Mass.),  51;  Smith  v. 
Empire  Ins.  Co.,  25  Barb.  (N.  Y.)  497  ;  Battles  v.  York  County  Mut.  Ins.  Co., 
41  Me.  208. 

J-  Brown  v.  People's  Mut.  Ins.  Co.,  11  Cush.  (Mass.)  280. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  317 

meiit  of  the  amount  will  also  avoid  the  policy.^  And  that, 
too,  without  reference  to  the  fact  that  the  company  is  a  foreign 
one,  and  has  no  lien  in  the  State  where  the  insurance  is  made.^ 
And  in  the  amount  should  be  included  accrued  interest.^ 

§  291.  Incumbrance,  what  is.  —  A  mortgage,  of  course,  is 
an  incumbrance,^  though  without  consideration,  and  therefore 
fraudulent  and  void  as  against  creditors,^  and  though  unre- 
corded, if  delivered  ;  ^  although  the  insured  did  not  acquire 
title  till  after  the  date  of  the  mortgage.^  So  is  a  lien  for  taxes ;  * 
and  a  mechanic's  lien  ;  ^  and  an  attachment ;  ^^  and  a  seizure 
on  execution  ;  ^^  and  a  title  under  a  sale  on  execution,  subject 
to  the  debtor's  equity  of  redemption  ;  ^^  and  an  assessment 
upon  a  deposit  note  to  pay  a  loss ;  ^^  and  a  lien  for  a  balance 
due  of  the  purchase-money  where  the  purchaser  is  in  posses- 
sion under  an  agreement  for  purchase,  having  paid  part  of  the 
purchase-money.^^ 

§  292.  Incumbrance,  what  is  not.  —  A  mortgage  which  has 
been  paid,  though  not  discharged  of  record,  is  no  longer  an 
incumbrance.^"  Nor  is  a  bond  for  the  conveyance  of  the  prem- 
ises insured,  upon  the  payment  of  the  purchase-money  at  a 
specified  time,  although  the  forfeiture  on  account  of  the  ex- 
piration of  the  time  has  been  waived,  if,  in  fact,  the  money 

1  Lowell  V.  Middlesex  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  127;  Hayward  v 
New  Eng.  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  444. 

2  Davenport  r.  New  Eng.  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  340. 
5  Jacobs  V.  Eagle  Mut.  Fire  Ins.  Co.,  7  Allen  (Mass.),  132. 

*  Masters  v.  Madison  County  Mut.  Ins.  Co.,  11  Barb.  (N.  T.)  624. 

5  Treadway  v.  Hamilton  Mut.  Ins.  Co.,  29  Conn.  68. 

6  Hutchins  v.  Cleveland  Mut.  Ins.  Co.,  11  Ohio  St.  477. 

7  Packard  v.  Agawam  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  334. 

8  Wilbur  V.  Bowditch  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  446. 

9  Longhurst  v.  Conway  Fire  Ins.  Co.,  U.  S.  Dist.  Ct.  Iowa,  1861,  cited  in 
Digest  of  Fire  Ins.  Decisions  (2d  ed.),  p.  247. 

1"  Brown  v.  Commonwealth  Ins.  Co.,  41  Penn.  St.  187. 

n  Penn.  Ins.  Co.  v.  Gottsman,  48  Penn.  158. 

1-  Campbell  v.  Hamilton  Mut.  Ins.  Co.,  51  Me.  69. 

"  Jackson  v.  Farmers'  Mut.  Fire  Ins.  Co.,  5  Gray  (Mass.),  52;  Tuttle  v 
Eobinson,  33  N.  H.  104. 

1*  Keynolds  v.  State  Mut.  Ins.  Co.,  2  Grant  (Penn.),  326. 

1*  Hawkes  v.  Dodge  County  Mut.  Ins.  Co.,  11  Wis.  188.  But  see  Warner  v 
Middlesex  Mut.  Ass.  Co.,  21  Conn.  444,  ante,  §  289. 


318  insurance:  fire,  life,  accident,  etc. 

has  not  been  paid.^  In  Jackson  v.  Farmers'  Mutual  Fire 
Insurance  Company,^  the  question  arose  whether  a  liability 
for  an  assessment  on  a  deposit  note,  laid  under  a  policy  which 
was  afterwards  declared  void  on  account  of  an  increase  of  the 
risk,  was  an  incumbrance  such  as  ought  to  have  been  dis- 
closed by  the  insured  in  a  new  policy  taken  out  from  another 
company  after  tbe  increase  of  risk  and  before  the  policy  was 
declared  void,  and  was  discussed,  though  not  decided,  with  an 
evident  inclination  to  the  negative.  "  It  will  be  a  grave  ques- 
tion, we  think,"  says  Shaw,  C.  J.,  "  whether  a  remote  con- 
tingent liability  or  possibility  of  charge  for  a  very  minute 
assessment  is  an  incumbrance  within  the  meaning  of  this 
contract  of  insurance.  Perhaps  a  different  rule  may  apply  in 
covenants  against  incumbrances,  because  founded  on  a  different 
reason  ;  thus  a  purchaser,  having  paid  a  full  compensation  for 
the  estate,  with  all  its  benefits,  has  a  right  to  expect  in  his 
grant  and  covenants  an  indefeasible  title  without  further 
charge.  ...  It  is,  in  effect,  a  stipulation  that  if  there  be  any 
charge  upon  the  estate,  known  or  unknown,  the  vendor  of  the 
estate  will  pay  the  expense  of  removing  it.  Should  the  same 
rule  apply  to  this  subject  of  representation  with  a  view  to 
insurance,  every  married  man  making  application  for  an  insur- 
ance, in  answer  to  the  question  whether  his  estate  is  incum- 
bered, must  state  that  he  has  a  wife  living,  otherwise  the 
policy  would  be  void." 

§  29-3.  Incumbrance  —  Several  Mortgages.  —  If  a  mortgagee 
insures  his  interest  as  mortgagee,  under  a  provision  calling  for 
incumbrances  calculated  to  affect  the  interest,  other  mortgages 
should  be  stated.^  But  where  the  insurance  is  specifically 
upon  the  particular  interest,  and  not  upon  the  property,  other 
incumbrance  upon  the  property  need  not  be  stated ;  as  where 
a  "mechanic's  lien  on  the  Lawrence  Block"  was  specified  as 
the  subject-matter  of  insurance,  and  a  negative  answer  to  the 

1  Newhall  v.  Union  Mut.  Fire  Ins.  Co.,  52  Me.  180. 

2  5  Gray  (Mass.),  52. 

3  Addison  v.  Ken.  and  Lou.  Ins.  Co.,  7  B.  Mon.  (Ky.)  470;  Smith  v.  Colum- 
bia Ins.  Co.,  17  Penn.  St.  253;  Rex  v.  Insurance  Companies,  2  Phila.  (Penn.) 
857. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  319 

question  whether  "  it  "  was  incumbered  was  given,  it  was  held 
that  this  was  no  misrepresentation,  although  there  were  other 
liens  upon  the  same  block. ^ 

§  294.  Incumbrance  made  after  Application.  —  In  Howard  Fire 
Insurance  Company  v.  Bruner,-  application  was  made  for  insur- 
ance July  17,  and  the  policy  countersigned  and  issued  on  the 
25th  of  the  same  month.  A  mortgage  existing  on  the  17th  was 
disclosed  in  the  application,  but  a  mortgage  executed  on  the 
25th,  and  after  the  delivery  of  the  policy,  was  not  disclosed. 
And  it  was  held  that  it  need  not  be,  as  it  was  a  subsequent 
incumbrance,  whereas  the  inquiry  related  only  to  existing 
incumbrances.  And  in  Button  v.  New  England  Mutual  Fire 
Insurance  Company,  a  mortgage  executed  on  same  day  when 
the  policy  was  issued,  but  whether  before  or  after  delivery  of 
the  policy  did  not  appear,  was  held  to  be  a  subsequent  incum- 
brance which  the  applicant  was  not  bound  to  disclose  in  reply 
to  the  interrogatory  on  that  point,  whether  executed  before  or 
after  the  delivery  of  the  policy,  as  it  was  not  an  incumbrance 
when  the  application  was  filed  and  the  answer  made,  five  days 
before.  What  would  be  the  effect  if  the  mortgage  was  in  con- 
templation at  the  time  the  application  was  filed,  and  purposely 
kept  open  till  after  the  delivery  of  the  policy,  was  not  decided. 
But  it  was  intimated  that  such  facts  might  amount  to  a  fraud- 
ulent concealment  of  a  fact  material  to  the  risk.  Where  a  policy 
was  assigned  by  consent  of  the  insurers  to  the  plaintiffs,  and 
afterwards  the  insured  mortgaged  the  property  insured  to  the 
plaintiffs  to  protect  them  as  accommodation  indorsers  for  the 
insured,  it  was  held  that  this  was  not  such  an  incumbrance 
as  was  contemplated  in  the  policy  which  provided  for  notice  of 
any  incumbrance  "  sufficient  to  reduce  the  real  interest  of  the 
insured  to  a  sum  only  equal  to,  or  below,  the  amount  insured.^ 
But  it  certainly  seems  an  extremely  liberal  interpretation  in 
favor  of  the  insured,  to  protect  him  against  the  consequences 
of  a  material  change,  effected  by  himself,  in  the  status  of  the 
property  insured,  between  the  time  of  the  application  and  that 

1  Longhurst  v.  Conway  Fire  Ins.  Co.,  U.  S.  Dist.  Ct.  Iowa,  18G1. 

2  23  Penn.  St.  50. 

5  Allen  V.  Hudson  River  Mut.  Ins.  Co.,  19  Barb.  (N.  Y.)  443. 


320  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

of  issuing  the  policy,  by  holding  that  the  insurance  is  by  rela- 
tion from  the  date  of  filing  the  application.  Besides  opening 
a  wide  door  to  fraud,  it  does  not  seem  to  be  in  accordance  with 
the  well-settled  doctrine  that  a  material  change  intervening, 
pending  the  negotiations,  ought  to  be  disclosed. ^ 

1  See  ante,  §  190. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  321 


CHAPTER  XII. 

OP   THE   SPECIAL   PROVISIONS    OF   THE   CONTRACT    (^continued). 

§  295.  Good  Health  —  Healthy  Life.  —  111  the  early  history  of 
life  insurance  in  England,  and  before  the  officers  had  acquired 
the  art  or  indeed  seen  the  necessity  of  hedging  the  insured 
about  with  warranties,  in  Ross  v.  Bradshaw^  it  was  held,  by 
Lord  Mansfield,  that  a  warranty  of  good  health  meant  simply 
that  the  applicant  was  in  a  reasonably  good  state  of  health,  and 
was  such  a  life  as  ought  to  be  insured  on  common  terms.  That 
it  did  not  mean  that  he  was  free  from  every  infirmity,  and  in 
fact  though  he  had  one,  the  life  might  be  a  good  one ;  and  the 
fact  that  insured  had  several  years  before  received  in  battle  a 
wound  in  the  loins,  which  so  affected  him  that  he  could  not 
retain  his  urine  or  fajces,  though  not  mentioned,  was  not 
inconsistent  with  a  good  insurable  life.  And  about  twenty 
years  later,  in  Willis  v.  Poole,^  where  it  appeared  the  insured 
was  at  times  troubled  with  spasms  from  violent  fits  of  the  gout, 
though  at  the  time  of  insurance  in  his  usual  state  of  health, 
Lord  Mansfield  said  :  "  The  imperfection  of  language  is  such 
that  we  have  not  words  for  every  different  idea,  and  tlie  real 
intention  of  the  parties  must  be  found  out  by  the  subject- 
matter.  By  the  present  policy  the  life  is  warranted  to  some 
of  the  underwriters,  in  health  ;  to  others,  in  good  health.  And 
yet  there  is  no  difference  in  point  of  fact.  Such  a  warranty 
can  never  mean  that  a  man  has  not  in  him  the  seeds  of  some 
disorder.  We  are  all  born  with  the  seeds  of  mortality  in  us. 
A  man  subject  to  the  gout  is  a  life  capable  of  being  insured,  if 
he  has  no  sickness  at  the  time  to  make  it  an  unequal  contract." 
In  Watson  v.  Mainwaring^  there  was  a  warranty  that  the  insured 
was  free  from  any  "  disorder  tending  to  shorten  life,"  while  in 

1  1  W.  B.  312,  A.D.  1760.  2  2  Tarke,  Ins.  050. 

3  4  Taunt.  763. 

21 


322  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

fact  the  applicant  was  afflicted  with  a  disorder  of  the  bowels, 
which  might  proceed  either  from  a  defect  of  the  internal  or- 
gans, which  would  tend  to  shorten  life,  or  it  might  proceed 
from  dyspepsia,  which  would  not,  unless  organic  and  excessive  ; 
and  it  was  left  to  the  jury  to  say  whether  it  was  dyspepsia  or 
not,  and,  if  so,  whether  it  was  organic  and  excessive.  "  All  dis- 
orders," said  Chambre,  J.,  "  have,  more  or  less,  a  tendency  to 
shorten  life ;  even  the  most  trifling,  —  corns  may  end  in  mortifi- 
cation. That  is  not  the  meaning  of  the  clause.  If  dyspepsia 
were  a  disorder  that  tended  to  shorten  life  within  the  exemp- 
tion, the  lives  of  half  the  members  of  the  profession  of  the  law 
would  be  uninsurable."  A  disease  tending  to  shorten  life  is 
one  which  has  a  continuing  tendency,  and  not  stating  one 
which  might  or  might  not  have  produced  that  result  is  no  con- 
cealment.^ Of  course  if  there  is  no  warranty  the  insurers  take 
every  risk,  where  there  is  no  fraud,  as  by  misrepresentation  or 
concealment.^  "  Good  health  "  does  not  import  a  perfect  phys- 
ical condition.  The  epithet  "  good  "  is  comparative,  and  does 
not  ordinarily  mean  that  the  applicant  is  free  from  infirmities. 
Such  an  interpretation  would  exclude  from  the  list  of  insurable 
lives  a  large  proportion  of  mankind.  The  term  must  be  inter- 
preted with  reference  to  the  subject-matter  and  the  business  to 
which  it  relates.  Slight  troubles,  not  usually  ending  in  serious 
consequences,  and  so  unfrequently  that  the  possibility  of  such 
result  is  usually  disregarded  by  insurance  companies,  may  be 
regarded  as  included  in  the  term  good  health.^  "Good  health" 
means  apparent  good  health,  without  any  ostensible,  or  known, 
or  felt  symptom  of  disorder,  and  does  not  exclude  the  exist- 
ence of  latent  unknown  defects.*  The  fact  that  death  may 
ensue,  and  in  fact  does  unexpectedly  ensue  in  the  particular 
case,  from  one  of  these  slight  troubles,  is  of  no  importance.^ 
But  a  predisposition  to  a  disease, — dyspepsia  for  instance,  —  of 
such  a  character  and  to  such  a  degree  as  to  seriously  affect  the 

1  Rose  V.  Star  Ins.  Co.,  2  Irish  Jurist,  o.  s.  206. 

2  Stackpole  v.  Simon,  2  Parke,  Ins.  648. 

3  Peacock  v.  N.  Y.  Life  Ins.  Co.,  20  N.  Y.  293,  aflSrming  s.  c.  1  Bosw.  (N.  Y. 
Superior  Ct.)  338. 

<  Hutchinson  v.  Nat.  Loan  Ass.  Soc,  7  Ct.  of  Sess.  (Scotch)  2d  ser.  467. 
^  Watson  V.  Mainwaring,  4  Taunt.  763. 


I 

I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  323 

health  and  to  produce  bodily  infirmity,  is  incompatible  with  a 
warranty  of  good  health.^  A  "  healthy  life "  is  a  good  life, 
one  that  would  be  taken  at  common  rates  ;  and  one  which 
would  be  cbarged  higher  than  the  usual  rate  of  premium  is 
not  a  healthy  life.-  And  a  "  drunken  fellow  "  is  not  a  good 
life.^  Equivocation  in  the  answers  touching  health  is  of  course 
as  fatal  as  falsehood.'*  » 

§  296.  Serious  Illness  —  Tendency  to  shorten  Life.  —  The 
ordinary  question  whether  the  applicant  has  ever  had  any  seri- 
ous illness,  as  the  word  serious  is  a  relative  term,  involving 
a  question  of  degree,  and  it  being  certain  that  there  are  all 
degrees  of  illness  from  the  slightest,  about  which  no  concern 
is  felt  by  any  one,  to  the  most  aggravated,  attended  by  the  most 
alarming  developments  and  the  most  serious  consequences, 
about  which  there  is  everywhere  the  highest  degree  of  concern, 
and  as  even  a  disease  regarded  in  its  course  as  of  the  most 
trivial  in  its  character  may  be  followed  by  the  most  serious 
results,  seems  to  be  a  question  of  opinion,  the  expression  of 
which  should  be  based  upon  intelligence  and  good  faith.  What 
one  may  call  serious  another  might  not ;  and  where  there  is  no 
test  furnished  by  the  insurers  by  which  the  applicant  can  know 
what  serious  illness  means,  his  failure  to  mention  one  which  he 
does  not  regard  as  serious  works  no  forfeiture  of  the  policy, 
though  in  fact  the  illness  not  mentioned  was  a  serious  one.^ 
So,  if  the  inquiry  be  as  to  the  prior  existence  of  disease  having 
a  tendency  to  shorten  life,  or  rendering  an  assurance  upon  it 
more  than  usually  hazardous.  An  honest  belief  in  the  truth 
of  his  answer  is  all  that  is  required  of  the  applicant.  He  may 
have  had  repeated  attacks  of  disease,  but  if  he  does  not  know 
or  have  reason  to  believe  that  they  come  within  the  range  of 
the  inquiry,  his  failure  to  answer  is  immaterial,  even  though  in 

1  N.  Y.  Life  Ins.  Co.  v.  Flack,  3  Md.  341. 

2  Brealy  v.  Collins,  1  You.  317 ;  Ross  v.  Bradshaw,  1  W.  Bl.  312. 

'  Weskett,  Ins.  335.  In  Taylor's  Medical  Jurisprudence  may  be  found  many 
valuable  suggestions  on  the  subject  of  representation  as  to  health  and  disease 
and  personal  habits,  with  references  to  some  cases  not  elsewhere  reported. 
Phila.  ed.  1866,  738  et  seq. 

*  Smith  V.  .Etna  Life  Ins.  Co.,  49  N.  Y.  211. 

5  Hogle  V.  Guardian  Life  Ins.  Co.,  6  Rob.  (N.  Y.  Superior  Ct.)  567. 


324  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

point  of  fact  they  had  a  tendency  to  shorten  life  and  to  increase 
the  hazard  of  the  risk.  "  In  the  argument,"  said  the  court,^ 
"  we  were  referred  by  the  defendant's  counsel  to  several 
autliorities,  —  amongst  others,  Lindeneau  v.  Desborough,^  — 
establishing  the  proposition,  which,  as  a  rule,  is  indisputable, 
that  it  is  the  duty  of  a  party  effecting  an  insurance  on  life  or 
property  to  communicate  to  the  underwriters  or  other  insurer 
all  material  facts  within  his  knowledge,  touching  the  subject- 
matter  of  insurance,  and  that  it  is  a  question  for  the  jury 
whether  any  particular  fact  was  or  was  not  material  to  be  com- 
municated. It  is,  however,  equally  clear  that  the  underwriters 
may  in  any  particular  case  limit  their  right  in  this  respect  to  that 
of  being  informed  of  what  is  in  the  knowledge  of  the  assured, 
not  only  as  to  its  existence  in  point  of  fact  but  as  to  its  mate- 
riality ;  and  in  our  opinion  that  is  the  effect  of  the  limited 
declaration  required  in  the  present  case  as  to  disorders  or  cir- 
cumstances tending  to  shorten  life  or  to  render  an  insurance 
upon  the  life  insured  more  than  ordinarily  hazardous."  In 
such  cases  the  rule  seems  to  be  that  if  the  inquiry  call  for  an 
answer  which  involves  a  matter  of  opinion,  the  applicant  is 
answerable  only  for  the  honesty  of  his  opinion,  although  the 
answer  be  untrue  in  fact.  And  substantially  the  same  rule  was 
laid  down  in  Hutchinson  v.  National  Loan  Assurance  Society,' 
where  the  inquiry  was  whether  any  material  circumstances 
touching  health  or  habits  of  life  with  which  insurers  ought 
to  be  made  acquainted  was  withheld,  and  it  was  decided  that 
the  answer  was  only  a  warranty  to  the  extent  of  the  knowledge 
and  reasonable  belief  of  the  insured.  "  A  disease  requiring 
confinement "  seems  to  be  one  calling  for  the  attendance  of  a 
physician.^ 

§  297.  Subject  to  or  afflicted  with  Disease. —  And  the  same 
rule  is  applicable  to  inquiries  whether  the  applicant  has  been 
afflicted  with  any  particular  disease  or  symptoms  of  disease. 
He  is  bound  to  answer  in  good  faith  and  according  to  his 
knowledge,  —  that  knowledge  which  a  man  of  ordinary  intelli- 

1  Jones  V.  Provincial  Ins.  Co.,  3  C.  B.  n.  s.  65.  2  8  B.  &  C.  586. 

s  7  Ct.  of  Sess.  Cas.  2(1  ser.  (Scotch)  467. 

*  Cazenove  v.  Brit.  Eq.  Ass.  Co.,  6  C.  B.  n.  b.  437. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  325 

gence  ought  to  have  and  in  law  is  presumed  to  have,  touching 
matters  relating  to  his  own  physical  condition  and  history. 
Though  some  of  the  cases  make  use  of  language  strong  enough 
to  require  that  he  must  answer  truthfully  at  his  peril,  without 
regard  to  the  applicant's  knowledge  of,  or  reason  to  believe,  the 
truth  of  the  fact  as  stated  or  omitted,  yet,  as  we  have  before 
seen,^the  facts  in  those  cases  did  not  require  so  extreme  a  rul- 
ing ;  and  it  may  be  doubted  if,  in  view  of  the  current  of  opinion, 
in  a  case  presenting  tlie  exact  point,  the  courts  using  this  lan- 
guage will  not  be  found  in  accord  with  the  other  authorities. 
Tlius  wiiere  the  statement  in  answer  to  an  inquiry  as  to  a 
particular  disease  or  infirmity,  as  that  the  party  has  not  l)een 
"  afflicted  with  "  or  "  subject  to  "  fits,  for  instance,  the  interpre- 
tation to  be  put  upon  the  clause  is  not  that  the  person  never 
had  a  fit  accidentally,  but  that  he  was  not  at  the  time  of  the 
insurance  a  person  habitually  or  constitutionally  afflicted  with 
fits,  or  a  person  liable  to  fits  from  some  peculiarity  of  tempera- 
ment, either  natural  or  contracted,  from  some  cause  or  otlier.^ 
So,  where  the  question  was  whether  the  applicant  had  ever  been 
afflicted  with  the  gout.  "  As  to  the  first  answer,"  said  Cock- 
burn,  C.  J.,  in  his  charge  to  the  jury,  in  Fowkes  v.  Manchester 
and  London  Life  Insurance  Company,^  "to  the  question  whether 
he  had  ever  been  afflicted  with  the  gout,  no  doubt  it  must 
be  considered  with  some  reasonable  latitude,  and  the  answer 
would  not  be  false  merely  because  he  had  had  some  symptoms 
which  an  experienced  medical  man  might  see  indicated  the 
presence  of  gout  in  the  system.  You  will  probably  consider 
whether  there  was  gout  in  a  sensible  appreciable  form  ;  and  in 
considering  that  question  you  will  bear  in  mind  that  the  medi- 
cal man  himself  described  the  only  attack  which  preceded  the 
policy  as  the  slightest  possible  cape  of  gout,  and  that  there  is 
no  positive  evidence  that  the  deceased  knew  that  he  had  the 
gout."  Where  the  insurance  is  upon  the  life  of  a  tliird  party, 
the  knowledge  and  good  faith  of  the  third  party  may  be  imputa- 
ble to  the  insured.* 

1  Ante,  §§  202-205. 

2  Chattock  V.  Sliaw,  1  Mood.  &  Rob.  498.  »  3  F.  &  F.  440. 

♦  Uuckett  V.  Williams,  2  Carr.  &  Marsh.  348 ;  Forbes  i-.  Ed.  Life  Ass.  Co.,  10 
Ct.  of  Sess.  Cas.  (Scotch)  451. 


326  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

§  298,  Afflicted  with  Disease.  —  In  Yose  v.  Eagle  Life  and 
Health  Insurance  Company ,i  the  questions  were  whether  the 
applicant  or  any  of  his  family  had  heen  afflicted  with  pulmonary 
complaints,  consumption,  or  spitting  of  blood,  or  whether  he 
Was  afflicted  with  any  disease  or  disorder,  and  the  court 
thought  he  ought  to  have  stated  the  "  symptoms  of  consump- 
tion which  he  had,  and  which  he  knew  he  had,  and  which  he 
had  had  for  five  months  previous,"  in  answer  to  the  last  inter- 
rogatory. But  whether  this  were  so  or  not,  the  denial  that  he 
had  been  afflicted  with  pulmonary  complaints,  consumption,  or 
spitting  of  blood,  under  such  circumstances,  whether  regarded 
as  a  warranty  or  representation,  avoided  the  policy.  In  a  later 
case  in  the  same  State,  where  the  question  was  whether  the 
insured  had  been  "  subject  to  or  at  all  affected  by  spitting  of 
blood," 2  the  appellate  court  held  the  following  language:  — 

"  The  court  instructed  the  jury  that  the  repeated  spitting  of 
blood,  accompanied  by  a  cough,  was  so  far  an  indication  of  dis- 
ease that  if  the  applicant  had  suffered  from  it  he  was  bound  to 
have  so  stated ;  that  if  he  was  sulyect  to  occasional  spitting  of 
blood,  accompanied  by  a  cough,  he  was  bound  to  have  stated 
that  fact ;  and  that  the  same  was  true  if  he  had  spit  blood  in 
a  single  instance,  if  recent,  and  such  as  to  excite  apprehension 
in  his  own  mind  that  it  was  the  result  of  disease. 

"  Considering  the  various  forms  and  degrees  in  which  the 
spitting  of  blood  with  a  cough  may  manifest  itself,  the  uncer- 
tainty as  to  its  source  and  cause,  and  the  character  of  the  facts 
which  the  testimony  in  this  case  tended  to  prove,  we  cannot 
say  that  the  rulings  of  the  court  ought  to  have  gone  further 
than  this  in  favor  of  the  propositions  of  the  defendant.  Tlie 
mere  raising  of  a  small  q\iantity  of  blood  with  a  cough  in  a 
single  instance  is  not  necessarily  an  indication  of  disease  or 
a  material  circumstance,  so  that  such  an  occurrence,  however 
slight,  at  any  time  during  the  previous  life  of  the  applicant, 
would  make  his  answer  such  a  misrepresentation  as  to  require 
that  the  court  should  so  declare  it  as  a  matter  of  law." 

And  in  the  same  case,  on  exceptions  after  another  trial,  the 

1  G  Cush.  (Mass.)  42. 

2  Campbell  v.  New  England  Mut.  Life  Ins.  Co.,  98  Mass.  381. 


SPECIAL   PROVISIONS    OP   THE   CONTRACT.  327 

question  being  whether  the  insured  had  truly  answered  the 
same  question  relative  to  "  bronchitis,"  the  court  say :  "  It  was 
for  the  jury  to  decide  whether  '  chronic  bronchitis  '  or  '  bron- 
chial difficulty,'  or  any  other  bodily  affection  or  condition  to 
which  the  assured  was  found  by  them  to  have  been  subject, 
amounted  to  bronchitis,  consumption,  disease  of  the  lungs, 
or  some  other  of  the  infirmities  stated  in  the  application,  and 
relied  on  by  the  defendants ;  and  whether  the  spitting  of  blood 
by  him,  if  proved  to  have  taken  place,  was  under  such  circum- 
stances as  to  indicate  disease  in  his  throat,  lungs,  air  passages, 
or  other  internal  organs."  So  where  the  application  states 
that  the  insured  had  not  had  "  any  spitting  of  blood,  consump- 
tive symptoms,"  &c.,  the  "  spitting  of  blood  "  must  be  taken 
to  mean  a  symptom  of  disease  tending  to  shorten  life,  the  mere 
fact  being  of  no  significance,  as  that  may  happen  from  the 
mere  pulling  a  tooth.  Yet  the  court  were  of  the  opinion  that 
if  a  single  instance  of  spitting  of  blood  was  the  "  result  of  the 
disease  called  spitting  of  blood,"  it  ought  to  be  stated.  If  he 
had  "  spit  blood  from  his  lungs,  no  matter  in  how  small  quan- 
tity, or  even  had  spit  blood  from  an  ulcerated  sore  throat,  he 
would  be  bound  to  state  it;  "  and  one  of  the  learned  judges, 
Pollock,  C.  B.,  went  so  far  as  to  say  that  "  one  single  act  of 
spitting  of  blood"  ought  to  have  been  mentioned,  though  he  had 
just  before  said  that  the  expression  "  spitting  of  blood  "  no  doubt 
meant  the  disorder  so  called,  whether  proceeding  from  the 
lungs,  the  stomach,  or  any  other  part  of  the  body,  leaving  it 
fairly  to  be  inferred  that  he  intended  to  go  no  further  than  his 
brethren  in  respect  to  the  single  act.^  In  Fried  v.  Royal 
Insurance  Company,  the  question  tried  was  whether  the  "  spit- 
ting of  blood  "  proceeded  from  the  lungs  or  from  the  stomach, 
under  a  representation  by  the  insured  that  he  was  not  afflicted 
with  spitting  of  blood  or  disease  of  the  lungs.^  The  propriety 
of  submitting  the  question  in  this  form  to  the  jury  seems  not 
to  have  been  contested  in  either  of  the  appellate  courts,  the 
Supreme  Court,^  or  the  Court  of  Appeals.^     Fainting  fits  are 

1  Geach  v.  Ingall,  14  Mees.  &  Wels.  95. 

2  So  stated  in  Bliss  on  Insurance,  p.  159. 

»  47  Barb.  (N.  Y.)  127.  *  2  Ins.  L.  J.  126. 


328  insurance:  fire,  life,  accident,  etc. 

not  "  epileptic  or  other  fits,"  and  are  consistent  with  the  truth 
of  a  representation  that  the  applicant  is  not  subject  to  "  epilep- 
tic or  other  fits."^ 

§  299.  Habits  —  Intemperance  —  Opium-eating.  —  A  warranty 
that  tlie  insured  is  of  sober  and  temperate  habits  means  that 
at  the  time  of  insurance,  and  for  such  a  reasonable  time  prior 
thereto  as  would  allow  of  a  man  evincing  a  habit,  the  insured 
was  a  temperate  man.  The  question  is  not  whether  he  was 
intemperate  to  such  a  degree  as  to  injure  his  health.  The 
insurers  have  a  right  to  protect  themselves  by  guarding  against 
the  risks  of  pernicious  habits ;  and  if  one  who  stipulates  for 
habitual  sobriety  and  temperance  is  an  habitual  drunkard,  he 
loses  his  protection  under  such  a  warranty,  though  his  health 
may  be  good  and  his  constitution  unimpaired.^  And  especially 
have  the  insurers  a  right  to  know  that  the  insured  had  had 
delirium  tremens  within  one  year  prior  to  the  issuing  the  pol- 
icy, and  that  during  the  year  prior  to  that  he  had  been  attended 
by  his  physician  on  account  of  the  effects  of  excessive  drink- 
ing.^ In  Scotland  it  is  held  that  the  habit  of  using  opium, 
laudanum,  or  spirituous  liquor  to  such  an  extent  as  to  impair 
the  health  is  one  that  ought  to  be  disclosed.  And  a  policy  was 
held  void  for  non-communication  of  this  fact,  the  applicant 
having  stated  that  he  was  in  perfect  health,  and  a  negative 
answer  by  both  the  medical  and  other  referees  to  the  question 
whether  "  they  knew  any  reason  why  an  insurance  on  the  life 
would  be  more  than  usually  hazardous  "  having  been  given.* 
If  the  agreement  is  that  at  the  time  of  the  insurance  the  insured 
is  a  man  of  sober  and  temperate  habits,  and  that  is  not  the 
fact,  it  is  no  answer  to  say  that  the  habits  were  not  such  as  to 
injure  the  health.^  Addicted  to  the  excessive  use  of  intoxicat- 
ing liquor  means  habitual  excessive  use,  not  occasional.^  Hab- 
its of  intemperance  acquired  subsequent  to  the  insurance,  even 
though  the  cause  of  death,  will  not  avoid  the  policy,  unless 

1  Shilling  V.  Accidental  Death  Ins.  Co.,  1  F.  &  F.  116. 

2  Southcombe  v.  Merriman,  Carr.  &  Marsh.  286. 

»  Hutton  V.  Waterloo  Life  Ass.  Soc,  1  F.  &  F.  735. 
*  Forbes  v.  Ed.  Life  Ass.  Co.,  10  Ct.  of  Sess.  Cas.  (Scotch)  1st  ser.  451. 
^  Southcombe  v.  Merriman  et  als.,  1  Carr.  &  Marsli.  286. 
6  Mowry  v.  Home  Ins.  Co.,  1  Bigelow,  Life  and  Ac.  Ins.  Cas.  698,  to  be 
reported  in  9  R.  I. 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  829 

expressly  so  stipulated.^  And  that  the  insured  died  from  an 
injury  received  while  intoxicated  is  immaterial.^  And  a  man 
cannot  truly  be  said  always  to  have  been  sober  and  temperate, 
who,  though  usually  of  sober  and  temperate  habits,  occasion- 
ally indulges  in  drunken  debauches,  which  sometimes  termi- 
nate in  delirium  tremens?' 

§  300.  Same  Subject  —  Distinction  between  Answer  to  spe- 
cific Question  and  a  Want  of  Fulness  in  Answ^er  to  a  general 
Question.  —  The  same  general  questions  as  to  health  and  hab- 
its came  before  the  court  in  a  very  recent  case,  where  some 
of  the  questions  were  somewhat  different  in  form  from  any  of 
those  we  have  been  considering,  one,  especially,  calling  for  an 
answer  whether  the  habits  of  the  insured  were  uniformly  and 
strictly  sober  and  temperate.*  The  case  was  tried  before  Dil- 
lon and  Treat,  JJ.,  and  seems  to  have  been  carefully  consid- 
ered. And  in  charging  the  jury  the  court  held  the  following 
language :  — 

"  The  main  defence  upon  the  trial  has  been  rested  upon 
alleged  misrepresentations  by  the  assured  in  the  application, 
respecting  his  health  and  his  habits  as  to  the  use  of  alcoholic 
drinks. 

"  In  the  application  the  following  questions  were  asked  of 
Henry,  and  answered  by  him :  6.  '  Is  your  health  good  (and, 
as  far  as  you  know),  free  from  any  symptoms  of  disease?* 
Answer :  '  Yes.'  9.  '  Are  your  habits  uniformly  and  strictly 
sober  and  temperate?'  Answer:  'Yes.'  10  (a).  '  Have  you 
ever  been  addicted  to  the  excessive  or  intemperate  use  of  any 
alcoholic  stimulant  or  opium?  '  Answer  :  '  No.'  10  (6).  '  Do 
you  use  habitually  intoxicating  drinks  as  a  beverage  ? '  Answer : 
'  No.' 

"  By  the  terms  of  the  contract  between  these  parties,  these 

^  Eeicliard  v.  Manhattan  Life  Ins.  Co.,  31  Mo.  518;  Horton  v.  Equitable  Life 
Ass.  Soc.  of  the  United  States,  C.  C.  P.  (N.  Y.)  1870;  s.  c.  2  Bigelow,  Life  and 
Ac.  Ins.  Rep.  2,  108. 

2  Ibid. 

*  Mutual  Benefit  Life  Ins.  Co.  v.  Holterhoff,  2  Cincinnati  Superior  Ct.  Rep. 
379. 

4  Swick  V.  Home  Life  Ins.  Co.,  1  U.  S.  Circuit  Ct.  for  the  Eastern  District  of 
Missouri,  March  T.  1873,  2  Ins.  L.  J.  415. 


330  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

answers  are  warranted  to  be  true ;  and  it  is  agreed  in  the  pol- 
icy that  if  these  answers  are  untrue  or  deceptive  in  any  respect, 
the  policy  shall  be  void  and  of  no  effect.  The  parties  have  the 
right  thus  to  agree,  and  are  bound  by  their  agreement,  and 
hence  the  importance  of  understanding  what  the  questions 
asked  were,  and  the  answers  given  thereto.  This  is  the  more 
important,  because  if  the  answers  given  are  untrue,  the  policy 
is  avoided,  although  there  are  no  intentional  or  fraudulent  mis- 
statements, and  although  the  party's  habits  as  to  intoxicating 
drinks  did  not  in  fact  cause  or  even  accelerate  his  death.  We 
remark  to  you,  first,  that  the  questions  as  to  health  and  habits 
in  respect  to  intoxicating  drinks  will  be  taken  to  mean  what 
the  words  employed  by  those  questions  usually  and  commonly 
mean.  They  are  not  words  of  art,  but  words  of  every-day 
meaning,  and  this  is  a  contract  not  between  professional  men 
or  lawyers,  but  a  contract  that  these  companies  profess  to  make 
with  the  world,  and  when  they  ask  a  man  if  his  health  is  good, 
there  is  no  mystery  in  the  question.  If  you  find  from  the  evi- 
dence that  at  the  date  of  the  application  Henry's  health  was 
not  good,  or  if  Henry  knew  of  any  symptom  of  disease  which 
be  did  not  disclose,  then  there  can  be  no  recovery  on  the 
policy.  If  you  find  the  fact  to  be  as  the  company  contends  it 
was,  that  Henry's  general  health  was  at  the  time  impaired  by 
exposure,  or  from  the  use  of  intoxicating  liquors,  or  from  any 
other  cause,  there  can  be  no  recovery  on  the  policy.  But  if  it 
was  shown  to  the  company,  or  its  agent  taking  the  risk,  that 
the  assured  had,  as  certified  by  the  family  physician  to  the 
company,  been  sick  a  few  days  before,  and  if  this  was  a  mere 
temporary  illness  which  was  over  at  the  time,  and  was  disre- 
garded by  the  company,  or  its  agent  taking  the  risk,  as  not 
being  within  the  purview  of  the  question  asked  of  the  assured 
in  this  respect,  the  policy  would  not  be  thereby  avoided. 

"  Now  as  to  the  question  respecting  intoxicating  liquors. 
These  relate  to  the  habits  of  the  party.  The  applicant  stated 
that  he  had  never  been  addicted  to  the  excessive  or  intemperate 
use  of  alcoholic  stimulants.  This  is  not  a  statement  that  he 
had  never  been  addicted  to  the  use  of  intoxicating  liquors  at 
all,  but  a  statement  that  he  had  never  been  addicted  to  the 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  331 

excessive  and  intemperate  use  of  them,  and  it  is  untrue  if 
Henry  had,  and  only  in  case  he  liad,  been  addicted  to  the 
excessive  or  intemperate  use  of" alcoholic  stimulants. 

"  The  application,  in  answer  to  other  questions,  stated  that 
his  habits  were  uniformly  and  strictly  sober  and  temperate,  and 
that  he  did  not  habitually  use  intoxicating  drinks  as  a  bever- 
age. These  questions  and  answers  you  will  perceive  relate  to 
the  habits  of  the  party  in  that  respect.  If  the  company  did  not 
intend  to  insure  any  person  who  used  intoxicating  liquors  at 
all,  it  would  be  very  easy  to  ask  such  a  question.  But  they 
have  not  done  so.  Tiie  occasional  use  of  intoxicating  liquors 
by  the  applicant  would  not  make  these  answers  untrue  ;  nor 
would  they  be  rendered  untrue  by  any  use  of  intoxicating 
drinks  which  did  not  make  his  habits  those  of  a  man  not  uni- 
formly and  strictly  sober  and  temperate,  or  which  did  not 
amount  to  habitual  use  of  such  drinks  as  a  beverage. 

"  It  is  your  province  to  decide  from  the  evidence  whether 
the  assured  was  or  was  not,  at  the  time  the  application  was 
made,  a  man  whose  habits  were  uniformly  and  strictly  sober 
and  temperate,  or  whether  he  did  or  did  not  habitually  use 
intoxicating  stimulants  as  a  beverage  ;  and  if  you  find  his 
answer  to  either  question  to  be  untrue,  there  can  be  no  recov- 
ery on  this  policy,  although,  as  above  remarked,  he  did  not 
intentionally  make  false  answers,  and  although  those  habits  did 
not  in  fact  cause,  hasten,  or  contribute  to  the  death.  We  have 
been  asked  by  the  defendant  to  instruct  you  that  if  the  answers 
as  to  the  health  and  habits  are  not  full,  correct,  and  true,  the 
plaintiff  cannot  recover,  even  though  the  failure  to  make  full 
answers  was  unintentional.  The  application  referred  to  and 
made  part  of  the  policy,  contains  the  provision  :  '  The  under- 
signed does  hereby  covenant  .  .  .  that  the  preceding  answers 
and  this  declaration  shall  be  the  basis  of  the  policy  ;  that  the 
same  are  ivarrantecl  to  be  full,  correct,  and  true,  and  that  no 
circumstance  is  concealed,  withheld,  or  unmentioned  in  relation 
to  the  past  or  present  state  of  health,  habits  of  life,  or  condition 
of  the  said  party  whose  life  is  to  be  assured,  which  may  render 
an  insurance  on  his  life  more  than  usually  hazardous,  or  which 
may  affect  unfavorably  his  prospects  of  life  ; '  and  that '  if  the 


332  INSURANCE  ;    FIRE,   LIFE,    ACCIDENT,    ETC. 

foregoing  answers  and  statements  be  not  in  all  respects  full, 
true,  and  correct,  the  policy  shall  be  void.'  The  policy  repeats 
or  adopts  this  provision.  Now  a  distinction  is  to  be  taken,  we 
think,  between  untruthful  answers  to  specific  questions  and  the 
mere  failure  to  make  full  answers.  Such  failure,  under  these 
provisions,  to  defeat  the  policy  must  relate  to  some  circum- 
stance which  might  render  an  insurance  on  his  life  more  than 
usually  hazardous,  or  which  might  affect  unfavorably  his  pros- 
pects of  life ;  while  an  untruthful  or  incorrect  answer  to  the 
specific  questions  asked  renders  the  policy  absolutely  void, 
though  made  in  relation  to  a  matter  not  material  to  the  risk." 
§  301.  Death  by  Intemperance  —  Proximate  Cause.  —  If  a  policy 
is  by  its  provisions  to  be  void  when  the  insured  shall  die  by 
reason  of  intemperance  in  the  use  of  intoxicating  liquor,  it 
must  appear  that  intemperance  is  the  paramount  and  proxi- 
mate cause  of  death.  It  is  not  enough  that  the  insured  may 
have  been  addicted  to  habits  of  intemperance,  indulged  in  for 
a  considerable  period  prior  to  his  death.  Such  habits  doubt- 
less have  a  tendency  to  shorten  life,  but  if  on  this  ground  pay- 
ment of  a  loss  may  be  resisted,  no  insurance,  though  knowingly 
taken,  upon  the  life  of  an  intemperate  man  would  be  of  any 
value.  To  warrant  such  a  defence  it  should  appear  that  intem- 
perance was  the  cause  of  death,  so  recently  prior  to  the  death, 
and  having  such  an  obvious  connection  with  it,  that  the  death 
may  be  clearly  traceable  to  it,  and  fairly  be  said  to  have  been 
produced  by  it.  If  intemperance  is  only  a  contributory  cause, 
and  not  the  sole,  or  at  least  paramount  cause  of  death,  the 
defence  cannot  avail,  as  in  actions  for  negligence,  the  plaintiff 
cannot  recover  unless  it  be  shown  that  the  negligence  of  the 
party  to  be  charged  is  something  more  than  a  contributory 
cause  of  the  injury.  Neither  intemperance  combined  with 
other  causes,  nor  intemperance  as  a  secondary,  remote,  and 
predisposing  cause,  will  avoid  the  policy. ^ 

1  ISIiller  V.  Mutual  Benefit  Life  Ins.  Co.,  31  Iowa,  216.  Some  observations 
fell  from  Daly,  J.,  in  Horton  v.  The  Equitable  Life  Assurance  Company  of  the 
United  States  (N.  Y.  Ct.  Com.  Pleas,  1870,  ubi  supra),  not  entirely  consistent 
with  the  doctrine  stated  in  the  text.  But  they  were  obiter,  and  perhaps  not 
well  considered.  The  point  decided  was  that  on  an  issue  of  the  truth  of  a 
statement,  the  truth  of  which  was  warranted,  that  at  the  time  the  insurance 


SPECIAL   PROVISIONS    OF   THE    CONTRACT.  333 

§  302.  Death  from  Intemperance.  —  In  another  action  against 
the  same  company,^  substantially  the  same  question  again 
arose.  The  policy  provided  that  the  insurers  should  not  be  lia- 
ble if  the  insured  should  "  die  by  reason  of  intemperance  from 
the  use  of  intoxicating  liquors."  That  the  insured  so  died 
was  set  up  in  defence ;  and  there  was  evidence  to  establish  the 
defence,  and  that  the  insured  had  deUrium  tremens  or  mania 
a  potu,  caused  by  such  intemperance,  and  that  such  disease  is 
often  fatal.  It  was  also  in  evidence  that  morphine,  amongst 
other  medicines,  was  administered  in  large  quantities  to  the 
insured  by  the  physician  called  to  take  care  of  him,  as  a 
remedy.  The  plaintiff  claimed  that  the  treatment  was  im- 
proper, and  that  if  the  plaintiff  had  delirium  tremens,  the 
death  of  the  insured  resulted  directly  and  immediately  from 
the  excessive  amount  of  opium  administered,  and  not  from 
the  disease.  The  defendants  requested  the  court  to  rule  that 
"  if  the  assured,  by  intemperance  caused  by  the  use  of  intoxi- 
cating liquors,  brought  upon  himself  a  disease,  fatal  in  its 
nature,  and  a  physician  was  called  in  who,  in  good  faith  and 
with  intent  to  cure,  administered  medicines  which  in  fact  con- 
tributed to,  or  even  caused  the  death  of,  the  insured,"  he  could 
not  recover.  This  instruction  was  refused,  but  the  court  did 
instruct  the  jury  as  follows :  "  The  real  question  in  this  case 
is,  whether  intemperance  from  the  use  of  intoxicating  liquors 
was  the  cause  of  death.  If  the  disease  from  which  the  insured 
was  suffering  was  delirium  tremens  or  mania  a  j)otu,  or  other 
disease  resulting  from  intemperance  from  the  use  of  intoxi- 
cating liquors,  and  that  disease,  though  not  necessarily  mortal, 
yet  from  want  of  helpful  application,  or  neglect  of  proper  care 
or  treatment,  produced  exhaustion  or  fever,  and  consequent 
death,  the  death  would  properly  be  considered  as  resulting 

was  effected  the  insured  had  never  been  addicted  to  habits  of  intemperance, 
the  fact  that  the  death  occurred  from  an  injury  received  while  intoxicated,  and 
because  of  the  intoxication,  was  irrelevant,  a  decision  which  was  no  doubt  cor- 
rect.    See  "Watson  v.  Mainwaring,  4  Taunt.  763. 

1  Ranney  v.  Mut.  Benefit  Life  Ins.  Co.,  tried  in  the  Circuit  Court  of  the 
United  States  for  the  First  Judicial  District  (Mass.),  before  Shepley,  J.,  March, 
1873,  and  on  exceptions  to  the  rulings  of  the  court  carried  to  the  Supreme  Court 
of  the  United  States. 


33-i  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

from  the  intemperance,  even  if  the  disease  were  not  so  mortal 
in  itself,  but  that  with  good  care  and  under  favorable  circum- 
stances the  insured  might  have  recovered  ;  yet  if  it  became 
the  cause  of  death  by  reason  of  the  most  efficacious  mode  of 
treatment  not  having  been  adopted,  then  the  plaintiff  would 
not  be  entitled  to  recover.  If  the  death  of  the  assured  was 
caused  by  any  drug  administered  to  him  in  the  course  of 
medical  practice  for  the  purpose  of  cure,  in  sufficient  quantity 
to  produce  death,  and  death  was  the  effect  of  the  drug  and  not 
of  the  disease,  then,  in  such  case,  the  death  could  not  properly 
be  considered  as  resulting  from  the  intemperance  in  the  use  of 
intoxicating  liquors,  and  the  plaintiff  upon  that  branch  of  the 
case  would  be  entitled  to  recover."  And  the  court  further 
instructed  the  jury  "  that  they  were  to  consider  whether  the 
insured  caused  his  own  deatli  by  the  use  of  intoxicating  drinks, 
or  whether  the  physician  caused  the  death  by  the  use  of  nar- 
cotic drugs ;  wiiether  the  death  resulted  from  tliat  alone,  or 
whether  the  man  was  in  a  condition  in  which  they  failed  to 
relieve  him  from  the  disease,  and  left  the  disease  to  cause  the 
death  itself;  or  whether  it  was  of  itself  the  active  and  imme- 
diate cause  of  the  death,  and  he  would  have  recovered  but  for 
that,  is  a  question  of  fact  for  your  determination." 

§  303.  Materiality  of  Statements  at  the  Medical  Examina- 
tion—  Evidence.  —  In  a  strongly  contested  case  in  New  York, 
the  question  arose  whether  the  examining  physician  might 
testify  whether  the  statement  made  by  the  applicant,  during 
that  application,  that  he  was  a  man  of  means,  influenced  his 
judgment  upon  the  general  question  whether  the  applicant  was 
afflicted  with  any  disease  tending  to  shorten  life,  and  whether 
the  life  was  one  which  he  could  recommend.  This  evidence 
was  admitted,  upon  the  ground  that  such  a  statement  was 
material,  and  might  properly  influence  the  mind  of  the  medi- 
cal examiner,  fur  tlie  same  reason  that  any  statements,  tliough 
not  strictly  relating  to  the  risk,  if  they  are  calculated  to  deter- 
mine the  question  in  the  mind  of  the  insurer  whether  he  will 
assume  the  risk  or  not,  are  material,  and,  if  false,  avoid  the 
policy.  The  social  relations,  the  pecuniary  circumstances, 
the  fact  that  others  skilled  in  insurance  had  taken  the  same 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  335 

risk,  and  many  other  facts  not  having  a  direct  bearing  upon 
the  risk  itself,  may,  and  doubtless  often  do,  influence  the  judg- 
ment in  determining  whether  to  assume  the  risk.^  The  object 
of  a  physical  examination  of  a  person  proposing  to  insure  his 
life  by  a  competent  physician,  it  was  observed  by  the  court, 
is  to  ascertain  whether  he  is  laboring  under,  or  is  sulject  to, 
any  disease  or  defect  which  may  have  the  effect  to  shorten  life. 
The  inquiry  involves  an  examination  not  only  into  the  present 
state  of  the  various  organs  and  functions  of  the  body,  but  into 
the  tendency  of  these  organs  and  functions  to  take  on  dis- 
eases as  affected  by  habits  of  mind  as  well  as  of  body,  tem- 
perament, tendency  to  disease  from  hereditary  causes,  and  the 
occupation  and  condition  in  life  of  the  subject.  Of  two  persons 
of  the  same  age  and  present  bodily  health,  the  one  may  pre- 
sent a  risk  entirely  safe,  the  other  unsafe.  It  is  impossible  to 
fix  limits  to  the  subject  into  which  it  is  not  only  proper,  but 
necessary,  for  an  examining  physician  to  inquire,  in  order  to 
enable  him  to  arrive  at  a  conclusion  upon  which  he  can  prop- 
erly advise  the  acceptance  or  rejection.  The  fact  that  the 
applicant  declares  himself  to  be  a  man  of  means  may  affect 
his  judgment  in  such  case,  and,  if  so,  an  answer  to  that  ques- 
tion is  material.  The  physician  may  therefore  be  properly 
inquired  of  if  that  statement  affected  his  judgment  in  recom- 
mending the  risk.2 

§  304.  Family  Physician  —  Medical  Attendant. — A  "family 
physician"  is  the  physician  who  usually  attends  and  is  con- 
sulted by  the  members  of  a  family  in  the  capacity  of  physi- 
cian.-^ And  where  the  usual  medical  attendant  is  inquired  for, 
the  one  who  has  been  accustomed  to  attend,  and  not  the  one 
who  has  occasionally  attended,  should  be  mentioned,^  although 
the  usual  attendant  be  a  quack.^     But  when  the  usual  medical 

1  Sibbald  v.  Hill,  2  Dow,  263;  Anderson  v.  Fitzgerald,  4  H.  of  Lds.  Cas. 
484. 

2  Valton  V.  National  Loan  Fund  Life  Ass.  Soc,  1  Keyes  (N.  Y.),  21,  revers- 
ing 8.  c.  17  Abb.  Pr.  Rep.  (N.  Y.)  208. 

3  Price  V.  Phoenix  Mat.  Life  Ins.  Co.,  Sup.  Ct.  Minnesota,  2  Ins.  L.  J.  223. 

*  Hucknian  v.  Fernie,  3  Mees.  &  Wels.  505 ;  Monk  v.  Union  Life  Ins.  Co., 
6  Robt.  (N.  Y.  Superior  Ct.)  455. 

5  Everett  v.  Desborough,  5  Bing.  503. 


336  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

attendant  has  not  been  called  in  for  several  years,  and  another 
is  in  attendance  at  the  time  the  policy  is  applied  for,  it  is  for  the 
jury  to  say,  if,  in  answering  the  question,  "  Who  is  your  medical 
attendant?"  he  gives  the  name  of  the  usual  attendant,  and 
does  not  give  the  name  of  his  attendant  for  the  time  being,  the 
answer  is  true.^  The  object  of  reference  to  the  medical  attend- 
ant is  to  obtain  the  best  information  as  to  the  quality  of  the  life 
proposed,  and  it  would  seem  that  whatever  be  the  form  of  the 
inquiry,  tbe  answer  should  be  such  as  the  applicant  has  reason 
to  believe  will  best  accomplish  that  object.  Thus,  in  Hutton  v. 
Waterloo  Life  Assurance  Society,^  where  special  inquiry  was 
made  as  to  sobriety  and  temperance,  and  also  for  the  name 
and  address  of  the  medical  attendant  of  the  insured,  and  the 
answer  affirmed  habits  of  sobriety  and  temperance,  and  gave 
the  name  of  a  casual  medical  attendant,  but  did  not  give  the 
name  of  a  physician  who  had  then  recently  attended  him,  while 
under  delirium  tremens,  it  was  held  to  have  been  the  duty  of 
the  applicant  to  have  disclosed  the  name  of  the  physician  who 
attended  him  for  delirium  tremens.  In  Forbes  v.  Edinburgh 
Life  Assurance  Company ,3  the  insured  was  asked  to  refer  to 
a  "medical  man"  (if  possible  his  usual  medical  attendant) 
to  ascertain  the  present  and  general  health  of  the  party  to  be 
assured,  and  gave  the  name  of  a  physician  who  could  give 
little  information  on  this  point,  but  omitted  to  mention  the 
name  of  one  who  might  have  been  useful  in  that  particular, 
and  though  the  case  was  decided  upon  another  point,  the  Lord 
President  expressed  himself  very  strongly  against  this  as  a 
fraud  which  would  vitiate  the  policy.  And  when  one  is  shown 
to  have  been  the  usual  medical  attendant,  the  relation  will  be 
presumed  to  be  continued,  unless  a  change  be  shown,  within 
reasonable  limits,  so  that  an  answer  by  an  applicant  that  he 
has  no  usual  medical  attendant,  when  in  fact  he  has  had 
one  who  was  in  attendance  within  a  month  prior  to  making 
the  application,  —  there  being  no  evidence  of  discharge,  —  is 
false,  and  avoids  the  policy.*     But  a  former  attending  physi- 

1  Maynard  i;.  Rhode,  1  C.  &  B.  360.  2  l  F.  &  F.  735. 

'  10  Ct.  of  Sess.  Cas.  (Scotch)  451. 

4  Monk  V.  Union  Mut.  Life  Ins.  Co.,  6  Robt.  (N.  Y.  Superior  Ct.)  455. 


SPECIAL   PROVISIONS   OF   THE    CONTRACT.  337 

cian,  who  has  retired  from  practice,  and  has  recently  attended 
in  a  single  instance,  gratuitously  and  as  a  friend  in  an  emer- 
gency, pending  the  arrival  of  another  physician  who  had  been 
sent  for,  is  not,  as  matter  of  law,  an  attending  physician.  At 
most,  it  would  be  a  question  for  the  jury.^  In  the  case  in  Min- 
nesota, just  cited,  much  discussion  was  had  upon  the  meaning 
of  the  phrase  "  family  physician,"  the  majority  of  the  court 
arriving  at  the  conclusion  above  given,  and  for  the  following 
reasons,  stated  by  Berry,  J. :  — 

"  The  phrase,  '  family  physician,'  is  in  common  use,  and  has 
not,  so  far  as  we  are  aware,  any  technical  signification.  As 
used  in  this  instance,  and  for  the  purposes  of  the  testimony 
appearing  in  this  case-,  the  chief  justice  and  myself  are  of 
opinion  that  it  may  be  sufficiently  defined  as  signifying  the 
physician  who  usually  attends,  and  is  consulted  by  the  mem- 
bers of  a  family  in  the  capacity  of  a  physician. 

"  We  employ  the  word  '  usually,'  both  because  we  do  not 
deem  it  necessary  to  constitute  a  person  a  family  physician, 
as  the  phrase  is  used  in  this  instance,  that  he  should  invaria- 
bly attend  and  be  consulted  by  the  members  of  a  family  in 
the  capacity  of  physician,  and  because  we  do  not  deem  it  neces- 
sary that  he  should  attend  and  be  consulted  as  such  physi- 
cian by  each  and  all  of  the  members  of  a  family.  For  instance, 
the  testimony  in  this  case  shows  that  at  the  time  when  the 
application  for  insurance  was  made  the  family  of  Richard 
Price  consisted  of  himself,  his  wife,  and  two  or  three  children. 
We  think  that  a  person  who  usually  attended,  and  was  con- 
sulted by  the  wife  and  children  of  Richard  Price  as  a  physi- 
cian, would  be  the  family  physician  of  Richard  Price  in  the 
meaning  of  the  above  twenty-fifth  interrogatory,  although  he 
did  not  usually  attend  on,  and  was  not  usually  consulted  as  a 
physician  by  Richard  Price  himself." 

But  there  was  a  dissenting  opinion,  which  we  give,  as  afford- 
ing views  which  may,  not  improbably,  prove  in  the  end  the 
most  satisfactory.  That  opinion  was  by  McMillan,  J.,  and  was 
as  follows :  — 

"  One  ground  of  defence  set  up  is,  that  at  the  time  the  appli- 

1  Gibson  v.  American  Mut.  Life  Ins.  Co.,  37  N.  Y.  580. 
22 


338  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

cation  was  made,  and  the  policy  executed,  Richard  Price,  the 
deceased,  had  a  family  physician.  No  other  issue  is  taken 
upon  this  interrogatory.  It  does  not  appear  that  the  term 
'  family  physician  '  has  any  technical  signification  ;  it  is,  there- 
fore, for  the  court  to  determine  the  meaning  of  the  phrase,' 
'  family  physician  of  the  party.'  As  here  used,  the  purpose 
of  the  interrogatory  was  to  obtain  the  name  and  residence  of 
the  medical  attendant  best  able  to  give  an  account  of  the  phys- 
ical condition,  at  the  times  referred  to,  of  the  person  whose 
life  was  assured.^  This  intention  would  be  best  effected  by 
obtaining  a  reference  to  the  physician  who  was  the  medical 
adviser  of  such  person.  The  interrogatory,  it  seems  to  me, 
was  made  to  embrace  the  two  questions  contained  in  it,  and 
put  in  the  alternative,  in  order  that  a  true  affirmative  answer 
to  either  would  elicit  the  address  of  the  physician  who  had 
charge  of  the  assured  as  his  medical  adviser.  In  both  ques- 
tions the  inquiry  is  for  the  physician  of  the  ijarty ;  yet  if  the 
phrase,  '  family  physician  of  the  party,'  does  not  necessarily 
include  tlie  person  assured,  a  true  answer  in  many  cases  may 
be  given  to  the  first  question  embraced  in  the  interrogatory, 
without  disclosing  the  name  of  the  physician  of  the  assured  ; 
for  instance,  the  person  whose  life  is  assured  may  have  one 
person  as  his  individual  physician,  and  a  different  person  as 
the  physician  of  all  the  rest  of  his  family  ;  yet  if  the  construc- 
tion given  by  my  brethren  to  the  phrase,  '  family  physician  of 
the  party,'  be  correct,  it  seems  to  me  he  might,  in  answer  to 
the  inquiry  for  his  family  physician,  truthfully  give  the  name 
of  the  physician  attending  the  other  members  of  his  family, 
and  without  the  name  of  his  personal  piiysician ;  for,  accord- 
ing to  this  construction,  the  terms  of  the  question  call  for 
nothing  more.  It  may  be  that  such  answer  would  be  a  true 
answer  to  the  entire  interrogatory,  but  that  is  not  the  ques- 
tion before  us ;  the  only  point  for  us  to  determine  is,  whether 
Price's  answer  is  false  in  this,  that  he  had  a  family  physician 
at  the  time,  and  answered  that  he  had  none. 

"  I  am  unable,  therefore,  to  concur  with  my  brethren  in  the 
construction  they  give  to  the  phrase,  '  family  physician  of  the 
1  Bliss  on  Life  Ins.  17L 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  339 

party.'  I  think  the  phrase,  as  used  in  this  instance,  means 
the  physician  who  usually  attends  and  is  consulted  by  all  or 
most  of  the  members  of  the  family  of  the  person  whose  life  is 
assured,  and  that  the  person  thus  assured,  if  he  has  medical 
attendance,  must  be  one  of  the  members  attended  by  such 
physician." 

§  305.  Age  —  Residence  —  Relationship.  —  A  misrepresenta- 
tion or  an  equivocation  as  to  the  age  is  material,  —  although  a 
fact  not  entering  into  the  risk,  —  in  that  the  age  is  the  basis 
upon  which  the  premium  is  based,  that  being  at  a  greater  or 
less  rate  as  the  age  is  more  or  less  advanced.^  "  It  is  trifling," 
said  Pollock, C.  B.,in  the  case  last  cited,  "to  say  that  that  is  a 
true  answer  which  requires  something  to  be  added  to  make  it 
true."  And  it  has  been  held  that  where  the  applicant  truly 
answered  the  question  as  to  residence,  but  failed  to  disclose 
the  fact  that  she  was  in  prison  at  the  place  of  residence,  it 
might  be  material ;  and  it  was  for  the  jury  to  say  whether  it 
was  or  not,  and  this  although  there  was  nothing  in  the  policy 
which  could  be  construed  as  requiring  the  imprisonment  to 
be  stated.  And  in  the  Superior  Court  at  Buffalo  it  was  held, 
where  the  statements  were  warranties,  that  a  representation 
that  the  person  for  whose  benefit  the  policy  was  taken  out 
was  the  wife  of  the  applicant,  when  in  fact  she  was  not,  was 
untrue,  and  worked  a  forfeiture.^ 

§306.  Occupation.  —  An  untruc  statement  in  the  applica- 
tion, which  is  made  a  part  of  the  policy,  as  to  the  occupation 
at  the  time  the  application  is  made,  will  avoid  the  policy. 
What  is  necessary  to  be  stated  is  the  occupation  in  which  the 
insured  is  engaged  at  the  time,  and  not  the  occupation  in 
which  he  may  have  been  generally  engaged  before  that  time. 
If  one  who  is  in  fact  a  farmer,  and  has  followed  that  business 
from  his  youth  up,  is  occupied  in  any  other  pursuits,  as  a  busi- 
ness, at  the  time  he  seeks  insurance,  the  special  occupation 
should  be  stated,  and  not  the  general  one.    The  existing  status 

'  Cazenove  v.  Brit.  Eq.  Ass.  Co.,  6  C.  B.  n.  s.  437;  Murphy  v.  Harris, 
Batty  (Irish),  206;  Wray  v.  Manchester  Provident  Ass.  Co.,  Nisi  Prius,  cited 
from  tiie  London  Times  of  Mar.  1871,  by  Bliss,  Ins.  165. 

*  Stannard  v.  Am.  Pop.  Life  Ins.  Co.,  cited  in  Bliss,  Ins.  164. 


340  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

of  the  applicant,  in  this  particular,  is  that  about  which  the 
insurers  are  interested  to  know,  and  substantial  untruth  rela- 
tive thereto  is  fatal. ^  In  England,  it  has  been  held  that  a  rep- 
resentation that  the  applicant  was  an  "  esquire  "  is  sufficient, 
if  true,  although  he  was  then  engaged  in  business  as  an  iron- 
monger. Such  a  statement,  said  Hill,  J.,  "  is  not  untrue,  but 
simply  imperfect.  Suppose  the  applicant  had  been  a  wine- 
merchant  and  a  banker,  and  had  put  down  only  that  he  was  a 
banker ;  could  it  have  been  said  that  that  was  an  untrue  state- 
ment? I  think  not."  The  majority  of  the  judges  in  the 
Queen's  Bench  thought  the  word  designated  an  occupation,  and, 
being  true  as  far  as  it  went,  was  sufficient.  But  Cockburn, 
C.  J.,  thought  the  answer  tantamount  to  saying  that  he  had  no 
occupation,  and  was  untrue.^  But  the  judgment  was  affirmed 
in  the  Exchequer  Chamber .^  "  It  is  said,"  said  Williams,  J., 
"  the  statement  of  the  plaintiff  that  he  was  an  esquire  was  an 
untrue  statement,  because  it  was  a  suppression  of  the  truth ; 
the  truth  being  that  he  was  also  an  ironmonger.  But  there 
is  no  foundation  for  the  argument.  The  plaintiff  said,  in 
effect,  I  am  in  that  position  in  life  in  which  people  are  usually 
addressed  as  esquires.  A  man  who  is  in  such  a  position  is  no 
more  deserving  of  the  imputation  of  telling  an  untruth  by  call- 
ing himself  an  esquire,  without  adding  his  trade,  than  a  peer 
of  the  realm  would  be  who  should  describe  himself  as  such, 
and  not  also  state  that  he  was  a  brewer,  banker,  or  iron- 
master, as  the  case  might  be."  But  the  position  of  the  defend- 
ant's counsel,  that  "  in  withholding  the  fact  that  he  was  an 
ironmonger,  he  was  guilty  of  a  suppressio  veri,  tantamount  to 
a  positive  statement  that  he  had  no  occupation,"  does  not  seem 
to  be  satisfactorily  answered.  The  language  of  Williams,  J., 
shows  that  esquire  was  a  mere  title  of  courtesy  indicative  of 
social  position,  and  if  this  case  is  law,  then  a  man  who  is 
actually  engaged  in  the  business  of  manufacturing  nitro-gly- 
cerine  or  gunpowder,  if  he  happen  to  be  a  peer,  need  only 
state  the  latter  fact.     Yet  a  peer  would  know,  presumably, 

1  Hartman  v.  Keystone  Ins.  Co.,  21  Penn.  St.  466. 

2  Perrins  v.  Mar.  and  Gen.  Tr.  Ins.  Co.,  2  E.  &  E.  317. 

3  2  E.  &  E.  324. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  341 

that  the  fact  that  he  was  a  peer  was  of  little  or  no  moment  to 
the  insurers,  while  the  fact  that  he  was  engaged  in  a  hazard- 
ous business  was  of  the  greatest  moment.  It  would  seem  that 
if  a  man  have  two  or  more  occupations,  if  he  be  not  required 
to  state  all,  ho  ought  at  least  to  state  that  one  which  he  has 
reason  to  believe  the  insurers  are  most  interested  to  know, 
and  whether  he  had  done  this  in  the  particular  case  would  be 
for  the  jury  to  say.  Perhaps,  as  was  said  by  Black,  J.,  in  the 
case  from  Pennsylvania,  above  cited,  where  the  warranty  was 
that  the  statement  was  in  all  respects  true,  such  warranty 
ought  not  to  be  held  to  include  "  inaccuracies  which  are  not 
material."  But  substantial  truth  certainly  is  required  both 
by  the  conditions  of  the  contract  and  by  the  good  faith  which 
ought  to  inspire  the  answers  to  such  questions.^  In  Huguenin 
V.  Bailey  ^  it  was  held  that  where  the  insured  had  truly  stated 
her  residence  at  a  given  place,  when  in  fact  she  was  in  jail  at 
that  place,  it  ought  to  be  submitted  to  the  jury  whether  this 
was  a  material  "  reservation  "  or  not.  If  the  statement  of 
present  occupation  be  true,  however,  any  subsequent  change 
will  not  avoid  the  policy  if  not  so  stipulated.^ 

1  And  see  Smith  v.  Mtna,  Life  Ins.  Co.,  Ct.  of  App.  N.  Y.  Jan.  1873,  2  Ins. 
L.  J.  116. 

2  6  Taunt.  186. 

3  Provident  Life  Ins.  Co.  of  Chicago  v.  Fennell,  49  III.  180. 


342  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 


CHAPTER    XIII. 

OF   THE   SPECIAL   PROVISIONS    OP   THE    CONTRACT   (^continued). 

§  307.  Suicide  —  Death  by  one's  own  Hands  —  Taking  one's 
own  Life.  —  Prominent  among  the  causes  which  insurance  com- 
panies have  provided  shall  exempt  them  from  liability  under  life 
policies,  is  death  by  suicide ;  or,  as  it  is  sometimes  expressed, 
if  the  insured  "  shall  die  by  his  own  hands,"  or  "  take  his  own 
life."  It  is  prominent  also  in  the  difficulty  which  has  been 
found  in  determining  the  meaning  of  the  provision,  and  the 
learning  and  ability  which  has  been  displayed  in  the  attempt. 
The  courts  seem  to  delight  in  its  discussion.  There  seems  to 
be  about  this  question  a  fascination  which  the  judicial  mind  is 
unable  to  resist ;  and  whenever  the  question  presents  itself, 
whether  in  the  courts  of  Westminster  Hall,  or  those  of  our 
western  wilderness,  it  has  given  rise  to  so  many  and  such 
interesting  opinions  as  to  have  secured  for  the  student,  if  not 
relief  from  his  perplexing  doubts,  at  all  events  recreation  and 
instruction  while  he  is  devoting  himself  diligently  to  inquiries 
which  he  hopes  may  result  in  such  relief.  Upon  the  question 
of  voluntary  suicide  intentionally  committed  by  a  sane  man 
in  the  possession  of  his  faculties,  knowing  how  to  adapt  means 
to  ends,  and  conscious  of  the  immorality  of  the  act,  there  is 
not,  as  indeed  there  could  not  well  be,  any  difference  of  opin- 
ion, and  all  authorities  agree  that  such  a  suicide  is  within  the 
exemption.  And  all  the  authorities  likewise  agree  that  an  acci- 
dental death,  as  by  taking  poison  by  mistake,  or  shooting  one's 
self  with  a  pistol,  supposing  it  not  to  be  loaded,*  or  falling 
from  a  building,  or  death  happening  in  any  way  by  the  unin- 
tended act  of  the  party  dying,  is  not  within  the  exemption. 
But  whether  suicide  by  an  insane  man  is  also  within  the 
exemption  has  been  the  question  in  dispute,  and  upon  this  two 
prominent  and  different  doctrines  have  been  maintained.     On 


SPECIAL   PROVISIONS   OF  THE   CONTRACT.  343 

the  one  hand,  it  is  maintained  that  if  the  act  be  voluntarily 
done  in  pursuance  of  an  intelligent  purpose,  and  intentionally 
and  intelligently  carried  out  by  the  proper  adaptation  of  means 
to  ends,  it  is  suicide  on  the  part  of  the  insured,  or  death  by  his 
own  hands,  although  insanity  exist,  to  such  an  extent  that  he 
may  not  be  able  to  appreciate  the  moral  qualities  of  the  act. 
On  the  other  hand,  it  is  maintained  with  equal  vigor,  that  how- 
ever intelligently  the  act  may  be  done,  if  at  the  time  the  will 
be  overpowered  by  an  uncontrollable  impulse,  or  the  party  be 
unable  to  appreciate  the  moral  character  of  the  act,  it  is  not 
within  the  meaning  of  the  provision. 

§  308.  And  hereupon  there  has  been  hitherto,  and  still  is,  an 
irreconcilable  conflict  of  opinion,  both  among  different  courts  and 
among  the  different  judges  of  the  same  court.  And  while  at  one 
time  it  seemed  that  the  former  opinion  was  likely  to  become  the 
prevailing  one,  both  from  the  character  and  from  the  number  of 
the  courts  and  judges  who  adopted  it,  at  this  moment  it  must 
be  admitted  that  there  is  little  reason  upon  such  grounds  to  look 
for  such  a  result,  and  the  question  is  apparently  as  far  from  being 
settled  as  it  was  when  it  was  first  broached.  We  have  there- 
fore no  alternative  but  to  give  its  history,  and  by  so  doing  we 
shall  best  show  the  present  state  of  the  question.  And  as  the 
earlier  English  cases  will  be  found  to  be  stated  with  fulness 
in  the  American  cases  which  we  shall  have  occasion  to  cite  at 
some  length,  no  further  statement  of  those  cases  will  be  neces- 
sary. As  early  as  eighteen  liundrcd  and  forty-three  the  ques- 
tion came  under  discussion  in  the  courts  of  Xew  York  in  the 
case  of  Breasted  v.  Farmers'  Loan  and  Trust  Company ,i  which 
was  a  case  of  self-destruction  by  drowning,  where  the  defence 
was  suicide,  to  which  there  was  a  reply  that  the  insured  was 
insane  at  the  time,  and  this  reply  was  demurred  to,  of  course 
admitting. the  insanity.  The  policy  provided  against  liability 
if  the  assured  should  die  by  his  own  hand.  The  plaintiffs 
had  judgment  upon  the  demurrer  for  the  following  reasons,  by 
Nelson,  C.  J. :  — 

"  The  question  arising  upon  the  demurrer  is,  whether  Com- 
fort's self-destruction  in  a  fit  of  insanity  can  be  deemed  a 

1  4  HiU  (N.  Y.),  73. 


3-14  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

death  hy  his  oion  hand,  within  the  meaning  of  the  policy.  I 
am  of  opinion  that  it  cannot.  Since  the  argument  of  the  case, 
I  have  examined  many  precedents  of  life  policies  used  by  the 
different  insurance  companies,  and  am  entirely  satisfied  that 
the  words  in  the  policy  in  question  import  a  death  ly  suicide. 
Provisos  declaring  the  policy  to  be  void  in  case  the  insured 
commit  suicide,  or  die  by  his  oum  hand,  are  used  indiscrimi- 
nately by  different  insurance  companies  as  expressing  the 
same  idea ;  and  so  they  are  evidently  understood  by  writers 
upon  this  branch  of  the  law.  .  .  . 

"  The  connection  in  which  the  words  stand  in  the  policy 
would  seem  to  indicate  that  they  were  intended  to  express  a 
criminal  act  of  self-destruction,  as  they  are  found  in  conjunc- 
tion with  the  provision  relating  to  the  termination  of  the  life 
of  the  insured  in  a  duel,  or  by  his  execution  as  a  criminal. 
This  association  may  well  characterize  and  aid  in  determining 
the  somewhat  indefinite  and  equivocal  import  of  the  phrase. 
Speaking  legally,  also  (and  the  policy  should  be  subjected  to 
this  test),  self-destruction  by  a  fellow-being,  bereft  of  reason, 
can  with  no  more  propriety  be  ascribed  to  the  act  of  his  oion 
hand,  than  the  deadly  instrument  that  may  have  been  used  for 
the  purpose.  The  drowning  of  Comfort  was  no  more  his  act, 
in  the  sense  of  the  law,  than  if  he  had  been  impelled  by  irre- 
sistible physical  power ;  nor  is  there  any  greater  reason  for 
exempting  the  company  from  the  risk  assumed  in  the  policy, 
than  if  his  death  had  been  occasioned  by  such  means.  Con- 
struing tliese  words,  therefore,  according  to  their  true,  and,  as 
I  apprehend,  universally  received  meaning  among  insurance 
offices,  there  can  be  no  doubt  that  the  termination  of  Com- 
fort's life  was  not  within  the  saving  clause  of  the  policy.  Sui- 
cide involves  the  deliberate  termination  of  one's  existence 
while  in  the  possession  and  enjoyment  of  his  mental  faculties. 
Self-slaughter  by  an  insane  man  or  a  lunatic  is  not  an  act 
of  suicide  within  the  meaning  of  the  law.^  I  am  of  opinion, 
therefore,  that  the  plaintiffs  are  entitled  to  judgment  on  the 
demurrer." 

Ten  years  later  this  judgment  was  affirmed  in  the  New 

1  4  Bl.  Coram.  189 ;  1  Hale's  P.  C.  411,  412. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  345 

York  Court  of  Appeals,^  the  judges  voting  five  for  affirmation 
and  three  for  reversal.  In  the  mean  time  the  case  had  been 
tried  by  referees  upon  the  general  issue  contained  in  the  plead- 
ings, who  found  specially  that  deceased  threw  himself  into  the 
river,  "  while  insane,  for  the  purpose  of  drowning  himself,  not 
being  mentally  capable  of  distinguishing  between  right  and 
wrong."     The  opinion  of  the  majority  was  by  Willard,  J.  :  — 

"  The  question  raised  by  the  decision  of.  the  referees  is 
substantially  tlie  same  as  that  decided  by  the  Supreme  Court 
on  the  demurrer.  It  will  be  unnecessary,  therefore,  to  give 
each  a  separate  examination. 

"  It  is  material  to  determine,  in  the  first  place,  what  is 
meant  by  the  term,  death  hy  his  oivn  hand,  which  is  to  avoid 
the  policy.  If  the  words  are  construed  according  to  the  letter, 
an  accidental  death  caused  by  the  instrumentality  of  the  hand 
of  the  insured  would  fall  within  the  exception.  Thus,  should 
the  insured,  by  mistake,  swallow  poison,  and  thereby  terminate 
his  life,  his  representatives  could  not  recover  on  the  policy  if 
the  poison  was  conveyed  to  his  mouth  by  his  oivn  liand.  The 
same  rule  of  construction  applied  to  the  words,  death  hy  the 
hands  of  justice,  in  the  same  connection,  would  take  the  case 
out  of  the  exception,  if  the  death  was  occasioned  by  strangu- 
lation by  a  rope  instead  of  the  hands  of  the  minister  of  jus- 
tice. But  it  is  too  plain  for  argument  that  the  literal  meaning 
is  not  the  true  meaning  of  either  phrase.  Death  by  the  hands 
of  justice  is  a  well-known  phrase,  denoting  an  execution,  either 
public  or  private,  of  a  person  convicted  of  crime,  in  any  form 
allowed  by  law.  The  moral  guilt  of  the  party  executed  has 
nothing  to  do  with  the  definition.  Socrates,  though  he  took 
the  poison  from  his  own  hand,  died  by  the  hands  of  justice,  in 
this  sense  of  the  term.  It  would  be  an  abuse  of  language  to 
charge  him  with  an  act  of  intentional  self-destruction.  The 
martyrs  who  perished  at  the  stake,  in  like  manner  '  died  by 
the  hands  of  justice.' 

"  In  popular  language,  the  term  death  by  his  oivn  hand, 
means  tlie  same  as  suicide,  or  felo  de  se.  The  first  two, 
indeed,  are  not  technical  terras,  and  may  be  used  in  a  sense 

1  8  N.  Y.  299. 


346  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

excluding  the  idea  of  criminality.  The  connection  in  which 
they  are  used  in  this  policy  indicates  that  the  phrase,  death  by 
Ids  own  hand,  meant  an  act  of  criminal  self-destruction.  Pro- 
visos declaring  the  policy  to  be  void  in  case  the  assured  com- 
mit suicide,  or  die  by  his  own  hand,  are  used  indiscriminately 
as  expressing  the  same  idea.  In  the  note  to  Borradaile  v. 
Hunter  ^  are  given  the  forms  of  the  proviso,  used  by  seventeen 
of  the  principal  London  insurance  companies.  In  eight  of 
them  the  exception  is  of  a  death  hy  suicide,  and  in  nine  of  a 
death  by  the  assured" s  own  hands.  In  two,  separate  provision 
is  made  in  case  of  a  death  by  suicide  noifelo  de  se,  and  in  two 
others  in  case  of  a  death  by  his  own  hands,  not  felo  de  se.  It 
is  obvious,  therefore,  that  the  phrase,  death  by  his  oivn  hand 
and  death  by  suicide,  mean  the  same  thing,  and  that  both, 
unless  qualified  by  some  other  expressions,  import  a  criminal 
act  of  self-destruction.  The  connection  in  which  they  stand 
in  this  policy  favors  this  construction.  The  first  four  excep- 
tions in  the  policy  are  of  acts  innocent  in  themselves,  three  of 
which  become 'inoperative  if  the  defendants  give  their  consent 
and  have  it  indorsed  on  the  policy.  Then  follow  the  last  four 
exceptions,  viz.,  if  he  shall  die  by  his  own  hand,  or  in  conse- 
quence of  a  duel,  or  by  the  hands  of  justice,  or  in  the  hioivn 
violation  of  any  laiv,  <fec.  By  the  acknowledged  rule  of  con- 
struction, noscitur  a  sociis,  the  first  member  of  the  sentence,  if 
there  be  any  doubt  in  its  meaning,  should  be  controlled  by  the 
other  members,  which  are  entirely  unequivocal,  and  should  be 
construed  to  mean  a  felonious  killing  of  himself.^  It  is  a  note 
laid  down  by  Lord  Bacon  that,  coimlatio  verborum  indicat  ac- 
ceptionem  in  eodem  sensu ;  the  coupling  of  words  together 
shows  that  they  are  to  be  understood  in  the  same  sense.  And 
when  the  meaning  of  any  particular  word  is  doubtful  or 
obscure,  or  when  the  expression,  taken  singly,  is  inoperative, 
the  intention  of  the  parties  using  it  may  frequently  be  ascer- 
tained and  carried  into  effect  by  looking  at  the  adjoining 
words,  or  at  expressions  occurring  in  other  parts  of  the  same 
instrument,    for   qme    non    valeant    singula    juncta  juvant.^ 

1  5  Man.  &  Gr.  648.  2  Broome's  Maxims,  293,  450. 

3  Bacon's  Works,  vol.  iv.  p.  26 ;  2  Buls.  Broome's  Maxims,  293. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  347 

Besides,  the  words  in  this  case  are  those  of  the  insurer,  and  if 
susceptihle  of  two  meanings,  should  be  taken  most  strongly 
against  him.  It  was  not  contended  on  the  part  of  the  defendant 
that  the  policy  would  be  avoided  by  a  mere  accidental  destruc- 
tion of  life  by  the  party  himself.  It  was  urged  that  it  would  be, 
if  the  act  was  done  intentionally,  although  under  circumstances 
which  would  exempt  the  party  from  all  moral  culpability.  It 
was  insisted  that  the  expression  must  be  taken  to  mean  a 
death  by  his  own  act.  It  seems  to  me  that  this  is  a  yielding 
of  the  whole  question.  An  insane  man,  incapable  of  discern- 
ing between  right  and  wrong,  can  form  no  intention.  His 
acts  are  not  the  result  of  thought  or  reason,  and  no  more  the 
subject  of  punishment  than  those  which  are  produced  by  acci- 
dent. The  acts  of  a  madman,  which  are  the  offspring  of  the 
disease,  subject  him  to  no  criminal  responsibilty.  If  the 
insured,  while  engaged  in  his  trade  as  a  house-joiner,  had  acci- 
dentally fallen  through  an  opening  in  the  chamber  of  a  house 
he  was  constructing,  and  lost  his  life,  the  argument  concedes 
that  the  insurer  would  have  been  liable.  The  reason  is  that 
the  mind  did  not  concur  with  the  act.  How  can  this  differ  in 
principle  from  a  death  in  a  fit  of  insanity,  when  the  party  had 
no  mind  to  concur  in  or  oppose  the  act  ? 

"  It  must  occur  to  every  prudent  man  seeking  to  make  pro- 
vision for  his  family  by  an  insurance  on  his  life,  that  insanity 
is  one  of  the  diseases  which  may  terminate  his  being.  It  is 
said  the  defendants  did  not  insure  the  continuance  of  the 
intestate's  reason.  Nor  did  they  in  terms  insure  him  against 
the  small-pox  or  scarlet-fever ;  but  had  he  died  of  either  dis- 
ease, no  doubt  the  defendants  would  have  been  liable.  They 
insured  the  continuance  of  his  life.  What  difference  can  it 
make  to  them  or  to  him,  whetlier  it  is  terminated  l)y  the 
ordinary  course  of  a  disease  in  his  bed,  or  whether  in  a  fit  of 
delirium  he  ends  it  himself  ?  In  each  case  the  death  is  occa- 
sioned by  means  within  the  meaning  of  the  policy,  if  the  ex- 
ception contemplates,  as  I  think  it  does,  the  destruction  of  life 
by  the  intestate  while  a  rational  agent,  responsible  for  his 
acts. 

"  It  is  competent,  no  doubt,  for  the  insurer  so  to  frame  his 


348  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

policy  as  to  exempt  him  from  liability  for  a  death  occasioned 
in  a  fit  of  insanity.  The  parties  have  not  done  so  in  the  pres- 
ent case. 

"  It  is  urged  that  because  a  person  non  compos  mentis  is  lia- 
ble civiliter,  for  torts  committed  while  in  a  state  of  insanity, 
therefore  insanity  has  no  effect  to  qualify  this  exception  in  the 
policy.  That  conclusion  is  not  a  legitimate  deduction  from 
the  premises.  A  rational  man  is  liable  civilite)-,  for  an  injury 
occasioned  by  an  accident,  unless  it  be  an  inevitable  one,  and 
yet  no  one  pretends  that  the  insurer  is  not  liable  for  a  death 
by  accident,  whether  inevitable  or  not.  Indeed,  the  liability 
for  death  by  accident  was  conceded  on  the  argument.  A 
death  by  accident,  and  a  death  by  the  party's  own  hand,  when 
deprived  of  reason,  stand  on  principle  in  the  same  category. 
In  both  cases  the  act  is  done  without  a  controlling  mind.  If 
the  insurer  is  liable  in  the  one  case,  he  should  be  in  the  other. 

"  If  the  insured  was  compelled  by  duress  to  take  his  own 
life,  it  will  hardly  be  contended  that  the  insurers  could  avoid 
payment.  In  what  consists  the  difference  between  the  duress 
of  man  and  duress  of  Heaven  ?  Can  a  man  be  said  to  do 
an  act  prejudicial  to  the  insured  when  he  is  compelled  to  do 
it  by  irresistible  coercion  ?  and  can  it  make  any  difference 
whether  this  coercion  come  from  the  hand  of  man  or  the  visi- 
tation of  Providence  ? 

"  But  it  is  urged  that  this  is  a  civil  action,  and  the  contract 
of  insurance  a  civil  contract.  Be  it  so.  A  person  so  desti- 
tute of  reason  as  not  to  know  the  consequences  of  his  acts 
can  make  no  valid  contract.  Whether  the  incompetency  be 
the  result  of  disease  or  of  intoxication,  his  contracts  made 
while  in  that  condition  are  void.^  If  the  party  could  do  no 
act  to  bind  himself,  he  certainly  could  do  none  to  bind  the 
insurer.  If  he  could  not  make  a  bond,  he  could  not  make  a 
release.    If  he  could  not  make  a  will,  he  could  not  revoke  one. 

"  The  liability  of  a  lunatic  for  necessaries  rests  upon  the 
ground  that  the  law  will  raise  a  contract  by  implication  on 

1  Basset  v.  Buxton,  2  Aikens,  Vt.  Rep.  167,  approved  by  Chancellor  Wal- 
worth  in  Prentice  v.  Achorn,  2  Paige,  31,  and  by  Chancellor  Kent  in  2  Comm. 
451 ;  Smith's  Law  of  Contracts,  329,  333,  and  notes. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  349 

the  part  of  the  lunatic,  in  favor  of  the  party  who  has  supplied 
them  in  good  faith,  and  therefore  does  not  affect  the  present 
question.^  The  cases  on  this  head  are  analogous  to  that  of 
an  infant.^  The  law,  to  prevent  a  failure  of  justice,  will  imply 
a  promise  by  a  party  incapable  of  making  a  contract ;  but  it 
will  never  imply  that  a  party  incapable  of  distinguishing  be- 
tween right  and  wrong  was  guilty  of  a  fraud. 

"  At  the  time  this  case  was  decided  by  the  Supreme  Court 
on  the  demurrer,  there  had  been  no  case,  either  in  this  coun- 
try or  in  England,  in  which  the  same  question  had  arisen. 
The  case  of  Borradaile  v.  Hunter,^  decided  by  the  English 
Common  Pleas  in  1843,  has  since  been  reported.  That  action 
was  brought  by  the  executor  of  the  insured  upon  a  life  policy 
containing  a  proviso  that  in  case  the  assured  should  die  by  his 
own  hands,  or  by  the  hands  of  justice,  or  in  consequence  of  a 
duel,  the  policy  should  be  void.  The  assured  threw  himself 
into  the  Thames  and  was  drowned.  Upon  an  issue,  whether 
the  assured  died  by  his  own  hands,  the  jury  found  that  he 
voluntarily  threw  himself  into  the  water,  knoicing  at  the  time 
that  he  should  thereby  destroy  his  life,  and  intending  thereby 
to  do  so;  but  at  the  time  of  committing  the  act  he  was  not 
capable  of  judging  between  right  and  wrong.  It  was  held  by 
a  majority  of  the  court,  Tindal,  C.  J.,  dissenting,  that  the 
policy  was  avoided,  as  the  proviso  included  all  acts  of  volun- 
tary self-destruction,  and  was  not  limited  by  the  accompany- 
ing proviso  to  acts  of  felonious  suicide.  The  three  judges  who 
formed  tlie  majority  laid  the  main  stress  upon  the  fact  that 
the  jury  found  the  act  of  self-destruction  to  be  voluntary,  that 
he  knew  when  he  threw  himself  into  the  river  he  should 
thereby  destroy  his  life,  and  that  he  intended  thereby  to  do  so. 
The  referees  in  the  present  case  have  not  found  that  the  intes- 
tate acted  voluntarily,  or  that  he  knew  the  consequence  of  his 
act.     They  merely  find  that  while  insane,  for  the  purpose  of 


1  Walworth  v.  Tubb,  1  Younge  &  Coll.  Ch.  171. 

2  See  Smith's  Law  of  Contracts,  325  et  seq.,  and  notes,  where  the  cases  are 
collected  and  reviewed. 

»  5  Man.  &  Gr.  639. 


350  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

drowning  himself,  he  threw  himself  into  the  river,  not  being 
mentally  capable  of  distinguishing  between  right  and  wrong. 
If  Borradaile  v.  Hunter  be  an  authority  which  we  ought  to 
follow,  it  differs  so  much  from  the  case  before  us,  that  we  are 
at  liberty  to  decide  it  upon  principle. 

"  After  the  case  of  Borradaile  v.  Hunter,  the  case  of  Schwabe 
V.  Clift  was  tried  at  Nisi  Pt-ius,  before  Cresswell,  J.  It  was 
upon  a  policy  upon  the  life  of  the  plaintiff's  intestate,  contain- 
ing the  proviso  that  if  the  assured  should  '  commit  suicide  or 
die  by  duelling  or  by  the  handfe  of  justice,'  the  policy  should 
be  void.  The  assured  died  from  the  effects  of  sulphuric  acid 
taken  by  himself,  but  evidence  was  given  tending  to  show  that 
at  the  time  he  took  the  sulphuric  acid  he  was  in  part  of 
unsound  mind.  In  his  charge  to  the  jury,  the  learned  judge 
said  that  to  bring  the  case  within  the  exception,  it  must  be 
made  to  appear  that  the  deceased  died  by  his  own  voluntary 
act ;  that  at  the  time  he  committed  the  act  he  could  distin- 
guish between  right  and  wrong,  so  as  to  be  able  to  understand 
and  appreciate  the  nature  and  quality  of  the  act  he  was  doing; 
and  that,  therefore,  he  was  at  that  time  a  responsible  being. 
The  jury  found  for  the  plaintiff."  ^ 

§  309.  But  upon  the  finding  of  the  referees  that  the  act  was 
done  purposely,  the  following  dissenting  opinion  was  delivered 
by  Gardner,  J.  :  — 

"  The  referees  in  this  case  have  found  '  that  the  assured, 
on  the  twenty-fifth  day  of  June,  1839,  threw  himself  into  the 
Hudson  River,  from  the  steamboat  Erie,  while  insane,  for  the 
purpose  of  drowning  himself,  not  being  mentally  capable  at 
the  time  of  distinguishing  between  right  and  wrong.'  The 
question  is  whether  this  act  avoided  the  life  policy  in  question, 

1  2  Car.  &  Kirwan,  134.  This  cause  was  afterwards  brought  into  the  Court 
of  Exchequer  Chamber  on  the  bill  of  exceptions,  and  will  be  found  in  3  Man.  & 
Gr.  437,  by  the  title  of  Clift  v.  Schwabe.  That  court,  by  a  vote  of  four  to  two, 
ordered  a  new  trial,  holding  that  the  direction  was  erroneous  ;  for  that  the  terras 
of  the  condition  included  all  acts  of  voluntary  self-destruction,  and  therefore,  if 
A.  voluntaril}'  killed  himself,  it  was  immaterial  whether  he  was  or  was  not  a 
responsible  moral  agent.  The  case  is  open  to  the  same  remark  as  Borradaile  v. 
Hunter,  supra.  It  turned  upon  the  assumed  fact  that  the  act  of  suicide  was  vol- 
untary,  a  fact  not  found  by  the  referees  in  this  case. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  351 

one  condition  of  which  is,  that  if  the  assured  '  sliould  die  by 
his  own  hand,'  the  policy  should  be  void. 

"It  is  by  the  finding  established  that  the  assured  cast  him- 
self into  the  river  for  the  purpose  of  drowning  himself.  The 
act  committed  by  him  was  therefore  voluntary,  and  accom- 
panied by  so  much  intelligence  as  to  enable  the  agent  to  con- 
template a  particular  result,  and  adopt  the  means  requisite  to 
accomplish  it.  His  object  was  self-destruction  by  drowning. 
For  this  purpose  he  cast  himself  into  the  river,  and  tliereby 
effected  it.  If  this  was  not  '  dying  by  his  own  hand,'  within 
the  spirit  and  intent  of  this  clause  of  the  policy,  it  is  difficult 
to  attach  any  legal  significance  to  such  language. 

"  If,  under  the  same  circumstances,  the  assured  had  destroyed 
the  property  or  assaulted  the  person  of  a  citizen,  he  would 
have  been  civilly  responsible  for  all  the  damages  sustained  by 
the  latter.^  Insanity,  unless  it  suspended  the  power  of  voli- 
tion, would  be  no  justification ;  still  less  a  want  of  moral  per- 
ception to  distinguish  between  right  and  wrong. 

"  I  can  perceive  no  reason  why  upon  the  same  principle  he 
should  not  be  held  responsi!)le  for  a  wilful  breach  of  contract 
resulting  from  self-destruction,  where  it  was  premeditated, 
and  accomplished  by  means  usual  and  appropriate  to  effect  his 
design.  In  Bagster  v.  Earl  of  Portsmouth,^  it  was  held  that 
a  lunatic  was  capable  of  contracting  for  necessaries.  '  Imbe- 
cility of  mind,'  says  Abbott,  C.  J.,  '  may,  or  may  not,  be  a 
defence  in  the  case  of  an  unexecuted  contract.' 

"  Tliese  cases  show  that  the  assured,  althongh  insane,  is 
a  responsible  agent  for  some  purposes,  and  consequently,  a 
fortiori,  that  he  can  be  affected  and  bound  by  a  condition 
which  qualifies  the  liability  of  the  insurers,  and  which,  in 
terms,  is  made  to  depend  upon  an  act  to  be  performed  by  the 
former. 

"  In  Borradaile  v.  Hunter,^  in  a  life  policy  containing  the 
same  proviso  found  in  the  one  before  us,  the  jury  found  that 
the  insured  'voluntarily  threw  liimself  into  the  water,  know- 
ing at  the  time  that  he  should  thereby  destroy  his  life,  and 

1  Weaver  v.  Ward,  Hob.  134 ;  Cross  v.  Andrews,  Cro.  Eliz.  622. 

2  3  Dowl.  &  Ryl.  614.  3  5  Man.  &  Gr.  689. 


353  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

intending  thereby  to  do  so,  but  at  the  time  of  committing  the 
act  he  was  not  capable  of  judging  between  right  and  wrong.' 

"  It  was  held  that  the  policy  was  avoided.  The  proviso 
included  all  acts  of  self-destruction,  and  was  not  limited  by 
the  accompanying  provisos  to  acts  of  felonious  suicide.  This 
decision  was  pronounced  in  1843,  and  the  case  is  not  distin- 
guishable from  the  one  under  consideration.  The  case  cited 
was  argued  and  decided  as  one  of  insanity,  in  which,  however, 
the  assured  was  capable  of  voluntary  action.  Erskine,  J., 
remarked,  '  that  all  the  contract  required  was,  that  the  act  of 
self-destruction  should  be  the  voluntary  and  wilful  act  of  a 
man  having  at  the  time  sufficient  power  of  mind  to  under- 
stand the  physical  nature  and  consequence  of  the  act,  and 
having  the  intention  to  choose  his  own  death.' 

"  In  that  case,  and  in  the  present,  the  incapability  of  distin- 
guishing between  right  and  wrong  was  the  measure  of  the 
insanity  of  the  assured.  Four  years  afterwards,  Clift  v. 
Schwabe  was  decided  in  the  Exchequer  Chamber,^  upon  a 
policy  in  which  the  word  '  suicide '  occurred  in  place  of  the 
phrase  '  dying  by  liis  own  hands.'  The  issue  was  upon  the  fact 
of  suicide,  and  an  exception  to  the  charge  of  the  judge  ;  it  was 
held  that  the  terms  of  the  condition  included  all  acts  of  volun- 
tary self-destruction,  and  if  the  insured  voluntarily  killed  him- 
self, it  was  immaterial  whether  he  was  or  not  a  responsible 
moral  agent. 

"  These  cases  are  directly  in  point ;  that  last  mentioned  is 
much  stronger  for  the  assured  than  the  one  now  under  con- 
sideration. 

"  When  this  case  was  before  the  Supreme  Court  on  demurrer, 
the  replication  averred  that  when  the  assured  drowned  himself 
he  was  of  unsound  mind,  and  wliolly  unconscious  of  the  act. 
This  was  admitted  by  the  demurrer,  and  the  question  whether 
voluntary  action  can  exist  without  some  degree  of  conscious- 
ness, is  very  different  from  the  one  presented  by  the  finding 
before  us. 

"I  think  the  judgment  of  the  Supreme  Court  should  be 
reversed." 

1  64  Eng.  Com.  L.  437  ;  3  Man.  Gr.  &  Scott,  437. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  353 

§  310.  Life  Insurance  —  Suicide.  —  Tlie  question  next  came 
before  the  Supreme  Court  of  Massachusetts,^  in  1862,  and  was 
very  elaborately  considered.  Tiie  insured  had  cut  his  throat 
with  a  razor,  and  the  plaintiffs,  in  answer  to  the  objection  that 
his  death  was  by  his  own  hands,  offered  to  show  that  the  death 
was  caused  during  a  state  of  insanity.  But  this  was  held  inad- 
missible.    The  opinion  was  by  Bigelow,  C.  J. :  — 

"  There  can  be  no  doubt  that  the  facts  agreed  by  the  parties 
concerning  the  mode  in  which  the  assured  destroyed  his  own 
life  bring  this  case  within  the  strict  letter  of  the  proviso  in  the 
policy,  by  which  it  was  stipulated  that  it  should  be  void  and  of 
no  effect  if  the  assured  should  '  die  by  his  own  hand.'  The 
single  question,  therefore,  which  we  have  to  determine  is, 
whether,  on  the  well-settled  principles  applicable  to  the  coii- 
struction  of  contracts,  we  can  so  interpret  the  language  of  the 
policy  as  to  add  to  the  proviso  words  of  qualification  and  limi- 
tation, by  which  the  natural  import  of  the  terms  used  by  the 
parties  to  express  their  meaning  will  be  so  modified  and 
restricted  that  the  case  will  be  taken  out  of  the  proviso,  and 
the  policy  be  held  valid  and  binding  on  the  defendants.  In 
other  words,  the  inquiry  is  whether  the  proviso  can  be  so  read 
that  the  policy  was  to  be  void  in  case  the  assured  should  die 
by  his  own  hand,  he  being  sane  when  the  suicide  was  com- 
mitted. If  these  or  equivalent  words  cannot  be  added  to  the 
proviso,  or  if  it  cannot  be  held  that  they  are  necessarily 
implied,  then  it  must  follow  that  the  language  used  is  to  have 
its  legitimate  and  ordinary  signification,  by  which  it  is  clear 
that  the  policy  is  void. 

"  In  considering  this  question,  we  are  relieved  of  one  diffi- 
culty which  has  embarrassed  the  discussion  of  the  same  sub- 
ject in  otlier  cases.  If  the  proviso  had  excepted  from  the 
policy  death  by  '  suicide,'  it  would  have  been  open  to  the 
plaintiffs  to  contend  that  this  word  was  to  have  a  strict  tech- 
nical definition,  as  meaning  in  a  legal  sense  an  act  of  criminal 
self-destruction,  to  which  is  necessarily  attached  the  moral 
responsibility  of  taking  one's  life  voluntarily,  and  in  the  full 
exercise  of  sound  reason  and  discretion.     But  the  language  of 

1  Dean  v.  American  Life  Ins.  Co.,  4  Allen  (Mass.),  96. 
23 


354  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

the  proviso  is  not  necessarily  limited  by  the  mere  force  of  its 
terms.  The  words  used  are  of  the  most  comprehensive  char- 
acter, and  are  sufficiently  broad  to  include  every  act  of  self- 
destruction,  however  caused,  without  regard  to  the  moral 
condition  of  the  mind  of  the  assured,  or  his  legal  responsibility 
for  his  acts. 

"  Applying,  then,  the  first  and  leading  rule  by  which  the 
construction  of  contracts  is  regulated  and  governed,  we  are 
to  inquire  what  is  a  reasonable  interpretation  of  this  clause 
according  to  the  intent  of  the  parties.  It  certainly  is  very 
difficult  to  maintain  the  proposition  that,  where  parties  reduce 
their  contract  to  writing,  and  put  their  stipulations  into  clear 
and  unambiguous  language,  they  intended  to  agree  to  any 
thing  diffijrent  from  tiiat  which  is  plainly  expressed  by  the 
terms  used.  It  is,  however,  to  be  assumed  that  every  part  of  a 
contract  is  to  be  construed  with  reference  to  the  subject-matter 
to  which  it  relates,  and  with  such  limitations  and  qualifications 
of  general  words  and  phrases  as  properly  arise  and  grow  out 
of  the  nature  of  the  agreement  in  which  they  are  found.  Giv- 
ing full  force  and  effect  to  this  rule  of  interpretation,  we  are 
unable  to  see  that  there  is  any  thing  unreasonable  or  incon- 
sistent with  the  general  purpose  which  the  parties  had  in  view 
in  making  and  accepting  the  policy,  in  a  clause  which  excepts 
from  the  risks  assumed  thereby  the  death  of  the  assured  by 
his  own  hand,  irrespective  of  the  condition  of  his  mind,  as 
affecting  his  moral  and  legal  responsibility  at  the  time  the  act 
of  self-destruction  was  consummated.  Every  insurer,  in  assum- 
ing a  risk,  imposes  certain  restrictions  and  conditions  upon  his 
liability.  Nothing  is  more  common  than  the  insertion,  in  pol- 
icies of  insurance,  of  exceptions  by  which  certain  kinds  or 
classes  of  hazards  are  taken  out  of  the  general  risk,  which  the 
insurer  is  willing  to  incur.  Especially  is  this  true  in  regard 
to  losses  which  may  arise  or  grow  out  of  an  act  of  the  party 
insured.  Such  exceptions  are  founded  on  the  reasonable 
assumption  that  the  hazard  is  increased  when  the  insurance 
extends  to  the  consequences  which  may  flow  from  the  acts  of 
the  person  who  is  to  receive  a  benefit  to  himself  or  confer  one 
on  others  by  the  happening  of  a  loss  within  the  terms  of  the 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  355 

policy.  Where  a  party  procures  a  policy  on  his  life,  payable 
to  his  wife  and  children,  he  contenaplates  that,  in  the  event  of 
his  death,  the  sum  insured  will  enure  directly  to  their  benefit. 
So  far  as  a  desire  to  provide  in  that  contingency  for  the  welfare 
and  comfort  of  those  dependent  on  him  can  operate  on  his 
mind,  he  is  open  to  tlie  temptation  of  a  motive  to  accelerate 
a  claim  for  a  loss  under  the  policy  by  an  act  of  self-destruction. 
Against  an  increase  of  the  risk  arising  from  such  a  cause,  it  is 
one  of  tlie  objects  of  the  proviso  in  question  to  protect  the  insur- 
ers. Although  the  assured  can  derive  no  pecuniary  advantage 
to  himself  by  hastening  his  own  death,  he  may  have  a  motive 
to  take  his  own  life,  and  tlms  to  create  a  claim  under  the  pol- 
icy, in  order  to  confer  a  benefit  on  those  who,  in  the  event  of 
his  death,  will  be  entitled  to  receive  the  sum  insured  on  his 
life.  Unless,  then,  we  can  say  that  such  a  motive  cannot 
operate  on  a  mind  diseased,  we  cannot  restrict  the  words  of 
tlie  proviso  so  as  to  except  from  the  risk  covered  by  the  policy 
only  tlie  case  of  criminal  suicide,  where  the  assured  was  in  a 
condition  to  be  held  legally  and  morally  responsible  for  his 
acts.  It -certainly  would  be  contrary  to  experience  to  affirm 
that  an  insane  person  cannot  be  influenced  and  governed  in 
his  actions  by  the  ordinary  motives  which  operate  on  the 
human  mind.  Doubtless  there  may  be  cases  of  delirium  or 
raving  madness  where  the  body  acts  only  from  frenzy  or  blind 
impulse,  as  there  are  cases  of  idiocy  or  the  decay  of  mental 
power,  in  whicii  it  acts  only  from  the  promptings  of  the  lowest 
animal  instincts.  But  in  the  great  majority  of  cases  where 
reason  has  lost  its  legitimate  control,  and  the  power  of  exer- 
cising a  sound  and  healthy  volition  is  lost,  the  mind  still  retains 
sufficient  power  to  supply  motives  and  exert  a  direct  and  essen- 
tial control  over  tlie  actions.  In  such  cases,  the  effect  of  the 
disease  often  is  to  give  undue  prominence  to  surrounding  cir- 
cumstances and  events,  and,  by  exaggerating  their  immediate 
effi?cts  or  future  consequences,  to  furnish  incitement  to  acts  of 
violence  and  folly.  A  person  may  be  insane,  entirely  incapa- 
ble of  distinguishing  between  right  and  wrong,  and  without 
any  just  sense  of  moral  responsibility,  and  yet  retain  sufficient 
powers  of  mind  and  reason  to  act  with  premeditation,  to  under- 


356  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

stand  and  contemplate  the  nature  and  consequences  of  his  own 
conduct,  and  to  intend  the  results  which  his  acts  are  calcu- 
lated to  produce.  Insanity  does  not  necessarily  operate  to 
deprive  its  subjects  of  their  hopes  and  fears,  or  the  other 
mental  emotions  which  agitate  and  influence  the  minds  of  per- 
sons in  the  full  possession  of  their  faculties. 

"  On  the  contrary,  its  effect  often  is  to  stimulate  certain 
powers  to  extraordinary  and  unhealthy  action,  and  thus  to 
overwhelm  and  destroy  the  due  influence  and  control  of  the 
reason  and  judgment.  Take  an  illustration.  A  man  may  labor 
under  the  insane  delusion  that  he  is  coming  to  want,  and  that 
those  who  look  to  him  for  support  will  be  subjected  to  the 
ills  of  extreme  poverty.  The  natural  effect  of  this  species  of 
insanity  is  to  create  great  mental  depression,  under  the  influ- 
ence of  which  the  sufferer,  with  a  view  to  avoid  the  evils  and 
distress  which  he  imagines  to  be  impending  over  himself  and 
those  who  are  dependent  upon  him  for  support,  is  impelled  to 
destroy  his  own  life.  In  such  a  case,  suicide  is  the  wilful  and 
voluntary  act  of  a  person  who  understands  its  nature,  and 
intends  by  it  to  accomplish  the  result  of  self-destructron.  He 
may  have  acted  from  an  insane  impulse,  which  prevented  him 
from  appreciating  the  moral  consequences  of  suicide ;  but, 
nevertheless,  he  may  have  fully  comprehended  the  physical 
effect  of  the  means  which  he  used  to  take  his  own  life,  and  the 
consequences  which  might  ensue  to  others  from  the  suicidal 
act.  It  is  against  risks  of  this  nature  —  the  destruction  of 
life  by  the  voluntary  and  intentional  act  of  the  party  assured 
—  that  the  exception  in  the  proviso  is  intended  to  protect  the 
insurers.  The  moral  responsibility  for  the  act  does  not  affect 
the  nature  of  the  hazard.  The  object  is  to  guard  against  loss 
arising  from  a  particular  mode  of  death.  The  causa  causans, 
the  motive  or  influence  which  guided  or  controlled  the  will  of 
the  party  in  committing  the  act,  are  immaterial,  as  affecting  the 
risk  which  the  insurers  intended  to  except  from  the  policy. 
This  view  is  entirely  consistent  with  the  nature  of  the  con- 
tract. It  is  the  ordinary  case  of  an  exception  of  a  risk  which 
would  otherwise  fall  witliin  the  general  terms  of  the  policy. 
These  comprehended  death  by  disease,  either  of  the  body  or 


SPECIAL   PROVISIONS    OF   THE    CONTRACT.  357 

brain,  from  whatever  cause  arising.  The  proviso  exempts  the 
insurers  from  liability  when  life  is  destroyed  by  the  act  of 
the  party  insured,  although  it  may  be  distinctly  traced  as  the 
result  of  a  diseased  mind.  It  may  well  be  that  insurers  would 
be  willing  to  assume  tlie  risk  of  the  results  flowing  from  all 
diseases  of  the  body,  producing  death  by  the  operation  of  phys- 
ical causes,  and  yet  deem  it  expedient  to  avoid  the  hazards 
of  mental  disorder,  in  its  effects  on  the  will  of  the  assured, 
whether  it  originated  in  bodily  disease,  or  arose  from  external 
circumstances,  or  was  produced  by  a  want  of  moral  and  reli- 
gious principle. 

"  It  was  urged  very  strongly  by  the  learned  counsel  for  the 
plaintiffs,  that  this  view  of  the  construction  of  the  contract  was 
open  to  the  fatal  objection  that  it  would  necessarily  lead  to 
the  absurd  conclusion  that  death  occasioned  by  inevitable  acci- 
dent or  overpowering  force,  or  in  a  fit  of  delirium  or  frenzy,  if 
the  proximate  and  immediate  cause  was  the  hand  of  the  per- 
son insured,  would  be  excepted  from  the  risks  assumed  by  the 
defendants.  But  this  objection  is  sufficiently  answered  by 
the  obvious  suggestion  that  such  an  interpretation,  although 
within  the  literal  terms  of  the  proviso,  would  be  contrary  to 
a  reasonable  intent,  as  derived  from  the  subject-matter  of  the 
contract.  An  argument  having  for  its  basis  a  reductio  ad 
absurdum  is  not  entitled  to  mucli  weiglit  when  it  is  necessary 
to  ascertain  the  intention  of  the  parties  to  a  contract,  and  to 
conform  to  that  intention  in  giving  an  interpretation  to  the 
language  used.  Indeed,  when  it  becomes  necessary  (as  the 
case  on  the  part  of  the  plaintiffs  requires)  to  desert  the  literal 
import  of  terms  adopted  by  parties  to  express  their  meaning, 
as  it  cannot  be  reasonably  supposed  that  they  intended  to 
enter  into  stipulations  which  would  be  unreasonable  or  absurd, 
all  conclusions  which  tend  to  establish  such  a  result  are  neces- 
sarily excluded.  The  question  in  such  cases  is  not  how  far 
can  the  literal  meaning  of  words  be  extended,  but  what  is  a 
reasonable  limitation  and  qualification  of  them,  having  regard 
to  the  nature  of  the  contract  and  the  objects  intended  to  be 
accomplished  by  it.  Applying  this  principle  to  the  present 
proviso,  and  assuming  that  the  plaintiffs  are  right  in  their  posi- 


858  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

tion,  that  the  words  used  are  not  to  be  interpreted  literally,  it 
would  seem  to  be  reasonable  to  hold  that  they  were  intended 
to  except  from  the  policy  all  cases  of  death  caused  by  the  vol- 
untary act  of  the  assured,  when  his  deed  of  self-destruction 
was  the  result  of  intention,  by  a  person  knowing  the  nature 
and  consequences  of  the  act,  although  it  may  have  been  done 
under  an  insane  delusion,  which  rendered  the  party  morally 
and  legally  irresponsible,  incapable  of  distinguishing  between 
right  and  wrong,  and  which,  by  disturbing  his  reason  and 
judgment,  impelled  him  to  its  commission.  If  the  suicide  was 
an  act  of  volition,  however  excited  or  impelled,  it  may  in  a 
just  sense  be  said  that  he  died  by  his  own  hand.  But  beyond 
this  it  would  not  be  reasonable  to  extend  the  meaning  of  the 
proviso.  If  the  death  was  caused  by  accident,  by  superior 
and  overwhelming  force,  in  the  madness  of  delirium,  or  under 
any  combination  of  circumstances  from  which  it  may  be  fairly 
inferred  that  the  act  of  self-destruction  was  not  the  result  of 
the  will  or  intention  of  the  party  adapting  means  to  the  end, 
and  contemplating  the  physical  nature  and  effects  of  the  act, 
then  it  may  be  justly  held  to  be  a  loss  not  excepted  within 
the  meaning  of  the  proviso.  A  party  cannot  be  said  to  die  by 
his  own  hand  in  the  sense  in  which  these  words  are  used  in 
the  policy,  whose  self-destruction  does  not  proceed  from  the 
exercise  of  an  act  of  volition,  but  is  the  result  of  a  blind 
impulse,  of  mistake  or  accident,  or  of  other  circumstances 
over  which  the  will  can  exercise  no  control. 

"  In  seeking  to  ascertain  the  intention  of  parties,  some 
weight  is  to  be  given  to  the  practical  results  which  would  be 
likely  to  follow  from  the  adoption  of  a  particular  construction 
of  the  words  of  a  contract.  It  is  reasonable  to  suppose  that 
these  were  in  contemplation  of  the  insurers  at  the  time  the 
policy  was  issued.  Certainly  it  is  fair  to  infer  that  they 
intended  to  put  some  material  limitations  upon  their  liability 
by  the  insertion  of  this  proviso.  But  if  it  is  to  be  construed 
as  including  only  cases  of  criminal  self-destruction,  it  would 
rarely,  if  ever,  effect  this  object.  Those  familiar  with  the 
business  of  insurance,  and  with  the  results  of  actions  on  poli- 
cies of  insurance  in  courts  of  law,  know  how  difficult  it  is  td 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  359 

establish  a  case  of  exemption  from  liability  under  an  excep- 
tion in  a  policy,  where  it  depends  on  a  question  of  fact  to  be 
decided  by  the  verdict  of  a  jury.  If  this  is  true  in  reo;ard  to 
ordinary  claims  under  policies,  it  is  obvious  that  the  difficnlty 
would  be  greatly  enhanced  in  cases  like  the  present,  where  it 
would  be  sufficient,  in  order  to  take  a  case  out  of  the  operation 
of  the  proviso,  to  prove  that  self-destruction  was  the  result 
of  insanity.  It  would  not  be  hazardous  to  affirm  that,  in  all 
cases  where  such  an  issue  was  to  be  determined  by  a  jury 
between  an  insurance  company'and  the  representatives  of  the 
deceased,  the  act  of  suicide  would  be  taken  as  proof  of  insan- 
ity. Such  considerations  were  not  likely  to  have  escaped  the 
intention  of  practical  men  in  framing  this  general  proviso  ; 
and,  in  a  doubtful  case  of  construction,  they  are  not  to  be 
overlooked  in  giving  an  interpretation  to  the  words  used  by 
them. 

"  The  learned  coiuisel  for  the  plaintiffs  have  insisted  with 
great  force  on  an  argument  drawn  from  the  context,  to  show 
that  the  proviso  was  intended  to  embrace  only  a  case  of  crim- 
inal self-destruction  by  a  reasonable  and  responsible  being. 
But  it  seems  to  us  that  the  maxim  noscitur  a  sociis,  on  which 
they  rely,  does  not  aid  the  construction  for  which  they  con- 
tend. The  material  part  of  the  clause  is,  that  the  policy  shall 
be  void  if  the  assured  'shall  die  by  his  own  hand,  or  in  conse- 
quence of  a  duel,  or  by  the  hands  of  justice,  or  in  the  known 
violation  of  any  State,  national,  or  provincial  law.'  Now  the 
first  and  most  obvious  consideration  suggested  by  other  parts 
of  this  clause  is,  that  in  enumerating  the  causes  of  death 
which  shall  not  be  deemed  to  be  within  the  risks  covered  by 
the  policy,  one  of  them  is  in  terms  made  to  depend  on  the 
existence  of  a  criminal  intention.  It  is  a  '  known  '  violation 
of  law,  which  is  to  avoid  tl»e  policy.  This  tends  very  strongly 
to  show  that  where  an  act  producing  death  may  be  eitiier  inno- 
cent or  criminal,  if  it  is  intended  to  except  only  such  as 
involves  a  guilty  intent,  it  is  carefully  so  expressed  in  the  pro- 
viso. The  inference  is  very  strong  that  if  they  designed  to 
confine  the  exception  in  question  to  cases  of  criminal  suicide, 
it  would  have  been  so  provided  in  explicit  terms.     So  far,  the 


360  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

argument  drawn  from  the  context  does  not  support  the  plain- 
tiflfs'  claim.  Take  then  another  of  the  causes  of  death,  death 
in  a  duel,  enumerated  in  the  proviso. 

"  It  seems  to  us  to  be  a  peiitio  principii  to  assume  that  death 
in  consequence  of  a  duel  necessarily  implies  an  act  for  which 
the  party  would  be  criminally  responsible.  Why  is  not  this 
part  of  the  proviso  open  to  the  same  argument  as  that  which 
is  urged  in  regard  to  the  clause  relating  to  self-destruction  ? 
A  duel  may  be  fought  by  a  party  acting  under  duress,  or 
impelled  thereto  by  an  insane -delusion,  which  might  blind  his 
moral  perceptions  and  render  him  legally  irresponsible.  If 
so,  then  the  same  answer  to  a  defence  set  up  against  a  claim 
under  the  policy  would  be  open  under  this  clause,  as  the 
one  now  urged  in  behalf  of  the  plaintiffs ;  and  the  argument, 
founded  on  the  assumption  that  a  forfeiture  under  this  part 
of  the  proviso  necessarily  involves  a  criminal  violation  of  law, 
falls  to  the  ground.  Therefore  the  inference  that  a  guilty 
intention  is  communicated  from  this  branch  of  the  proviso  to 
that  relating  to  death  by  the  act  of  the  assured,  seems  to  us 
to  be  unfounded.  The  only  remaining  clause  is  that  which 
provides  for  the  case  of  death  by  the  hands  of  justice.  This 
undoubtedly  implies  that  the  person  insured  has  been  found 
guilty  of  a  criminal  act  by  a  judicial  tribunal,  according  to  the 
established  forms  of  law.  But  it  is  not  correct  to  say  that  it 
involves  the  existence  of  a  criminal  intent,  because  it  might 
be  shown  that  the  conviction  of  the  assured  was  erroneous, 
and  that  he  was  in  fact  innocent  of  the  crime  for  which  he 
suffered  the  penalty  of  death.  So  far,  therefore,  as  any  argu- 
ment can  be  justly  drawn  from  the  connection  in  which  the 
words  as  to  self-destruction  stand  in  relation  to  other  parts 
of  the  proviso,  it  leads  to  the  conclusion  that  it  was  not  solely 
death  occasioned  by  acts  of  the  assured  involving  criminal 
intent  or  a  wilful  violation  of  law  by  a  person  morally  and 
legally  responsible,  which  was  intended  to  be  excepted  from 
the  risks  assumed  by  the  insurers ;  but  that,  with  the  excep- 
tion of  death  in  a  known  violation  of  law,  the  proviso  embraces 
all  cases  where  life  is  taken  in  consequence  of  the  causes  speci- 
fied, without  regard  to  the  question,  whether  at  the  time  the 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  361 

assured  was  amenable  for  his  act,  either  m  foro  conscientice,  or 
in  the  tribunals  of  justice. 

"  It  may  be  added  that  a  departure  from  the  literal  terms  of 
a  contract  is  always  attended  with  great  difficulty  and  danger, 
because  it  is  apt  to  lead  to  great  latitude  of  construction,  and 
to  give  uncertainty  to  the  language  which  the  parties  have 
adopted  to  express  their  meaning.  It  certainly  never  should 
be  extended  beyond  the  clear  intent  of  the  parties,  as  derived 
from  other  parts  of  the  agreement,  or  the  subject-matter  to 
which  the  contract  relates.  This  position  may  be  illustrated 
by  reference  to  another  part  of  the  policy  declared  on.  The 
proviso  which  precedes  that  on  which  the  present  question  has 
arisen  contains  a  stipulation  that  the  policy  shall  be  void  if 
the  assured,  without  the  consent  of  the  defendants  in  writing, 
shall  during  certain  portions  of  the  year  visit  the  more  south- 
erly parts  of  the  United  States,  or  shall  pass  without  the  set- 
tled limits  of  the  United  States.  If  the  assured  in  a  fit  of 
insanity  should  wander  from  his  home  and  go  within  the  pro- 
hibited territory,  would  the  policy  be  void  ?  If  he  was  taken 
prisoner  and  went  thither  with  his  captors,  would  he  lose  his 
claims  under  the  policy  ?  These  and  similar  questions,  which 
might  arise  under  other  clauses  of  the  policy,  seem  to  show 
that  it  is  more  safe  to  adhere  to  the  strict  letter  of  the  con- 
tract, and  to  hold  parties  to  the  salutary  rule  which  requires 
them  to  express  in  clear  and  unambiguous  terms  any  excep- 
tions which  they  desire  to  engraft  on  the  general  words  of  a 
contract. 

"  So  far  as  the  adjudicated  cases  bear  on  the  question  which 
we  have  considered  in  the  present  case,  the  weight  of  author- 
ity is  against  the  claim  of  the  plaintiffs  under  the  policy.  In 
the  case  of  Borradaile  v.  Hunter,^  where  the  policy  contained 
a  proviso  very  similar  to  that  found  in  the  policy  declared  on, 
it  was  held  that  the  policy  was  avoided,  as  the  proviso  included 
all  cases  of  voluntary  self-destruction,  and  was  not  limited  to 
acts  of  criminal  suicide.  From  this  opinion  there  was  a  dis- 
sent by  the  Chief  Justice.  In  Clift  v.  Schwabe,^  a  similar 
decision  was  made  by  the  Exchequer  Chamber,  two  of  the 
1  5  Man.  &  Gr.  639.  2  3  C.  B.  437. 


362  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

judges  dissenting.  These  cases  seem  now  to  be  regarded  as 
having  settled  the  law  in  England  in  conformity  with  the  opin- 
ion of  the  majority  of  the  judges.^  A  different  opinion  was 
arrived  at  in  Breasted  v.  Farmers'  Loan  and  Trust  Company,^ 
from  which,  however,  several  of  the  most  learned  justices  of 
the  court  of  appeals  dissented. 

"  In  1  Phil.  Ins.,^  it  is  stated  that  any  mental  derangement 
sufficient  to  exonerate  a  party  from  a  contract  would  render 
a  person  incapable  of  occasioning  the  forfeiture  of  a  policy 
under  a  clause  like  the  one  in  question.  In  support  of  this 
proposition  no  authorities  are  cited  except  the  cases  above 
named  of  Borradaile  v.  Hunter  and  Breasted  v.  Farmers'  Loan 
and  Trust  Company  as  reported  in  4  Hill.  If  it  is  intended 
by  it  to  assert  that  the  principle  on  which  a  contract  made 
with  an  insane  person  is  held  to  be  void  as  to  him,  applies  to 
this  clause  so  as  to  exclude  from  its  operation  all  cases  of  self- 
destruction  occasioned  by  insanity,  it  seems  to  us  that  the 
position  is  untenable.  The  reason  for  the  rule  which  exeYnpts 
a  person  from  liability  on  a  contract  into  which  he  entered 
when  insane  is,  that  he  is  not  deemed  to  have  been  capable  of 
giving  an  intelligent  assent  to  its  terms.  But  this  rule  is  not 
applicable  where  a  contract  is  made  with  a  person  in  the  full 
possession  of  his  faculties,  and  he  subsequently,  in  a  fit  of 
insanity,  commits  a  breach  of  it,  or  incurs  a  penalty  under  it. 
He  is  then  bound  by  it.  His  mind  and  will  have  assented  to 
it.  No  subsequent  mental  incapacity  will  absolve  him  from 
his  responsibility  on.  it,  unless  from  its  nature  it  implies  the 
continued  possession  of  reason  and  judgment  and  the  action 
of  an  intelligent  will.  A  party  may  be  liable  on  an  unexe- 
cuted contract,  after  he  has  lost  the  use  of  his  mental  facul- 
ties, as  he  may  be  held  responsible  civiliter  for  his  torts."* 

"  To  say  that  insanity  exonerates  a  party  from  a  forfeiture 
under  such  a  proviso  in  a  policy,  is  to  assume  that  this  was 
the  intention  of  the  parties  when  the  contract  of  insurance 

1  Dufaur  v.  Professional  Life  Ass.  Co.,  2.5  Beav.  602. 

2  4  Hill  (N.  Y.),  74,  and  4  Seklen,  2U9.  »  Sect.  895. 

♦  Bagster  v.  Portsmouth,  7  Dowl.  &  Ryl.  614 ;  Weaver  v.  Ward,  Ilob.  134  ; 
Cross  V.  Andrews,  Cro.  Eliz.  622. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  363 

was  entered  into.  But  if  such  was  not  the  intention,  then  it 
follows  that  the  assured  gave  an  intelligent  assent  to  a  con- 
tract, by  which  he  stipulated  that  if  he  took  his  own  life  volun- 
tarily, knowing  the  consequences  of  his  act,  he  would  thereby 
work  a  forfeiture  of  his  claim  under  the  policy,  although  he 
may  have  acted  under  the  influence  of  insanity  in  commit- 
ting the  suicidal  act.  So  that,  after  all,  we  are  brought  back 
to  the  inquiry,  what  was  the  intention  of  the  parties  to  iihe 
contract,  in  order  to  ascertain  the  true  construction  of  the 
proviso. 

"  The  result  to  which  we  have  come,  after  a  careful  and 
deliberate  consideration  of  the  qiiestion,  during  which  we  have 
felt  most  sensibly  the  very  great  difficulties  and  embarrassments 
which  surround  the  subject,  is,  that  the  plaintiffs  are  not  enti- 
tled to  recover.  The  facts  agreed  by  the  parties  concerning 
the  mode  in  wliich  the  plaintiffs'  intestate  took  his  own  life 
leave  no  room  for  doubt  that  self-destruction  was  intended  by 
him,  he  having  sufficient  capacity  at  the  time  to  understand 
the  nature  o&  the  act  which  he  was  about  to  commit,  and  the 
consequences  which  would  result  from  it.  Such  being  the 
fact,  it  is  wholly  immaterial  to  the  present  case  that  he  was 
impelled  thereto  by  insanity,  which  impaired  his  sense  of 
moral  responsibility,  and  rendered  him  to  a  certain  extent 
irresponsible  for  his  actions." 

§  311.  Afterwards,  in  1866,  the  question  arose  in  the  Su- 
preme Court  of  Maine,  in  Eastabrook  v.  Union  Mutual  Life 
Insurance  Company,^  where  it  was  held  that  the  representa- 
tives of  an  insane  suicide  might  recover  upon  the  policy,  the 
facts  being  fully  stated  in  the  opinion.  The  policy  provided 
that  in  case  the  insured  should  "  die  by  his  own  hand,  or 
in  consequence-  of  a  duel,  or  by  the  violation  of  any  State, 
national,  or  provincial  law,  or  by  the  hands  of  justice,"  it 
should  be  void.  The  death  was  by  suicide  in  a  fit  of  insan- 
ity, and  the  question  was  whether  death  under  such  circum- 
stances is  within   the  condition.     The  learned  judge,-  after 

1  54  Me.  224. 

2  Appleton,  C.  J.,  in  Eastabrook  v.  Union  Mut.  Life  Ins.  Co.,  54  Me.  224. 
Kent,  J.,  dissented,  but  delivered  no  opinion. 


364  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

adverting  to  the  diversity  of  judicial  opinions,  both  in  England 
and  in  this  country,  proceeds  as  follows  :  "  In  this  conflict  of 
authority,  it  may  not  be  amiss  to  briefly  examine  the  question, 
and  to  endeavor  to  determine  what  conclusions  will  best  accord 
with  the  object  of  the  policy  and  with  the  intent  of  the  parties 
as  ascertainable  from  the  language  upon  the  recognized  princi- 
ples of  interpretation. 

"  An  insurance  upon  life  is  of  comparatively  recent  date. 
A  creditor  may  insure  upon  the  life  of  his  debtor,  or  one  may 
insure  upon  his  own  life  for  the  benefit  of  his  family.  In  no 
event  can  the  person  upon  whose  life  the  policy  is  effected 
be  benefited  by  his  own  death.  Death,  whether  by  disease, 
by  accident,  or  the  result  of  insanity,  is  in  each  case  within 
the  general  object  of  the  policy. 

"  The  terms  '  suicide '  and  '  dying  by  one's  own  hand  '  are 
generally  used  synonymously.  Sometimes  one  form  of  expres- 
sion is  used,  and  sometimes  the  other.  They  have  the  same 
meaning.  Dying  by  one's  own  hand  is  but  another  form  of 
expression  for  suicide.  ♦ 

"  The  phrase,  '  die  by  one's  own  hand,'  may  include  all 
cases  of  death  by  the  person  upon  whose  life  the  policy  is 
effected,  or  it  may  receive  limitations.  If  limitations,  then 
the  inquiry  arises  as  to  tlie  extent  of  those  limitations.  The 
authorities  concur  in  this,  that  the  expression  does  not  embrace 
all  cases  of  death  by  one's  own  hand.  If  the  insured  kill  him- 
self by  drinking  poison,  not  being  aware  that  it  was  poison  ;  or 
by  snapping  a  loaded  pistol,  ignorant  that  it  was  loaded  ;  or  by 
leaping  from  a  window  in  the  delirium  of  a  fever, —  it  is  con- 
ceded that  he  would  not  die  by  his  own  hand,  within  the 
meaning  of  the  clause  under  consideration,  though  he  might 
literally  die  by  his  own  hand,  that  is,  by  his  own  act. 

"  '  It  is  to  be  observed,'  remarks  Tindal,  C.  J.,  in  Borradaile 
V.  Hunter, '  that  the  words  of  the  proviso  are  the  words  not  of 
the  assured,  but  of  the  insurers,  introduced  by  themselves  for 
the  purpose  of  their  own  exemption  and  protection  from  lia- 
bility ;  both  in  reason  and  good  sense,  therefore,  no  less  than 
upon  the  acknowledged  principles  of  legal  construction,  they 
are  to  be  taken  most  strongly  against  those  who  speak  the 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  365 

words,  and  most  favorably  for  the  other  party.  For  it  is  no 
more  than  just  that,  if  the  words  are  ambiguous,  he  whose 
meaning  they  are  intended  to  express,  and  not  tlie  other  party, 
shall  suffer  by  the  ambiguity.'  That  they  are  ambiguous  is 
conceded,  for  the  courts  in  no  cases  have  given  them  a  literal 
construction.  When  death  is  the  result  of  insanity,  it  is 
equally  the  result  of  disease,  for  which  the  insane  is  in  no 
respect  responsible.  It  is  a  well-settled  physiological  principle, 
'  that  disturbed  intelligence  has  the  same  relation  to  the  brain 
that  disordered  respiration  has  to  the  lungs  and  pleura.' 
Death,  then,  by  an  insane  suicide  is  as  much  death  by  disease 
as  though  it  were  death  by  fever  or  consumption.  Death  by 
accident  or  mistake,  though  by  the  party's  own  hand,  is  not 
within  the  condition.  Death  by  disease  is  provided  for  by  the 
policy.  Insanity  is  disease.  Death,  the  result  of  insanity,  is 
death  by  disease.  The  insane  suicide  no  more  dies  by  his  own 
hand,  than  the  suicide  by  mistake  or  accident.  If  the' act  be 
not  the  act  of  a  responsible  being,  but  is  the  result  of  any 
delusion  or  perversion,  whether  physical,  intellectual,  or  morale 
it  is  not  tlie  act  of  the  man.  '  If  they  (the  insurers)  intended 
the  exception  to  extend  both  to  the  case  of  felonious  self- 
destruction,  and  self-destruction  not  felonious,  they  ought,' 
observes  Tindal,  C.  J.,  in  Borradaile  v.  Hunter,  '  so  to  have 
expressed  it  clearly  in  the  policy ;  and  that,  at  all  events,  if 
they  have  left  it  doubtful  on  the  face  of  the  policy  whetlier  it 
is  so  confined  or  not,  that  doubt  ought,  in  my  opinion,  to  be 
determined  against  them  ;  for  it  is  incumbent  on  them  to  bring 
themselves  within  the  exception,  and,  if  their  meaning  remains 
in  doubt,  they  have  failed  so  to  do.' 

"  The  different  English  life  insurance  companies  (when 
unwilling  to  incur  the  risk  of  suicidal  insanity)  have  guarded 
against  such  risk  by  language  clearly  excluding  it  from  the 
policy.  Thus,  the  Equitable  has  the  condition,  '  if  the  insured 
shall  die  by  his  own  hand,  being  at  the  same  time  sane  or 
insane  ; '  the  Eagle, '  if  he  shall  die  by  his  own  act,  whether 
sane  or  insane.'  In  the  policies  of  the  Solicitors'  and  General 
Life  Assurance,  the  condition  is,  if  he  die  by  his  own  act, 
'  whether  felonious  or  not.' 


366  insurance:  fire,  life,  accident,  etc. 

"  The  policy  in  tlie  clause  under  consideration  refers  to 
death  by  his  own  hand,  or  in  consequence  of  a  duel,  or  the 
violation  of  any  State,  national,  or  provincial  laws,  or  by  the 
hands  of  justice.  All  the  other  cases  after  the  first  involve 
criminal  delinquency.  They  involve  intentional  misdoing. 
They  assume  criminal  intention.  They  are  cases  where  death 
occurs  in  consequence  of  committing  a  felony  or  other  viola- 
tion of  law  on  the  part  of  the  insured.  There  must  in  all  be 
moral,  as  well  as  legal,  responsibility.  Noscitvr  a  sociis  is  a 
familiar  maxim  in  the  interpretation  of  covenants.  The  other 
members  of  the  sentence,  connected  with  the  verb  '  die,'  imply 
death  as  the  result  of  crime  committed  by  a  responsible  being. 
The  first  of  these  conditions,  to  which  the  others  refer,  and 
with  which  they  are  connected,  must  equally  with  the  others 
refer  to  a  felonious  death,  to  the  case  of  felo  de  se,  not  to  the 
case  of  a  death  without  legal  or  moral  blame,  —  the  result  of 
accident,  mistake,  or  disease. 

"  The  madman  who  in  a  fit  of  delirium  commits  suicide,  as 
much  dies  by  his  own  hand  as  does  the  individual  who  acci- 
dentally and  unintentionally  takes  his  own  life.  They  each 
die  by  their  own  hands,  but  without  moral  responsibility  or 
legal  blame.  One  is  no  more  within  the  conditions  of  the 
policy  than  the  other.  In  each  case  it  should  receive  the  same 
construction. 

"That  a  jury  would  be  likely  to  regard  suicide  as  proof  of 
insanity  does  not  affect  the  conclusion.  If  suicide  is  to  be 
regarded  as  evidentiary  of  insanity,  as  it  unquestionably  is  in 
most  cases,  then  they  generally  arrive  at  correct  results.  If  it 
is  not  properly  to  be  so  regarded,  it  may  be  an  argument  against 
a  trial  by  jury,  that  the  tribunal  is  one  which  allows  itself  to 
be  governed  by  its  prejudices  rather  tiian  by  the  proofs ;  but  it 
is  none  against  the  construction  of  the  policy  that  death  by 
the  hands  of  the  insured,  whether  by  accident,  mistake,  or  in 
a  fit  of  insanity,  is  to  be  governed  by  one  and  tlie  same  rule. 

"  Nor  does  the  case  of  suicide,  by  one  insane,  fall  within  the 
danger  to  guard  against  the  occurrence  of  which  this  condition 
was  inserted.  '  A  policy,'  observes  Maule,  J.,  in  Borradaile  v. 
Hunter,  '  by  which  the  sum  is  payable  on  the  death  of  the 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  367 

person  assured  in  all  events,  gives  him  a  pecuniary  interest 
that  he  should  die  immediately,  rather  than  at  a  future  time, 
to  the  extent  of  the  excess  of  the  value  of  a  present  payment 
over  a  deferred  one,  and  offers  a  temptation  to  self-destruction 
to  that  extent.  To  protect  the  insurers  against  the  increase 
of  risk  arising  out  of  this  temptation,  is  the  ohject  for  which 
the  condition  is  inserted.'  The  reason  here  given  assumes,  or 
presupposes,  sanity  on  the  part  of  the  insured.  It  implies  a 
motive  acting  on  a  sane  mind,  for  sanity  is  in  all  cases  to  he 
presumed.  But,  in  fact,  there  is  very  slight  foundation  for 
any  such  reasoning.  The  person  whose  life  is  insured  never 
receives  money  after  his  death.  Suicide  for  the  benefit  of 
others  is  rare,  exceptional,  and  Quixotic.  The  love  of  life, 
the  strongest  sentiment  of  our  nature,  affords  reasonable  secu- 
rity against  a  danger  so  remotely  prol)able.  An  insane  man 
would  be  little  likely  to  calculate  the  difference  in  value 
between  a  payment  to  be  made  immediately  and  one  indefi- 
nitely deferred,  and  kill  himself  that  some  one  else  might 
receive  the  money  at  an  earlier  date  in  consequence  of  his 
committing  suicide.  The  evidence  affords  not  the  slightest 
indication  that  any  such  motive  had  any  influence  in  the  pres- 
ent case. 

"  Where  the  policy  is  on  the  life  of  a  mariner,  as  in  the  one 
under  consideration,  '  the  insurance  can  be  no  inducement  to 
a  criminal  act,  and  may  be  reasonably  construed  to  cover  this 
as  well  as  every  other  risk.  Tiiere  is,  indeed,  no  reason  why 
it  should  not  do  so ;  for  the  general  tables  of  mortality,  which 
form  the  basis  of  the  calculations  upon  which  the  policy  is 
founded,  include  this  as  well  as  every  other  cause  of  death, 
so  that  the  particular  risk  is  actually  insured  against.' "  ^ 

§  312.  The  doctrine  laid  down  in  Dean  v.  American  Mutual 
Life  Insurance  Company,^  has  since  been  adopted  and  followed 
by  Mr.  Justice  McKennan  in  the  Circuit  Court  of  the  United 
States  for  the  Western  District  of  Pennsylvania,^  and  in 
Kentucky."*     In  the  case  from  Kentucky  the  following  instruc- 

1  Bunyon  on  Life  Insurance,  73.  '  4  Allen  (Mass.),  96. 

**  Nimick  v.  Mut.  Benefit  Life  Lis.  Co  ,  3  Brewster,  502;  s.  c.  Am.  Law  Reg. 
Feb.  1871. 

*  St.  Louis  Mut.  Life  Ins.  Co.  v.  Graves,  6  Bush  (Ky.),  268. 


368  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

tions  were  held  to  be  erroneous :  "  That  although  the  jury 
may  be  satisfied  that  Leslie  C.  Graves,  whose  life  was  insured 
by  the  defendant,  committed  suicide,  and  that  when  he  did 
his  intellect  was  unimpaired,  and  that  he  knew  it  was  for- 
bidden both  by  moral  and  human  law ;  yet  if  they  believe, 
from  all  the  evidence,  that  at  the  instant  of  the  commission  of 
the  act  his  will  was  subordinated  by  an  uncontrollable  passion 
or  emotion,  causing  him  to  do  the  act,  it  was  an  act  of  moral 
insanity,"  and  would  not  avoid  the  policy.  In  England,  the 
rule  laid  down  by  the  majority  of  the  judges  in  the  cases  of 
Borradaile  v.  Hunter  and  Clift  v.  Schwabe  was  followed  in 
White  V.  The  British  Empire  Mutual  Life  Assurance  Company,^ 
in  which  the  Vice-Chancellor  (Malins)  took  occasion  to  inti- 
mate that  that  opinion  was  so  clearly  the  better  law  that  he 
did  not  wish  to  hear  any  argument  on  behalf  of  the  defend- 
ants. In  Stormont  v.  Waterloo  Life  and  Casualty  Assurance 
Company ,2  the  insured  committed  suicide  by  throwing  himself 
out  of  the  window,  and  the  court  told  the  jury  that  the  ques- 
tion was,  did  the  assured  know  that  he  was  throwing  hiniself 
out  of  the  window  ?  If  he  did,  no  recovery  could  be  had  under 
the  policy.     Otherwise  if  he  did  not. 

§  313.  And  more  recently  the  Supreme  Court  of  Massachu- 
setts, having  occasion  to  reconsider  the  question,^  adheres  to 
its  former  decision,  and  thus  states  the  present  position  of  the 
question. 

"The  proviso  in  the  policy  is,  that  it  shall  be  void  if  the 
assured  '  shall  die  by  suicide.'  The  plaintiff  offered  to 
prove  that  the  assured,  at  the  time  of  committing  the  act  of 
self-destruction,  was  insane  ;  that  he  acted  under  the  impulse 
of  insanity  ;  and  that  his  act  of  self-destruction  was  the  direct 
result  of  his  insanity.  The  question  presented  is,  whether, 
if  these  facts  are  true,  the  act  of  self-destruction  avoids  the 
policy,  within  the  terms  of  the  proviso.  The  subject  has  been 
so  fully  discussed  in  the  cases  cited,  that  further  argument  is 
needless.  We  need  only  collate  the  cases. 
.    "  In  Borradaile  v.  Hunter,*  the  words  were, '  if  the  assured 

1  38  L.  J.  N.  s.  Ch.  53.  2  1  F.  &  F.  Nisi  Prius,  22. 

3  Cooper  V.  Massachusetts  Mut.  Life  Ins.  Co.,  102  Mass.  227. 
*  6  Man.  &  Gr.  639. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  369 

should  die  by  his  own  hand.'  He  drowned  himself  in  the 
Thames ;  and  the  jury  found  that  he  did  it  voluntarily,  but 
that  he  was  not  capable  of  judging  between  right  and  wrong. 
It  was  held  that  the  proviso  was  not  limited  to  acts  of  felo- 
nious suicide,  and  that  the  policy  was  void.  Tindal,  C.  J., 
dissented.  But  the  jury  were  instructed  that  it  must  appear 
that  the  assured  was  conscious  of  the  probable  consequences 
of  his  act,  and  did  it  for  the  express  purpose  of  destroying 
himself  voluntarily,  having  at  the  time  sufficient  mind  and  will 
to  destroy  himself. 

In  Clift  V.  Schwabe  ^  the  words  were,  "  should  commit  sui- 
cide." The  assured  swallowed  a  quantity  of  sulphuric  acid, 
sufficient  to  occasion  death,  for  the  purpose  of  killing  himself, 
of  which  he  died  the  next  day.  It  was  held  by  Parke  and 
Alderson,  BB.,  Patteson,  J.,  and  Rolfe,  B.,  to  be  immaterial 
whether  he  was  a  responsible  agent.  Pollock,  C.  B.,  and 
Wightman,  J.,  dissented.  But  Alderson,  B.,  says  the  words 
do  not  apply  to  cases  in  which  the  will  is  not  exercised  at  all, 
as  when  death  results  from  an  accident  or  delirium,  but  when 
the  destruction  is  voluntary,  though  the  will  may  be  perverted. 

In  Dean  v.  American  Insurance  Company,^  the  words  were 
.like  those  in  Borradaile  v.  Hunter,  "  shall  die  by  his  own 
hand."  The  assured  cut  his  throat  with  a  razor.  The  plain- 
tiff, however,  alleged  and  offered  to  prove  that  the  act  whereby 
the  death  was  caused  was  the  direct  result  of  insanity;  that 
the  insanity  was  what  is  called  suicidal  depression,  impelling 
him  to  take  his  life,  and  that  suicide  is  the  necessary  and 
direct  result  of  such  insanity  or  disease ;  and  it  was  held  that 
this  avoided  the  policy.  But  Bigelow,  C.  J.,  in  giving  the 
opinion,  adverts  to  the  word  "  suicide,"  and  avoids  discussing 
its  signification ;  thereby  leaving  the  present  case  undecided 
by  this  court.  But  he  says  that  if  the  death  is  caused  in  the 
madness  of  delirium,  or  under  any  combination  of  circum- 
stances from  which  it  may  be  fairly  inferred  that  the  act  of 
self-destruction  was  not  the  result  of  the  will  and  intention  of 
the  party,  adapting  the  means  to  the  end,  and  contemplating 
the  physical  nature  and  effects  of  the  act,  it  would   not  be 

1  3  C.  B.  437.  2  4  Allen  (Mass.),  96. 

24 


370  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

within  the  policy.  This  limitation  is,  in  substance,  the  same 
with  that  which  is  quoted  from  the  other  cases  cited. 

"  In  Eastabrook  v.  Union  Insurance  Company,^  the  words 
were,  '  sliall  die  by  his  own  hand.'  The  jury  found  that  the 
self-destruction  was  the  result  of  a  blind  and  irresistible 
impulse  over  which  the  will  had  no  control,  and  was  not  an 
act  of  volition.  It  was  held  that  this  did  not  avoid  the  policy ; 
and  Appleton,  C.  J.,  in  a  very  elaborate  opinion,  says  the 
decision  was  in  entire  conformity  with  the  law  as  stated  in 
Dean  v.  American  Insurance  Company,  referring  to  the  limita- 
tion stated  above.     But  Kent,  J.,  dissented. 

"  In  Breasted  v.  Farmers'  Loan  and  Trust  Company,^  the 
words  were  '  should  die  by  his  own  hand.'  It  was  held  by 
a  majority  of  the  court  of  appeals,  three  of  the  justices  dis- 
senting, that,  if  the  assured  was  insane,  and  incapable  of  dis- 
cerning between  right  and  wrong,  his  suicide  did  not  avoid 
the  policy.  This  decision  is  at  variance  with  the  other  authori- 
ties cited,  and  is  contrary  to  our  own  interpretation  of  the 
same  words  in  Dean  v.  American  Insurance  Company. 

"  Upon  a  careful  consideration  of  the  elaborate  discussion 
of  the  matter  in  the  cases  above  cited,  by  the  dissenting  judges 
as  well  as  by  those  in  the  majority,  we  think  that,  as  applied 
to  this  case,  there  is  no  substantial  difference  of  significa- 
tion between  the  phrases  '  sliall  die  by  his  own  hand,'  '  shall 
commit  suicide,'  and  '  shall  die  by  suicide ; '  and  that  they 
include  self-destruction  under  the  influence  of  insanity,  within 
the  limitation  above  stated.  In  the  present  case,  there  was  no 
offer  to  prove  madness  of  delirium,  or  that  the  act  of  self- 
destruction  was  not  the  result  of  the  will  and  intention  of  the 
party,  adapting  the  means  to  the  end,  and  contemplating  the 
physical  nature  and  effects  of  the  act.  The  insanity,  there- 
fore, was  not  such  as  to  talte  the  case  out  of  the  proviso." 

§  314.  In  Fowler  v.  Mutual  Life  Insurance  Company ,3  the 
facts  made  it  so  plain  that  the  insured  was  a  voluntary  sui- 
cide, that  the  court  refused  to  submit  the  question  whether  the 
act  was  an  insane  or  an  involuntary  one  to  the  jury,  —  after 

1  54  Me.  224.  2  4  sdd.  (N.  Y.)  299. 

3  4  Lansing  (N.  Y.),  202. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  371 

intimating  tliat  the  question  would  be,  if  there  were  any  ques- 
tion on  the  evidence,  whether  the  act  was  voluntarily  done, 
without  reference  to  the  question  whether  the  insured  was,  or 
was  not,  a  responsible  moral  agent. 

§  315.  In  Mallory  v.  Travellers'  Insurance  Company,^  the 
court  instructed  the  jury  that  if  the  condition  of  the  deceased 
at  the  time  of  death  was  such  that  be  could  not  distinguish 
between  right  and  wrong,  if  it  was  such  that  he  did  not  know 
that  he  was  doing  an  act  which  would  produce  death,  the 
plaintiff  might  recover,  indicating  a  tendency  to  adopt  the 
doctrine  of  the  Massachusetts  cases,  and  said,  on  appeal  to 
the  general  term  of  the  same  court,  to  have  been  an  instruc- 
tion quite  as  favorable  to  the  defendants  as  the  rule  in  New 
York  would  allow. 

§  316.  In  the  case  of  Van  Zandt  v.  Mutual  Benefit  Life 
Insurance  Company,^  the  court  adheres  to  the  rule  theretofore 
laid  down  in  that  State  that  the  suicide  must  be  felonious,  and 
by  one  who  was  able  to  appreciate  the  moral  effect  and  conse- 
quences of  his  act,  in  order  to  prevent  a  recovery,  and  dis- 
tinctly refused  to  sustain  the  doctrine  that  if  the  insured 
destroy  his  own  life  voluntarily  and  wilfully,  having  at  the 
time  sufficient  power  of  mind  and  reason  to  understand  the 
physical  nature  and  consequences  of  such  an  act,  and  having 
the  purpose  and  intention  to  cause  death  by  the  act,  he  cannot 
recover.  xVnd  it  was  also  held  in  the  same  case  that  there  was 
no  essential  difference  whether  the  provision  was  "in  case  he 
shall  die  by  his  own  hand,  in  or  in  consequence  of  a  duel,  or 
by  reason  of  intemperance,"  or  "  in  case  he  sliall  die  by  his 
own  hand  in  consequence  of  a  duel,"  &c. 

§  317.  In  Isett  v.  American  Life  Insurance  Company,^  the 
insured  committed  suicide  by  shooting  himself  with  a  pistol, 
and  the  policy  provided  that  if  the  insured  "  die  by  his  own 
hand"  the  insurer  should  not  be  liable.  The  jury  were  in- 
structed that  yif  the  insured  at  the  time  of  his  death  was 
conscious  that  his  death  would  follow  the  discharge  of  the 

1  N.  Y.  Sup.  Ct.  1870 ;  s.  c.  affirmed,  47  N.  Y.  52. 

2  New  York  Supreme  Court,  Gen.  Term,  4th  Dept.,  June,  1872,  not  yet 
reported. 

3  Court  of  Common  Fleas,  Blair  County,  Penn.,  May,  1872,  1  Ins.  L.  J.  715. 


372  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

pistol  in  his  hands,  though  he  was  laboring  under  mental 
depression  or  disturbance  of  mind,  or  if  he  destroyed  his  life 
because  he  was  suffering  from  some  physical  infirmity,  and  for 
the  purpose  of  escaping  from  such  infirmity,  there  could  be  no 
recovery;  that  sanity  was  to  be  presumed  and  insanity  to  be 
proved  by  the  party  alleging  it,  and  that  suicide  is  not  of  itself 
proof  of  insanity,  but  to  be  considered  with  other  facts  and 
circumstances  in  the  case. 

§  318.  In  Gay  v.  Union  Mutual  Life  Insurance  Company, 
tried  before  Woodruff  and  Shipman,  JJ.,^  where  the  insured 
shot  himself  in  the  head  with  a  pistol,  the  jury  were  charged 
that  if  the  insured  at  the  time  he  fired  the  pistol  was  conscious 
of  the  act  he  was  committing,  intended  to  take  his  own  life, 
and  was  capable  of  understanding  the  nature  and  conse- 
quences of  the  act,  the  insurers  were  not  liable ;  that  if  the 
act  was  thus  committed,  it  was  immaterial  wlietlier  he  was 
capable  of  understanding  its  moral  aspects,  or  of  distinguish- 
ing between  right  and  wrong;  and  that  if  he  was  not  thus  con- 
scious, or  had  no  such  capacity,  but  acted  under  an  insane 
delusion  overpowering  his  understanding  and  will,  or  was 
impelled  by  an  uncontrollable  impulse  which  neither  his  un- 
derstanding nor  will  could  resist,  the  insurers  were  liable. 

§319.  In  Terry  v.  Life  Insurance  Company,  Mr.  Justice 
Miller  stated  the  conclusions  at  which  he  had  arrived  as  the 
result  of  an  examination  of  the  authorities  upon  this  point,  in 
his  charge  to  the  jury,  as  follows  :  "  It  being  agreed  that  the 
deceased  destroyed  his  life  by  taking  poison,  it  is  claimed  by 
the  defendants  that  he  '  died  by  his  own  hand,'  within  the 
meaning  of  the  policy,  and  that  they  are  therefore  not  liable. 
This  is  so  far  true,  that  it  devolves  on  the  plaintiff  to  prove 
such  insanity  on  the  part  of  the  deceased,  existing  at  the  time 
he  took  the  poison,  as  will  relieve  the  act  of  taking  his  own 
life  from  tlie  effect  which,  by  the  general  terms  used  in  the 
policy,  self-destruction  was  to  have,  namely,  to  avoid  tlie  policy. 
It  is  not  every  kind  or  degree  of  insanity  which  will  so  far 
excuse  the  party  taking  his  own  life  as  to  make  the  company 
insuring  liable.     To  do  this,  the  act  of  self-destruction  must 

1  9  Blatch.  C.  Ct.  (U.  S.)  142. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  373 

have  been  the  consequence  of  insanity,  and  the  mind  of  the 
deceased  must  have  been  so  far  deranged  as  to  have  made  him 
incapable  of  using  a  rational  judgment  in  regard  to  the  act 
which  he  was  committing.  If  he  was  impelled  to  the  act 
by  an  insane  impulse,  which  the  reason  which  was  left  him 
did  not  enable  him  to  resist,  or  if  his  reasoning  powers  were 
so  far  overthrown  by  his  mental  condition  that  he  could  not 
exercise  his  reasoning  faculties  on  the  act  he  was  about  to 
do,  then  the  company  was  liable.  On  the  other  hand,  there  is 
no  presumption  of  law,  prima  facie  or  otherwise,  that  self- 
destruction  arises  from  insanity ;  and  if  you  believe,  from  the 
evidence,  that  the  deceased,  although  excited  or  angry,  or  dis- 
tressed in  mind,  formed  the  determination  to  take  his  own  life, 
because  in  the  exercise  of  his  usual  reasoning  faculties  he  pre- 
ferred death  to  life,  then  the  company  is  not  liable,  because  he 
died  by  his  own  hand  within  the  meaning  of  the  policy."  ^ 

§  320.  And  the  doctrine  of  this  case  was  affirmed  on  appeal 
to  the  Supreme  Court  of  the  United  States,^  Mr.  Justice 
Hunt  delivering  the  opinion  of  the  court,  which  was  as  fol- 
lows :  — 

"  This  action  was  brought  to  recover  the  sum  of  two  thou- 
sand dollars,  claimed  to  be  due  upon  a  policy  of  insurance  on 
the  life  of  George  Terry,  made  and  issued  to  the  plaintiff,  his 
wife. 

"  The  policy  contained  a  condition,  of  which  a  portion  was 
in  the  following  words,  viz.  :  '  If  the  said  person  whose  life  is 
hereby  insured  .  .  .  shall  die  by  his  own  hand,  .  .  .  this  policy 
shall  be  null  and  void.' 

"  Within  the  terms  of  the  policy  George  Terry  died  from  the 
effects  of  poison  taken  by  him. 

"  Evidence  was  given  tending  to  show  that  at  the  time  he 
took  the  poison  he  was  insane.  Evidence  was  also  given,  tend- 
ing to  show  that  at  that  time  he  was  sane,  and  capable  of  know- 
ing the  consequences  of  the  act  he  was  about  to  commit. 

"  Thereupon  the  counsel  for  the  defendant  asked  the  court 

to  instruct  the  jury,  — 

1  1  Dillon,  C.  Ct.  (U.  S.)  8th  Circuit,  403. 

-'  INIut.  Life  Ins.  Co.  of  New  York,  plaintiff  in  error  v.  ISIary  Terry,  Albany 
Law  Journal,  May  17.  1873. 


374  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC. 

"1.  If  the  jury  believe,  from  the  eTidence  in  the  case,  that 
the  said  George  Terry  destroyed  his  own  life,  and  that,  at  the 
time  of  self-destruction,  he  had  sufficient  capacity  to  under- 
stand the  nature  of  the  act  which  he  was  about  to  commit, 
and  the  consequences  which  would  result  from  it,  then,  and 
in  that  case,  the  plaintiff  cannot  recover  on  the  policy  declared 
on  in  tliis  case. 

"  2.  Tiiat  if  the  jury  believe  from  the  evidence  that  the  self- 
destruction  of  the  said  George  Terry  was  intended  by  him,  he 
having  sufficient  capacity  at  the  time  to  understand  the  nature 
of  the  act  which  he  was  about  to  commit,  and  the  consequences 
which  would  result  from  it,  then,  and  in  that  case,  it  is 
wholly  immaterial  in  the  present  case  that  he  was  impelled 
thereto  by  insanity,  which  impaired  his  sense  of  moral  respon- 
sibility, and  rendered  him,  to  a  certain  extent,  irresponsible  for 
his  action. 

"  Which  instructions,  and  each  one  of  said  instructions,  the 
court  refused  to  give  to  the  jury,  but  the  court  did  charge  the 
jury  as  follows.^  .  .  . 

"  The  request  proceeds  upon  the  theory  tliat  if  the  deceased 
had  sufficient  mental  capacity  to  understand  the  nature  and 
consequence  of  his  act, —  that  is,  that  he  was  about  to  take 
poison,  and  that  his  death  would  be  the  result,  —  he  was  respon- 
sible for  his  conduct,  and  the  defendant  is  not  liable ;  and  the 
fact  that  his  sense  of  moral  responsibility  was  impaired  by 
insanity  does  not  affect  the  case. 

"  Tiie  cliarge  proceeds  upon  the  theory  that  a  higlier  degree 
of  mental  and  moral  power  must  exist ;  that  although  the 
deceased  had  the  capacity  to  know  that  he  was  about  to  take 
poison,  and  that  his  death  would  be  the  result,  yet  if  his 
reasoning  powers  were  so  far  gone  that  he  could  not  exercise 
tliem  on  the  act  he  was  about  to  commit,  its  nature  and  effect, 
or  if  he  was  impelled  l)y  an  insane  impulse  whicii  his  impaired 
capacity  did  not  enable  liim  to  resist,  he  was  not  responsible 
for  his  conduct,  and  the  defendant  is  liable. 

"  It  may  not  be  amiss  to  notice  that  the  case  does  not  pre- 
sent the  point  of  what  is  called  emotional  insanity,  or  mania 

1  See  preceding  section. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  375 

transitoria,  that  is,  the  case  of  one  in  possession  of  liis  ordi- 
nary reasoning  faculties,  who  allows  his  passions  to  convert 
him  into  a  temporary  maniac,  and  while  in  this  condition  com- 
mits the  act  in  question.  This  case  is  expressly  excluded  by 
the  last  clause  of  the  charge,  in  which  it  is  said  that  anger, 
distress,  or  excitement  does  not  bring  the  case  within  the  rule 
if  the  insured  possesses  his  ordinary  reasoning  faculties. 

"The  case  of  Borradaile  v.  Hunter^  is  cited  by  the  insur- 
ance company.  The  case  is  found  also  in  2  Bigelow's  Life 
and  Accident  Insurance  Cases,  p.  280,  and  in  a  note  appended 
are  found  the  most  of  the  cases  upon  the  subject  before  us. 
The  jury  found  in  that  case  that  the  deceased  voluntarily  took 
his  own  life,  and  intended  so  to  do,  but  at  the  time  of  commit- 
ting the  act  he  was  not  capable  of  judging  between  right  and 
wrong.  Judgment  went  for  the  defendant,  whicii  was  sus- 
tained upon  appeal  to  the  full  bench.  The  counsel  for  the 
company  argued  that  where  the  act  causing  death  was  inten- 
tional on  the  part  of  the  deceased,  the  fact  that  his  mind  was 
so  far  impaired  that  he  was  incapable  of  judging  between  right 
and  wrong  did  not  prevent  the  proviso  from  attaching ;  that 
moral  or  legal  responsibility  was  irrelevant  to  the  issue.  The 
court  adds  :  '  It  may  very  well  be  conceded  that  the  case  would 
not  have  fallen  within  the  meaning  of  the  condition  had  the 
death  of  the  assured  resulted  from  an  act  committed  under 
the  influence  of  delirium,  or  if  he  had,  in  a  paroxysm  of  fever, 
precipitated  himself  from  a  window,  or,  having  been  bled, 
removed  the  bandages,  and  death,  in  either  case,  had  ensued. 
In  these  and  many  other  cases  that  might  be  put,  though, 
strictly  speaking,  the  assured  may  be  said  to  have  died  by  his 
own  hands,  the  circumstances  clearly  would  not  be  such  as  the 
parties  contemplated  when  the  contract  was  entered  into.' 

"  In  delivering  the  opinion  of  the  court,  Erskine,  J.,  says  all 
that  the  '  contract  requires  is,  that  the  act  of  self-destruction 
should  be  the  voluntary  and  wilful  act  of  a  man  having  at  the 
time  sufficient  powers  of  mind  and  reason  to  understand  the 
physical  nature  and  consequences  of  such  act,  and  having  at 
the  time  a  purpose  and  intention  to  cause  his  own  death  by 

1  5  xMan.  &  Gr.  639. 


376  insurance:  fire,  life,  accident,  etc. 

that  act,  and  'the  question,  whether  at  the  time  he  was  capable 
of  understanding  the  moral  nature  and  quality  of  his  purpose, 
is  not  relevant  to  the  inquiry  further  than  as  it  might  help  to 
illustrate  the  extent  of  his  capacity  to  understand  tlie  physical 
character  of  the  act  itself.'  Chief  Justice  Tindal  dissented 
from  the  judgment.  In  speaking  of  the  verdict,  he  says  :  '  It  is 
not,  perhaps,  to  be  taken  strictly  as  a  verdict  that  the  deceased 
was  non  compos  mentis  at  the  time  the  act  was  committed,  for 
if  the  latter  is  the  meaning  of  the  jury,  the  case  would  then 
fall  within  that  description  mentioned  in  the  argument  to  be 
without  the  reach  of  the  proviso,  namely,  the  case  of  death 
inflicted  on  himself  by  the  party  while  under  the  influence  of 
frenzy,  delusion,  or  insanity.'  This  authority  was  followed  in 
Clift  V.  Schwabe,^  where  it  was  substantially  held  that  the  terms 
of  the  condition  included  all  acts  of  voluntary  self-destruc- 
tion, and  that  whether  the  party  is  a  voluntary  moral  agent 
is  not  in  issue. 

"  These  decisions  expressly  exclude  the  question  of  mental 
soundness.  They  are  in  hostility  to  the  tests  of  liability  or 
responsibility  adopted  by  the  English  courts  in  other  cases, 
from  Coke  and  Hale  onwards.  Coke  said,  '  A  little  madness 
deprives  the  lunatic  of  civil  rights  or  dominion  over  property, 
and  annuls  wills.'  But,  to  exempt  from  responsibility  for 
crime,  he  says,  '  Complete  ignorance  of  the  knowledge  of  right 
and  wrong  must  exist.'  Lord  Mansfield  holds  the  legal  test 
of  a  sound  mind  to  be  the  knowledge  of  right  and  wrong, 
good  and  evil ;  of  which  the  converse  is  ignorance  of  knowl- 
edge of  right  and  wrong,  of  good  and  evil.  Lord  Lyttleton 
held  the  test  to  be  the  state  called  compos  mentis,  or  sound 
mind.  Lord  Erskine  defined  it  to  be  the  absence  of  any  prac- 
ticable delusion  traceable  to  a  criminal  or  immoral  act.^  In 
1  Prichard,  p.  16  (on  the  different  forms  of  insanity),  will  be 
found  the  somewhat  lengthy  definition  of  insanity  by  Lord 
Lyndhurst.^ 

"  The  English  judges  refuse  to  apply  to  the  act  of  the 
insured  in  causing  his  death  the  principles  of  legal  and  moral 

1  3  C.  B.  437.  2  Defence  of  Hadfield. 

3  1  Shelf.  Lun.  46. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  377 

responsibility  recognized  in  cases  where  the  contract,  the  last 
will,  or  the  alleged  crime  of  such  person  may  be  in  issue.  .  .  . 
"  There  is  a  conflict  in  the  authorities  which  cannot  be 
reconciled.  The  propositions  embodied  in  the  charge  before 
us  are  in  some  respects  different  from  each  other,  but  in  prin- 
ciple they  are  identical.  Tiiey  rest  upon  the  same  basis,  the 
moral  and  intellectual  incapacity  of  the  deceased.  In  each 
case  the  physical  act  of  self-destruction  was  that  of  George 
Terry.  In  neither  was  it  truly  his  act.  In  the  one  suppo- 
sition he  did  it  when  his  reasoning  powers  were  overthrown, 
and  he  had  not  power  or  capacity  to  exercise  them  upon  the 
act  he  was  about  to  do.  It  was  in  effect  as  if  his  intellect 
and  reason  were  blotted  out  or  had  never  existed.  In  the 
other,  if  he  understood  and  appreciated  the  effect  of  his  act, 
an  uncontrollable  impulse,  caused  by  insanity,  compelled  its 
commission.  He  had  not  the  power  to  refrain  from  its  com- 
mission, or  to  resist  the  impulse.  Each  of  the  principles  put 
forth  by  the  judge  rests  upon  the  same  basis,  that  the  act  was 
not  the  voluntary,  intelligent  act  of  the  deceased.  The  causes 
of  insanity  are  varied  as  the  varying  circumstances  of  man. 

"  '  Some  for  love,  some  for  jealousy, 
For  grim  religion  some,  and  some  for  pride, 
Have  lost  their  reason ;  some  for  fear  of  want, 
"Want  all  their  lives ;  and  others  every  day, 
For  fear  of  dying,  suffer  worse  than  death.'  ^ 

"  When  we  speak  of  the  '  mental  condition '  of  a  person 
we  refer  to  his  senses,  his  perceptions,  his  consciousness,  his 
ideas.  If  his  mental  condition  is  perfect,  his  will,  his  mem- 
ory, his  understanding  are  perfect,  and  connected  with  a 
healthy  bodily  organization.  If  these  do  not  concur,  his  men- 
tal condition  is  diseased  or  defective. 

"  Excessive  action  of  the  brain  whereby  the  faculties  be- 
come exhausted,  a  want  of  proper  action  whereby  the  functions 
become  impaired  and  diminished,  the  visions,  delusions,  and 
mania,  which  accompany  irritability,  or  the  weakness  which 
results  from  an  excess  of  vital  functions,  indigestion  and  sleep- 
lessness, are  all  a  result  of  a  disturbance  of  the  physical  sys- 

1  Armstrong  on  Health,  book  iv.  ver.  113-118.    Cited  Shelf.  Lun.  In.  1,  -43. 


378  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

tem.  The  intellect  and  intelligence  of  man  are  manifested 
through  the  organs  of  the  brain,  and  from  these,  conscious- 
ness, will,  memory,  judgment,  thought,  volition,  and  passion, 
the  functions  of  the  mind  do  proceed.  Without  the  brain 
these  cannot  exist.  With  an  injured  or  diseased  brain,  their 
powers  are  impaired  or  diminished. 

"  We  have  not  before  us  the  particular  facts  on  which  the 
question  of  the  sanity  of  Terry  was  presented.  We  may  as- 
sume that  proof  was  given  upon  which  the  propositions  of  the 
charge  were  based.  We  do  not  know  whether  he  was  sleep- 
less, unduly  excited,  or  unnaturally  depressed  ;  whether  he 
had  abandoned  his  accustomed  habits  and  pursuits  and  adopted 
new  and  unusual  ones  ;  from  a  quiet,  orderly  man,  he  had  be- 
come disorderly,  vicious,  or  licentious ;  whether  his  fondness  for 
his  wife  and  children  had  changed  to  dislike  and  abuse  ;  or  jeal- 
ousy, pride,  the  fear  of  want,  the  fear  of  death  had  overtaken 
him  ?  He  may  have  realized  the  state  supposed  by  the  coun- 
sel in  arguing  Borradaile  v.  Hunter,  viz.,  that  his  death  might 
have  resulted  from  an  act  committed  under  the  influence  of 
delirium,  or  that  in  a  paroxysm  of  fever  he  might  have  precip- 
itated himself  from  a  window,  or  having  been  bled  he  might 
have  torn  away  the  bandages.  Whether  he  swallowed  poison, 
or  did  the  other  insane  acts,  might  result  from  the  same  con- 
dition of  body  and  mind. 

"  Delirium,  fever,  tearing  away  the  bandages  for  preserving 
the  life,  the  taking  of  poison,  in  a  case  like  that  before  us,  are 
all  results  of  bodily  disease.  If  bodily  disease  in  these,  or  other 
forms,  overthrew  Terry's  reasoning  faculties,  in  other  words, 
destroyed  his  consciousness,  his  judgment,  his  volition,  his 
will,  he  remained  the  form  of  the  man  only.  The  reflecting, 
responsible  being  did  not  exist.  In  the  language  of  the  suc- 
cessful counsel  in  Borradaile  v.  Hunter,  '  in  these  and  many 
other  cases,  thougli,  strictly  speaking,  the  assured  may  be  said 
to  have  died  by  his  own  hands,  the  circumstances  clearly 
would  not  be  such  as  the  parties  contemplated  when  the  con- 
tract was  entered  into.' 

"  That  form  of  insanity  called  impulsive  insanity,  by  which 
tlie  person  is  irresistibly  impelled  to  the  commission  of  an 


SPECIAL  PROVISIONS   OP  THE  CONTRACT.  379 

act,  is  recognized  by  writers  on  this  subject.  It  is  sometimes 
accompanied  by  delusions,  and  sometimes  exists  without  them. 
The  insanity  may  be  patent  in  many  ways,  or  it  may  be  con- 
cealed. We  speak  of  the  impulses  of  persons  of  unsound 
mind.  They  are  manifested  in  every  form,  —  breaking  of 
windows,  destruction  of  furniture,  tearing  of  clothes,  firing  of 
houses,  assaults,  murders,  and  suicides.  These  cases  are  to 
be  carefully  distinguished  from  those  where  persons  in  the  pos- 
session of  their  reasoning  faculties  are  impelled  by  passion, 
merely  in  the  same  direction.^ 

"  Dr.  Ray,  cited  by  Fisher,  approves  the  charge  of  the  judge 
in  Haskell's  case,  where  he  says  :  '  The  true  test  lies  in  the 
word  jjoiver.  Has  the  defendant  in  a  criminal  case  the  power 
to  distinguish  right  from  wrong,  and  the  power  to  adhere  to  the 
right  and  avoid  the  wrong  ? '  ^ 

"  The  question  of  sanity  has  usually  been  presented  upon 
the  validity  of  an  agreement,  the  capacity  to  make  a  will,  or 
upon  responsibility  for  crime,  If  Terry  had  made  an  agree- 
ment under  the  circumstances  stated  in  the  charge,  a  jury  or 
court  would  have  been  justified  in  pronouncing  it  invalid.  A 
will,  then,  made  by  him,  would  have  been  rejected  by  the  sur- 
rogate if  offered  for  probate.  If,  upon  trial  for  a  criminal 
offence,  upon  all  the  authorities,  he  would  have  been  entitled 
to  a  charge,  that  upon  proof  of  the  facts  assumed,  the  jury 
must  acquit  him.^ 

"  We  think  a  similar  principle  must  control  the  present  case, 
although  the  standard  may  be  different.  We  liold  the  rule 
on  the  question  before  us  to  be  this  :  If  the  assured,  being  in 
the  possession  of  his  ordinary  reasoning  faculties,  from  anger, 
pride,  jealousy,  or  a  desire  to  escape  from  the  ills  of  life,  inten- 
tionally takes  his  own  life,  the  proviso  attaclies,  and  there  can 
be  no  recovery.  If  the  death  is  caused  by  the  voluntary  act 
of  the  assured,  he  knowing  and  intending  that  his  death  shall 
be  the  result  of  his  act,  but  when  his  reasoning  faculties  are 

1  See  Blundford  on  Insanity,  —  "  Impulsive  Insanity." 

2  Fisher  on  Insanity,  p.  83. 

8  Freeman  v.  People,  4  Denio,  9  ;  Willis  v.  People,  32  N.  Y.  719 ;  Seaman 
So.  V.  Holier,  33  ib.  619  ;  The  jNIarquis  of  Winchester's  Case,  G  Coke,  23 ; 
Combe's  Case,  Moore,  759 


380  insurance:  fire,  life,  accident,  etc. 

80  far  impaired  that  he  is  not  able  to  understand  the  moral 
character,  the  general  nature,  consequences,  and  effect  of  the 
act  he  is  about  to  commit,  or  when  he  is  impelled  thereto  by 
an  insane  impulse,  which  he  has  not  the  power  to  resist,  such 
death  is  not  within  the  contemplation  of  the  parties  to  the 
contract,  and  the  insurer  is  liable. 

"  In  the  present  instance,  the  contract  of  insurance  was 
made  between  Mrs.  Terry  and  the  company,  the  insured  not 
being  in  form  a  party  to  the  contract.  Such  contracts  are  fre- 
quently made  by  the  insured  himself,  the  policy  stating  that 
it  is  for  the  benefit  of  the  wife,  and  that  in  the  event  of  death 
the  money  is  to.  be  paid  to  her.  We  see  no  difference  in  the 
cases.  In  each  it  is  the  case  of  a  contract,  and  is  to  be  so 
rendered  as  to  give  effect  to  the  intention  of  the  parties.  Nor 
do  we  see  any  difTerence  for  this  purpose  in  the  meaning  of  the 
expressions,  '  commit  suicide,'  '  take  his  own  life,'  or  '  die  by 
his  own  hands.'  With  either  expression,  it  is  not  claimed  that 
accidental  self-destruction,  death  in  endeavoring  to  escape  from 
the  flames,  or  the  like,  is  within  the  proviso.  Tiie  judgment 
must  be  affirmed."  ^ 

§  321.  In  the  Equitable  Life  Assurance  Society  v.  Paterson,^ 
the  insured  had  taken  laudanum  while  drunk.  The  plaintiff 
claimed  that  it  was  by  mistake,  and  the  court  said  there  must 
be  an  intent  to  commit  suicide,  and  if  the  intent  exists,  the 
fact  that  the  man  is  maudlin  from  drink,  and  could  have  no 
very  intelligent  conception  of  his  surroundings,  does  not  help 
the  case.  Death  from  laudanum,  taken  by  a  drunken  man  witli 
the  intent  to  destroy  life,  would  be  "  dying  by  his  own  liands." 
And  in  Fowler  v.  Mutual  Life  Insurance  Company,**  the  facts 
showed  such  a  case  of  deliberate  suicide  that  the  court  refused 
to  allow  the  question  of  insanity,  or  of  voluntary  or  involun- 
tary suicide,  to  go  to  the  jury,  and  directed  a  verdict  for  the 
defendant. 

§  322.  Suicide  —  Sane  or  Insane.  —  An  attempt  was  apparently 
made  to  avoid  the  perplexities  of  the  difficult  question  by  a 

1  Mr.  Justice  Strong  dissenting. 

2  41  Ga.  338 ;  s.  c.  6  Am.  Rep.  535. 

3  4  Lansing  (N.  Y.),  202. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  381 

provision  that  "  if  the  insured  shall  die  by  his  own  hand,  sane 
or  insane,"  the  policy  should  be  void,  which  was  the  case  in 
De  Gogorzav.  Knickerbocker  Life  Insurance  Company,^  —  not, 
however,  with  entire  success.  The  insured  died  from  a  pistol- 
shot  wound  received  from  the  discharge  of  a  pistol  while  in  his 
own  hand  ;  and  the  judge  charged  the  jury  that  if  the  death 
was  caused  by  an  accidental  explosion  of  the  pistol,  or  if,  at 
the  time  of  the  explosion,  the  mental  condition  of  the  insured 
was  sucii  that  the  act  was  not  a  voluntary  act  of  his  own  will, 
in  either  case  the  company  was  liable.  The  jury  found  that 
at  the  time  of  his  death  the  insured  was  not  a  responsible 
being,  and  that  the  act  was  not  a  voluntary  one,  and  the  plain- 
tiff had  judgment.  On  appeal,  it  was  held  that  tins  was  right, 
the  court  observing  that,  in  Breasted  v.  Farmers'  Loan  and 
Trust  Company ,2  the  words  in  the  policy  were,  similar  to  those 
in  the  case  under  consideration,  except  that  the  words  "sane 
or  insane  "  were  omitted  from  that  policy  ;  and  it  was  there 
held  that  the  words  "  death  by  his  own  hand  "  had  reference 
to  criminal  self-destruction,  and  that  a  death  by  accident,  and 
one  by  the  party's  own  hand,  stand  on  principle  in  the  same 
category.  Tiie  introduction  of  the  words  "  sane  or  insane  " 
in  the  policy,  it  was  held,  could  liave  no  further  effect  than  to 
make  the  policy  void,  jf  the  insured  intended  self-destruction 
while  in  a  state  of  insanity. 

§  323.  Suicide  in  a  Fit  of  Insanity  does  not  avoid  a  Policy 
unless  Death  by  Suicide  be  excepted  from  the  Risk  —  Express 
Agreement  to  insure  against  voluntary  Suicide  void  as  against 
public  Policy.  —  Suicide  in  a  fit  of  jtemporary  insanity  does 
not  avoid  a  policy  which  does  not  contain  an  express  provision 
that  death  by  such  means  shall  avoid  it.^ 

"  It  appears  to  me  clear,"  says  Wood,  V.  C,  in  the  case 
just  cited,  "  that  where  there  is  no  express  provision  in  the 
policy,  that  in  the  event  of  tliC  insured  dying  by  his  own  hand 
the  policy  shall  become  void,  that  policy  is  not  vacated  by  the 
circumstance  of  his  having  died  by  his  own  hand  while  in  a 

1  New  York  Supreme  Court,  2d  Dept.,  Alb.  L.  J.,  July  7,  1873. 

2  4  Seld.  (N.  Y.)  299. 

*  Horn  V.  The  Anglo-Australian  and  Universal  Family  Life  Ass.  Co.,  7  Jur. 
N.  8.  673. 


382  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

State  of  temporary  insanity.  It  was  held  by  the  House  of 
Lords,  in  Fauntleroy's  case,^  that  it  would  be  contrary  to  public 
policy  to  insure  a  man  a  benefit  upon  his  dying  by  the  hands 
of  public  justice  ;  and  as  it  would  be  contrary  to  the  policy  of 
the  law  for  any  such  express  contract  to  be  made,  so  no  con- 
tract could  be  implied  in  the  policy  to  pay  the  amount  in  such 
an  event ;  and  accordingly,  althougli  nothing  was  said  in  the 
policy,  one  way  or  the  other,  the  law  would  infer  as  a  condi- 
tion that  the  execution  of  the  insured,  in  consequence  of  a 
crime  committed  by  him,  was  not  one  of  the  cases  in  respect 
of  which  the  policy  would  become  payable.  So  the  argument 
might  be  pursued,  although  I  do  not  know  that  any  case  has 
so  decided,  to  the  same  extent,  in  the  case  of  a  person  com- 
mitting suicide  while  in  a  sane  state  of  mind,  thus  commit- 
ting a  felony,  and  losing  his  life  thereby  ;  but  I  know  of  no 
rule  of  law  that  can  justify  me  in  extending  that  to  the  case 
of  a  person  committing  suicide  while  in  a  state  of  insanity, 
and  therefore  committing  no  legal  offence." 

That  such  an  agreement  is  void  as  against  public  policy, 
was  also  the  opinion  of  Lord  Campbell,  as  expressed  by  him 
in  Moore  v.  Woolsey.^  So  the  owner  of  a  ship,  who  insures 
her  for  a  year,  cannot  recover  upon  the  policy  if,  within  the 
year,  he  causes  her  to  be  sunk.  And  such  no  doubt  would  be 
the  case  where  the  plaintiff  claims  under  a  policy  on  the  life 
of  a  person  whose  death  he  has  caused  ;  ^  so,  if  the  insured  set 
fire  to  his  own  house.* 

Perhaps  there  may  be  something  in  the  distinction  between 
a  sane  and  an  insane  suicide  under  such  a  policy.  And  it  has 
been  said,  in  this  country,  in  a  case  where  the  suicide  was  by 
taking  arsenic,  and  no  question  of  insanity  was  raised,  that  a 
man  who  commits  suicide  is  guilty  of  such  a  fraud  upon  the 
insurers,  that  for  that  reason  alone  he  cannot  recover,  even 
though  there  be  no  such  condition  in  the  policy.^     But  the 

1  The  Amicable  Insurance  Society  v.  Bolland,  2  Dow  &  C.  1 ;  s.  c.  4  Bligh, 
N.  s.  194. 

2  4  E.  &  B.  243  ;  s.  c.  28  Eng.  L.  &  Eq.  248. 

3  Reed  v.  Royal  Exch.  Ass.  Co.,  Peake's  Add.  Cas.  70. 
*  Washington  Ins.  Co.  v.  Wilson,  7  Wis.  169. 

5  Hartmaa  v.  Keystone  Ins.  Co.,  21  Penn.  St.  4G6. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  383 

case  did  not  require  the  decision  of  this  point.  And  in 
Dormay  v.  Borradaile/  the  question  being  upon  a  covenant 
in  a  marriage  settlement  to  keep  a  policy  alive,  and  whether 
suicide  was  a  violation  of  that  covenant,  it  was  held  that  it 
was  not.  The  covenant  was  "  to  do  and  perform  all  such 
acts,  matters,  and  things  as  shall  be  requisite  for  continuing 
and  keeping  on  foot  a  policy,"  and  it  was  held  not  the  equiva- 
lent of  a  covenant  not  to  do  any  thing  whereby  the  policy 
should  become  forfeited  ;  and  a  suicide  (the  same  as  in  Borra- 
daile  v.  Hunter)  who  drowned  himself,  voluntarily  and  intend- 
ing it,  though  found  by  the  jury  not  to  be  at  the  time  capable 
of  distinguishing  between  right  and  wrong,  was  held  not  to 
have  violated  his  covenant. 

§  324.  Bona  fide  Holder  for  Value  may  however  be  protected 
by  express  Contract.  —  To  a  life  policy  which  provided  that  if 
the  party  die  by  his  own  hands  the  policy  should  be  void  ex- 
cept to  the  extent  of  any  bona  fide  interest  which  a  third  person 
might  have  acquired,  it  was  objected  that  the  exception  was  an 
incentive  to  suicide,  and  therefore  the  policy  was  void  as  against 
the  policy  of  the  law.  But  the  court  thought  that,  thougii  a 
stipulation  that  the  policy  should  be  paid  in  case  of  suicide  of 
the  insured  would  be  obnoxious  to  that  objection,  yet  a  stipu- 
lation tliat  if  the  policy  should  be  assigned  bond  fide,  for  a 
valuable  consideration,  or  a  lien  upon  it  should  afterwards 
be  acquired  bona  fide^  for  valuable  consideration,  it  might  be 
enforced  for  the  benefit  of  others,  whatever  be  the  means  by 
which  death  is  occasioned,  was  not  open  to  the  objection.  That 
such  stipulation  may  promote  evil  by  leading  to  suicide  is  too 
remote  and  improbable  a  contingency  to  be  allowed  to  coun- 
terbalance the  many  obvious  advantages  which  would  result 
from  holding  the  stipulation  valid.^  But  an  assignee  in  bank- 
ruptcy is  not  such  a  bona  fide  holder  for  valuable  consideration. 
He  is  an  assignee  by  operation  of  law  and  not  by  contract.^ 
So  where  there  is  a  condition  in  a  life  policy  that  in  the  event 

1  10  Beav.  335. 

2  Per  Lord  Campbell,  Moore  v.  Woolsey,  28  Eng.  L.  &  Eq.  248  ;  9.  c.  4  E.  & 
B.  243 ;  White  v.  British  Empire  Mut.  Life  Ass.  Co.,  7  Law  Hep.  Eq.  394. 

3  Jackson  v.  Foster,  1  El.  i  El.  463. 


384  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

of  the  assured  dying  by  his  own  hand  the  policy  shall  be  void, 
except  to  the  extent  of  any  bona  fide  interest,  which,  at  the 
time  of  his  death,  shall  be  vested  in  any  other  person  or  per- 
sons for  his  or  their  own  benefit,  the  exception  applies  as  much 
when  that  interest  is  vested  in  the  assurers  themselves  as  when 
it  is  vested  in  a  third  party. 

Therefore,  where  one  White  effected  a  policy  of  assurance 
upon  his  life,  with  the  above  condition  and  exception,  and 
deposited  the  same  with  the  assurers  by  way  of  collateral 
security  for  a  loan  from  them  to  him,  it  was  held  that,  notwith- 
standing the  suicide  of  the  assured,  the  policy  was  good  to  the 
extent  of  tiie  debt  for  which  it  was  held  as  security,  and  there- 
fore that  the  debt  was  extinguished  by  the  moneys  which 
became  payable  under  the  policy.^ 

§  325.  Presumption  against  Suicide  -w^hen  the  Death  may  have 
been  from  Suicide  or  by  Accident  —  Evidence.  —  When  the  dead 
body  of  the  insured  is  found  under  such  circumstances  and 
with  such  injuries  that  the  death  may  have  resulted  from  acci- 
dent or  suicide,  the  presumption  is  against  suicide,  as  contrary 
to  the  general  conduct  of  mankind,  a  gross  moral  turi)itude, 
not  to  be  presumed  in  a  sane  man.'  Where  the  question  arises 
whether  the  death  is  by  suicide,  evidence  that  the  deceased 
was  an  infidel  or  an  atheist  is  inadmissible  as  affording  an 
inference  of  greater  probability  of  suicide.  The  inference  of 
one  fact  from  the  proof  of  the  existence  of  another  depends 
upon  the  observed  connection  of  the  two  in  the  relation  of 
antecedent  and  consequent,  a  relation  which,  so  far  as  the  two 
facts  in  question  are  concerned,  is  so  entirely  unsupported  by 
experience  and  observation  as  to  belong  rather  to  the  domain 
of  conjecture  than  of  proof.^  Of  course  the  burden  is  upon 
the   party  alleging   insanity  to    prove   it.*      The   opinion   of 

i  38  L.  J.  N.  s.  Ch.  53 ;  The  Solicitors'  and  General  Life  Ass.  Co.  v.  Lamb, 
1  Hem.  &  M.  716  ;  affirmed  on  appeal,  2  De  Gex,  J.  &  S.  251 ;  s.  c.  33  Law  J. 
Rep.  N.  s.  Ch.  426 ;  Dufaur  v.  The  Professional  Life  Ass.  Co.,  25  Beav.  599 ; 
s.  c.  27  Law  J.  Rep.  n.  s.  Ch.  817  ;  Jones  v.  The  Consolidated  Livestment  and 
Ass.  Co.,  26  Beav.  256 ;  s.  c.  28  Law  J.  Rep.  n.  s.  Ch.  66. 

li  Mallory  v.  Travellers'  Ins.  Co.,  N.  Y.  Ct.  App.,  47  N.  Y.  52. 

»  Gibson  v.  American  Mut.  Life  Ins.  Co.,  37  N.  Y,  (10  Tiff.)  580. 

*  Terry  v.  Life  Ins.  Co.,  ante,  §§  319,  320. 


SPECIAL  PROVISIONS   OF   THE   CONTRACT.  385 

unprofessional  witnesses  as  to  whether  a  person  under  a  given 
state  of  facts,  if  sane,  would  have  taken  his  own  life,  is  not 
competent  evidence.'  Nor  is  evidence  of  a  current  rumor  to 
show  the  probable  motive  of  an  act,  as  of  suicide,  admissible, 
unless  it  be  shown  that  the  rumor  was  known  to  the  party 
before  he  committed  the  act.^ 

1  St.  Louis  Mut.  Life  Ins.  Co.  v.  Graves,  6  Bush  (K7.),  2C8. 

2  Ibid. 


25 


386  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 


CHAPTER  XIV. 

OF   THE   SPECIAL   PROVISIONS   OF   THE   CONTRACT    (^continued). 

§  326.  Death  by  the  Hands  of  Justice.  —  Usually  associated 
with  tlie  exception  of  liability  for  death  by  suicide  is  that  of 
"  death  by  the  hands  of  justice."  Tliis  is  defined  by  Tindal,  C.  J., 
as  dying  in  "  consequence  of  a  felony  previously  committed."  ^ 
It  is  death  under  and  by  virtue  of  a  judicial  sentence  for  some 
crime,  and  not  merely  a  rightful  killing,  as  in  case  of  a  run- 
away slave  shot  by  a  patrolman  who  was  attempting  to  appre- 
hend him,  as  it  was  his  legal  right  and  duty  to  do.^  Death 
under  such  circumstances  is  not  "  by  means  of  any  invasion, 
insurrection,  riot,  or  civil  commotion,  or  of  any  military  or 
usurped  authority,  or  by  the  hands  of  justice."  ^ 

An  exception  of  liability  in  case  of  "  death  by  the  hands  of 
justice  "  has  been  held  to  be  unnecessary,  as  it  is  against  pub- 
lic policy  to  insure  against  the  consequences  of  a  capital  fel- 
ony ;  and  such  a  risk  could  not  be  covered  by  the  policy  even 
if  expressly  agreed  upon.  As  the  law  will  not  permit  an 
express  stipulation  that  a  man  shall  derive  pecuniary  benefit 
upon  his  dying  by  the  hands  of  public  justice,  as  against  pub- 
lic policy,  it  will  not  imply  any  such  stipulation.  Death,  there- 
fore, at  the  hands  of  public  justice  works  a  forfeiture  of  all 
right  to  indemnity  under  a  policy,  whether  it  does  or  does  not 
contain  such  stipulation.* 

§  327.  Death  in  known  Violation  of  Law.  —  Another  excep- 
tion from  liability  is  that  of"  death  in  the  known  violation  of 
law,"  and  what  constitutes  "  death  in  the  known  violation 
of  law  "  has  been  the  subject  of  considerable  discussion ;  but 

1  Borradaile  i'.  Hunter,  5  M.  &  G.  639. 

2  Spruill  V.  North  Carolina  Mut.  Life  Ins.  Co.,  1  Jones  (N.  C),  Law,  126. 

3  Ibid. 

4  The  Amicable  Ins.  Soc.  v.  BoUand,  2  Dow  &  C.  1 ;  s.  c  4  Bligh,  n.  s.  194, 
overruling  s.  c.  3  Russ.  350. 


SPECIAL   PROVISIONS    OF    THE    CONTRACT.  387 

it  cannot  be  said  that  the  law  is  settled  upon  this  point.  In 
Harper  v.  Phcenix  Insurance  Corapauy,i  the  question  arose 
whether  killing  in  self-defence  was  within  the  proviso  ;  but  as 
tlie  facts  found  and  reported  did  not  fully  present  this  case 
it  was  sent  back  for  a  new  trial,  when  the  facts  were  agreed  ; 
and  these,  with  the  opinion  of  the  court  thereon,  we  give  in 
eztenso  : — 

"  On  the  6th  day  of  February,  1850,  and  in  the  year  within 
the  time  for  which  the  life  of  said  Edmund  Harper  was  .insured, 
one  Coryell  was  talking  to  a  man  named  Wilson,  standing 
about  forty  paces  from  B.  Harper's  store,  where  the  said 
Edmund  Harper,  the  deceased,  tlien  was.  The  deceased  spoke 
to  the  said  "Wilson,  and  asked  him  if  he  knew  to  whom  he  was 
speaking,  and  admonished  him  to  keep  his  hand  on  his  pocket. 
Coryell  then  approached  the  deceased,  and  inquired  if  that 
insult  was  intended  for  him.  The  deceased  replied  that  it  was. 
The  parties  quarrelled,  the  deceased  drew  a  pistol  with  a  sin- 
gle barrel  and  snapped  it  at  Coryell,  who  thereupon  drew  a 
revolver  and  advanced  upon  the  deceased,  standing  on  the  sill 
of  B. '  Harper's  store  door,  who  threw  his  pistol,  which  had 
missed  fire,  and  struck  Coryell.  The  deceased  then  stepped 
into  the  store  of  B.  Harper,  and  said  Coryell,  standing  in  the 
door  of  said  store,  with  his  revolver  shot  at  and  missed  said 
deceased,  who  was  inside  the  store,  and  eight  or  ten  feet  from 
the  door.  The  deceased  then  retreated  precipitately  beiiind  an 
offset  formed  by  a  stairway,  six  or  eight  feet,  and  picked  up  a 
stick  of  wood,  and  raised  it  in  a  threatening  position  over  his 
head,  but  did  not  advance  upon  said  Coryell,  nor  attempt  to 
use  said  stick  in  any  other  manner.  Coryell  then  fired  again 
with  his  revolver,  and  shot  the  deceased  through  his  body,  of 
which  he  died  in  a  few  minutes.  The  whole  difficulty  was  one 
continuous  quarrel. 

"  Upon  tliese  facts  the  court  found  for  the  defendant,  where- 
upon the  plaintiff  sued  out  this  writ  of  error :  — 

"  1.  In  the  construction  of  the  contract  which  has  given  rise 
to  this  controversy,  we  are  not  authorized  to  be  influenced  by 
any  considerations  affecting  the  preservation  of  the  peace  and 

i  18  Mo.  lO'J. 


388  insurance:  fire,  life,  accident,  etc. 

order  of  society,  or  of  the  morals  of  the  party  insured.  Whilst 
the  law  will  not  countenance  contracts  against  its  policy,  it 
does  not  look  for  a  support  to  itself  in  the  stipulations  of  men. 
In  life  policies  the  insurer  has  a  guaranty  against  increasing 
the  risk  insured,  by  that  love  of  life  which  nature  has  implanted 
in  every  creature.  In  such  policies,  unless  it  is  otherwise  stip- 
ulated, the  insurer  takes  the  subject  insured  with  his  flesh, 
blood,  and  passions.  The  dangers  to  which  the  lives  of  men 
are  exposed  from  sudden  ebullitions  of  feeling  are  a  lawful 
matter  of  insurance. 

"  When  this  cause  was  formerly  here,  the  idea  intended  to 
be  conveyed  in  the  opinion  given  was  that  a  person  could  not  be 
said  to  have  died  in  the  known  violation  of  a  law  of  this  State, 
when  a  crime  attached  to  the  individual  by  whom  he  was  slain. 
It  was  not  supposed  that  therefore  it  followed  that  in  all  cases 
when  the  killing  was  without  crime,  that  the  person  slain  died 
in  the  known  violation  of  the  law.  We  see  no  reason  to  change 
the  opinion  then  hazarded.  Although  conditions  in  policies, 
similar  to  that  now  under  consideration,  are  not  unusual,  we 
have  not  been  enabled  to  find  any  case  in  which  its  interpreta- 
tion has  come  up  for  adjudication.  We  must  then,  as  in  all 
other  cases  involving  the  construction  of  contracts,  look  to  the 
intent  of  the  parties,  as  gathered  from  the  instrument  embody- 
ing their  minds.  It  is  obvious  that,  in  giving  the  words  of  the 
condition  a  literal  meaning,  cases  will  be  embraced  which  no 
one  will  maintain  were  in  the  contemplation  of  tlie  parties.  If 
the  person  whose  life  is  insured  uses  offensive  language  to 
one  whilst  they  are  engaged  in  an  unlawful  game  of  chance, 
which  language  is  concerning  the  game,  and  he  is  shot  down 
for  the  provocation,  it  would  not  be  maintained  that  he  died  in 
the  known  violation  of  a  law  of  the  land,  within  the  meaning 
of  the  contract.  So  if  he  is  riding  a  race  in  a  public  highway, 
which  is  forbidden,  and  his  horse  falls,  and  he  is  thrown  and 
his  neck  broken,  he  does  not  die  in  the  known  violation  of  a 
law  of  the  land,  within  the  meaning  of  the  terms  of  the  condi- 
tion. So,  also,  in  a  quarrel,  if  he  assails  another  with  his  open 
hand,  and  is  thereupon  instantly  shot  down,  he  does  not  die 
in  the  known  violation  of  a  law  within  the  intent  of  the  policy. 


I 


SPECIAL    PROVISIONS   OF   THE   CONTRACT.  889 

Many  similar  instances  might  be  put,  wliicli,  it  is  clear,  were 
not  within  the  meaning  of  the  parties,  and  if  they  were,  the 
contract  would  be  much  narrowed  in  its  operation.  If,  then, 
the  literal  sense  of  the  words  of  the  policy  leads  to  conclusions 
whicli  are  inadmissible,  we  are  necessarily  driven  to  some  other 
mode  in  order  to  ascertain  the  meaning  of  the  parties.  In  the 
interpretation  of  contracts  of  insurance,  the  maxim  noscitur  a 
sociis  obtains.  When  a  clause  stands  with  others,  its  sense  may 
be  gathered  from  those  which  immediately  precede  and  follow  it. 
The  clause  in  the  policy  which  immediately  goes  before  that  un- 
der consideration  is,  '  If  the  party  shall  die  by  tlie  hands  of  jus- 
tice.' Now,  do  not  these  words  clearly  indicate  the  idea  in  the 
minds  of  the  parties  at  the  time  ?  Do  they  not  show  timt  it  was 
a  justifiable  killing  ?  There  are  other  modes  of  killing  justifi- 
able than  by  the  hands  of  justice.  Dying  by  the  hands  of  jus- 
tice means  dying  by  the  execution  of  the  sentence  of  law.  The 
fourth  section  of  the  second  article  of  the  act  concerning  crimes 
and  punishments  enumerates  many  instances  of  justifiable  homi- 
cide. These  are,  in  resisting  any  attempt  to  murder  or  to  com- 
mit any  felony  on  the  person  or  in  a  dwelling-house ;  in  a  lawful 
defence  of  the  person,  where  there  is  reasonable  cause  to  appre- 
hend a  design  to  commit  a  felony ;  when  necessarily  committed- 
in  attempting,  by  lawful  ways  and  means,  to  apprehend  any 
person  for  any  felony  committed,  or  in  lawfully  suppressing 
any  riot  or  insurrection,  or  in  lawfully  keeping  or  preserving 
the  peace. 

"  Here  are  abundant  instances  in  which  the  words  of  the 
condition  can  have  play,  without  resorting  to  a  latitude  of  con- 
struction which  so  extends  its  sense  as  to  embrace  cases  which 
were  never  in  the  contemplation  of  the  parties. 

"As  there  was  but  one  mode  of  justifiable  killing  expressed, 
it  was  necessary  to  use  general  words  to  include  all  other  modes 
of  such  killing,  as  they  were  equally  within  the  meaning  of 
the  contract.  The  other  clause  in  the  condition  is  that  if  the 
party  shall  die  in  consequence  of  a  duel. 

"  If  a  man  falls  in  a  duel,  his  slayer  is  guilty  of  murder.  A 
duel  is  a  deliberate  act,  and  the  parties  voluntarily,  in  violation 
of  law,  expose  themselves  to  death.     The  kindred  clauses  of 


390  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  condition  thus  show  that  a  dying  in  consequence  of  a 
felony  in  the  very  act  or  course  of  being  committed  by  the 
insured,  and  a  dying  in  consequence  of  a  felony  previously 
committed  by  him,  were  in  the  contemplation  of  the  parties. 
Now  it  would  seem  that,upon  the  acknowledged  rule  of  con- 
struction, noscitur  a  sociis,  tlie  last  clause  in  tiie  condition  being 
left  in  doubt  as  to  its  meaning,  should  be  construed  only  to 
extend  to  instances  in  which  the  party  died  in  the  commission 
of  a  felony. 

"  It  has  been  shown  that  a  literal  interpretation  of  this 
clause  would  embrace  cases  not  within  the  intention  of  the 
parties.  Now  the  words  of  the  condition  are  the  words  not 
of  the  assured,  but  of  the  insurers,  introduced  by  themselves 
for  the  purpose  of  their  own  exemption  and  protection  from 
liability  ;  both  in  reason  and  justice,  therefore,  no  less  than 
upon  acknowledged  principles  of  legal  construction,  they  are  to 
be  taken  most  strongly  against  those  that  speak  the  words,  and 
most  favorably  for  the  other  party ;  for  it  is  no  more  than  jus- 
tice that  if  the  words  are  ambiguous,  he  whose  meaning  they 
are  intended  to  express,  and  not  the  other  party,  should  suffer 
by  the  ambiguity.^  The  facts  of  this  case  clearly  show  that  the 
person  slaying  Harper  was  guilty  of  a  crime.  There  is  no  proof 
of  the  fact  set  up  as  a  bar  that  Coryell  slew  Harper  in  self- 
defence.  Harper  had  abandoned  the  conflict,  retreated  as  far 
as  possible,  and  endeavored  to  screen  himself  from  the  attack 
of  his  assailant.  His  having  a  stick  of  wood  in  his  hand  at  the 
time  he  was  slain  did  not,  in  the  least,  extenuate  the  guilt  of 
Coryell. 

"  Under  the  circumstances  Harper  would  have  been  justified 
had  he  slain  Coryell.  This  is  made  so  by  our  statute.  He 
would  have  been  excused  by  the  common  law.  If  A.  upon  a 
sudden  quarrel  assaults  B.  first,  and  upon  B.'s  returning  the 
assault  A.  really  and  bo7ia  fide  flees,  and,  being  driven  to  the 
wall,  turns  again  upon  B,  and  kills  him,  this  is  se  defendendo? 
By  the  twelfth  section  of  the  second  asticle  of  the  act  concern- 
ing crimes  and  punishments,  it  is  enacted  that  every  person 

1  5  M.  &  G.     (See  note  suhjin.) 

2  1  Hale,  480 ;  Foster,  273. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  391 

who  shall  unnecessarily  kill  another,  cither  while  resisting  an 
attempt  by  such  other  person  to  commit  any  felony  or  do  any 
other  unlawful  act,  after  such  attempt  shall  have  failed,  shall 
be  deemed  guilty  of  manslaughter  in  the  second  degree.  Now 
if  one  dies  under  circumstances  which  would  justify  him  in 
slaying  his  adversary,  and  when  the  person  causing  his  death 
is  thereby  guilty  of  a  felony,  is  it  not  a  gross  perversion  of  lan- 
guage to  say  that  the  person  died  in  the  known  violation  of  a 
law  of  the  land  ?  " 

And  the  reasoning  of  this  case  and  the  conclusion  were 
adopted  and  affirmed  in  the  same  court  in  Overton  v.  St.  Louis 
Mutual  Life  Insurance  Company,^  where  the  death  happened 
in  the  course  of  a  street  fight  between  the  insured  and  an 
assailant. 

§  328.  In  a  late  case  in  Massachusetts, ^  in  which  it  appeared 
that  the  insured  was  killed  in  an  altercation,  brought  on  by  an 
attempt  on  his  part  to  unhitch  a  pair  of  horses  attached  to  the 
wagon  of  another,  who,  the  insured  alleged,  owed  him  a  bill, 
and  while  the  insured  was  proceeding  to  take  possession  of  the 
horses,  as  a  means  of  enforcing  the  payment  of  the  bill  alleged 
to  be  due  hira,  when  he  was  shot  by  the  driver  of  the  horses, 
the  court  held,  on  a  question  as  to  whether  there  was  evidence 
for  a  jury,  that  if  the  insured  when  he  was  shot,  was  engaged 
in  a  criminal  violation  of  law  (of  which  there  was  evidence  to 
go  to  a  jury),  known  by  him  to  be  so,  and  if  such  violation  of 
law  might  have  been  reasonably  expected  to  expose  him  to 
violence  which  might  endanger  life,  the  case  was  within  the 
exception.  The  same  case  was  again  before  the  court,^  when 
the  court,  by  Foster,  J.,  took  occasion  to  state  its  views  more 
at  large :  — 

"  In  the  opinion  of  the  court,  the  condition  that  the  policy 
should  be  null  and  void,  among  other  grounds,  in  case  the 
insured  should  die  '  by  the  hands  of  justice,  or  in  the  known 
violation  of  any  law  '  of  the  State  or  country  where  he  resided, 
or  which  he  was  permitted  to  visit,  must  be  construed  to  refer 

1  39  Mo.  122. 

2  Cluff  «.  Mut.  Ben.  Life  Ins.  Co.,  13  AUen  (Mass.),  308. 
'  Reported  ut  supra. 


392  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

to  a  voluntary  criminal  act  on  the  part  of  the  insured,  known 
by  him  at  the  time  to  be  a  crime  against  the  law  of  such  State 
or  country.  Applying  the  maxim  noscitur  a  sociis,  and  remem- 
bering that  such  a  clause  ought  not  to  be  so  interpreted  as  to 
work  a  forfeiture  unless  that  intention  is  apparent,  as  well  as 
from  the  natural  import  of  the  words  '  known  violation  of  law,' 
we  conclude  tliat  they  do  not  extend  to  mere  trespasses  against 
property  or  otlier  infringements  of  civil  laws  to  wliich  no  crim- 
inal consequences  are  attached.  The  forcible  taking  of  the 
horses  from  Cox,  if  done  under  an  honest  claim  of  right,  how- 
ever ill-founded,  would  not  constitute  the  crime  of  robbery  or 
larceny ;  because  where  a  party  sincerely,  although  errone- 
ously, believes  that  he  is  legally  justified  in  taking  property, 
he  is  not  guilty  of  the  felonious  intent  which  is  an  essential 
ingredient  of  these  crimes.  Neither  does  the  taking  of  horses 
from  a  vehicle  to  wliich  they  are  harnessed  amount  to  an 
assault  upon  the  driver,  unless  accompanied  by  violence  or 
threats  of  violence  against  him.  An  assault  is  an  intentional 
attempt  by  force  to  injure  the  person  of  another. ^  A  battery 
is  committed  whenever  the  menaced  violence  of  an  assault  is 
done  in  the  least  degree  to  the  person.  Either  an  assault  or 
battery  would  be  a  crime  within  the  condition  of  the  policy, 
unless  justified  as  a  measure  of  necessary  self-defence. 

"Assuming  that  Cluff  did  commit  a  criminal  assault,  it  may 
not  necessarily  follow  that  he  died  in  the  known  violation  of 
law.  If  he  was  sliot  while  the  assault  continued,  such  would 
be  the  case.  But  if  it  had  ceased,  and  Cluff  was  not  threaten- 
ing to  renew  it,  and  Cox  had  withdrawn  out  of  his  reach  and 
then  shot  him,  not  in  the  course  of  the  affray,  but  merely  to 
revenge  himself  for  what  had  been  done,  or  to  prevent  the  sei- 
zure of  the  horses,  then  at  the  time  he  was  killed  Cluff  was 
not  engaged  in  a  known  violation  of  the  law,  within  the  mean- 
ing of  the  policy.  For  he  must  have  received  the  mortal 
wound  during  and  while  engaged  in  the  commission  of  a  crime, 
not  merely  in  consequence  of  it  afterwards.  But  the  jury, 
upon  all  the  evidence,  should  consider  whether,  if  he  is  proved 
to  their  satisfaction  to  have  been  once  engaged  in  a  criminal 

i  Commonwealth  v.  Ordway,  12  Cush.  270. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  393 

assault,  he  can  be  deemed  to  have  desisted  from  it,  while  per- 
sisting coiitiuuously  in  the  very  act  in  the  course  of  which  the 
affray  occurred.  Their  attention  should  be  called  distinctly 
to  the  question  whether,  if  Cluff  had  committed  a  criminal 
assault,  it  was  so  far  ended  when  he  was  fired  upon  that  the 
fatal  shot  is  to  be  regarded  as  a  new  and  independent  event, 
rather  than  a  mere  continuation  of  the  original  affray.  If 
Cluff  committed  a  criminal  assault  on  Cox,  which  the  latter 
immediately  returned  by  a  fatal  blow,  then  the  death  would 
have  been  occasioned  in  a  known  violation  of  law,  although 
the  jury  might  believe  that  Cluff  was  not  at  the  moment 
intending  to  commit  any  further  assault.  The  question  to  be 
considered  is,  were  the  two  acts  —  the  assault  by  Cluff  and  the 
firing  of  tlie  pistol  by  Cox  —  a  part  of  one  conflict  for  the  pos- 
session of  the  horses,  or  had  Cox  abandoned  his  attempt  to 
regain  the  custody  of  the  horses,  and  had  Cluff  desisted  from 
his  assault  ?  "Was  the  fight  over,  or  had  Cox  merely  retired 
to  a  more  advantageous  position?  In  short,  if  Cluff  in  the 
first  instance  did  commit  a  criminal  assault,  and  the  firing  of 
the  pistol  was  a  part  of  the  same  continuous  transaction,  then 
the  condition  of  the  policy  was  violated.  It  must  also  appear 
that  the  death  was  caused  or  occasioned  by,  or  resulted  from, 
the  criminal  act.  The  loss  of  life  must  be  connected  with 
the  crime  as  its  consequence.  By  reason  of  the  guilty  act  the 
death  must  have  occurred,  so  that  without  its  commission  it 
would  not  have  taken  place.  In  the  opinion  of  a  majority  of 
the  court  it  is  not,  however,  essential  that  the  deceased  should 
have  known,  or  have  had  reason  to  believe,  that  his  criminal 
act  would  or  might  expose  his  life  to  danger.  The  fact  that 
the  crime  actually  did  produce  the  death  is  sufficient  to  avoid 
the  policy,  without  regard  to  the  probability  that  such  a  result 
would  ensue." 

And  to  this  extent  the  ruling  of  the  court,  when  it  first  came 
before  them,  and  not  then  requiring  any  more  explicit  ruling 
upon  this  point,  was  modified  in  the  second  consideration  of 
the  case.  On  exceptions  after  a  third  trial,  it  was  held  that  the 
honest  belief  in  the  right  to  do  the  act,  while  doing  which  the 
insured  was  shot,  must  be  a  belief  in  his  legal  right  to  do 


394  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

the  acts,  and  not  a  mere  belief  in  the  right  of  self-redress  on 
account  of  the  disturbed  condition  of  the  country,  the  ineffi- 
cient administration  of  the  laws,  or  otherwise.^ 

§  329.  In  Bradley  v.  Mutual  Benefit  Life  Insurance  Com- 
pany,^  which  was  an  action  upon  substantially  the  same  form 
of  policy,  and  upon  the  same  life,  the  views  of  the  court  were 
substantially  in  accordance  with  those  of  the  Supreme  Court 
of  Massachusetts,  except  upon  the  point  that  the  violation  of 
law  must  be  a  criminal  act.  Upon  this  point  the  Supreme 
Court  held  that  any  act  in  violation  of  law  which  would  natu- 
rally lead  to  a  conflict  by  which  the  life  of  the  insured  would 
be  endangered  would  come  within  the  exception.  But  the 
case  was  sent  back  on  another  point,  and  the  question  is  still 
an  open  one  in  New  York.^  The  majority  of  the  Court  of 
Appeals  seem  to  have  been  inclined  to  take  the  same  view  of 
the  import  of  the  proviso  as  had  already  been  taken  by  the 
Supreme  Court  of  Massachusetts  and  Missouri ;  while  the 
minority  held  that  the  proviso  embraced  the  violation  of  any 
law  when  the  violation  was  of  such  a  character  as  to  tend 
directly  to  endanger  life.  The  argument  in  favor  of  this  view 
is  well  stated  by  Mr.  Justice  Grover  in  his  dissenting  opinion, 
who,  after  stating  the  doctrine  as  held  by  the  Massachusetts 
Supreme  Court,  thus  proceeds  :  — 

"  This  was  so  lield  .  .  .  upon  an  application  of  tlie  maxim 
noscitur  a  sociis.  How  this  maxim  can  apply  to  the  present 
case,  or,  if  applied,  how  the  conclusion  deduced  by  the  court 
therefrom  follows,  I  am  unable  to  perceive.  Among  the  asso- 
ciates is  that  of  the  death  happening  by  reason  of  intemperance 
from  the  use  of  intoxicating  liquors.  It  is  obvious,  that,  if 
the  death  happened  from  tliis  cause,  the  case  would  come 
within  the  proviso  whether  such  use  of  intoxicating  liquors 
was  prohibited  by  the  criminal  law  of  the  State  where  it  oc- 

i  99  Mass.  317. 

•^  3  Lansing  (N.  Y.),  341  ;  s.  c.  in  the  Court  of  Appeals,  45  N.  Y.  (6  Hand) 
422. 

5  The  proviso  excepted  liability  from  death  "  in  case  the  insured  shall  die  by 
his  own  hand,  or  in  consequence  of  a  duel,  or  by  reason  of  intemperance  from 
the  use  of  intoxicating  liquors,  or  by  the  hands  of  justice,  or  in  the  known  vio- 
lation of  law  of  these  States  or  of  the  United  States." 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  395 

ciirred  or  not ;  applying  the  maxim  to  this,  it  might  with 
equal  propriety  he  argued  that  it  was  not  the  criminal  law  that 
was  had  in  view  by  the  parties,  as  that  it  was  such  law,  because 
death  by  the  hands  of  justice  is  also  included  by  the  same 
proviso.  To  arrive  at  the  intention  of  the  parties  to  the  con- 
tract we  must  consider  the  subject-matter  in  reference  to  which 
the  language  was  used.  What  was  the  risk  to  be  incurred  by 
the  defendant  in  insuring  the  life  of  Cluff  ?  From  the  policy 
it  appears  tliat  the  defendant  was  willing  to  assume  all  the 
general  risks  to  be  incurred  by  such  insurance  to  the  extent 
of  the  amount  insured.  From  the  proviso  it  appears  that 
the  defendant  was  unwilling  to  incur,  and  therefore  refused 
to  assume  the  additional  risks  to  his  life  incurred  wliile  the 
assured  was  engaged  in  the  prohibited  acts  specified  in  the 
proviso,  and  therefore  carefully  provided  that  it  should  not  be 
liable  in  case  of  death  wliile  engaged  in  the  prohibited  acts. 
Keeping  these  considerations  in  view,  there  will  be  but  little 
difficulty  in  arriving  at  the  intention  of  the  parties,  and, 
consequently,  at  the  correct  construction  of  the  proviso.  It 
is  obvious  that  the  violation  of  law  in  which  the  insured  is 
engaged,  whether  such  law  be  criminal  or  civil,  must  have 
some  connection  with  the  death,  as  cause  and  effect,  —  not 
necessarily  the  immediate  cause,  as  it  is  sufficient  if  it  puts  in 
operation  that  cause.  To  illustrate  :  The  sale  of  lottery-tickets 
is  prohibited  by  the  criminal  law  of  New  York.  Xo  one  would 
contend  that  had  the  assured  died  in  the  State  of  Xew  York 
from  heart  disease,  while  engaged  in  selling  lottery-tickets,  the 
case  would  have  come  within  the  proviso.  It  might  have  been 
within  the  strict  letter,  but  not  at  all  within  the  intention  of 
the  parties,  for  the  reason  that  the  violation  of  law,  although 
criminal,  had  no  possible  connection  with  the  death,  and  in  no 
possible  way  increased  the  risk.  Again,  the  criminal  law  of 
New  York  prohibits  profane  cursing  and  swearing.  Suppose 
the  death  happened  from  some  accident  while  tiie  assured  was 
violating  the  law,  would  this  bring  the  case  within  the  proviso  ? 
Clearly  not,  for  the  reasons  above  stated.  Again,  suppose  the 
death  occurred  from  injury  received  while  the  assured  was 
attempting  to  obtain,  by  force,  the  possession  of  a  chattel  of 


396  insurance:  fire,  life,  accident,  etc. 

which  another  was  in  peaceable  possession,  the  title  to  which 
was  claimed  by  both,  but  which  was  really  in  the  assured,  the 
case  would  come  within  the  proviso,  for  the  reason  that  the  risk 
was  increased  and  the  death  caused  by  the  violation  of  law 
by  the  assured,  althougli  such  law  was  the  civil  law  only,  the 
deceased  having  committed  no  breach  of  the  peace  or  any  in- 
dictable offence.  The  Massachusetts  court  held  in  the  same 
case,  when  again  before  it,^  that  the  case  would  have  come 
within  the  proviso  had  the  assured  at  the  time  of  being  shot, 
in  furtherance  of  his  attempt  to  get  the  horses  from  Cox,  been 
committing  an  assault  and  battery  upon  him.  The  court,  I 
think,  must  have  overlooked  the  fact  that  the  violation  of  law 
in  which  the  insured  was  engaged  was  eminently  calculated  to 
cause  violence  dangerous  to  his  life  to  be  inflicted  upon  him, 
and  that  the  very  object  of  the  proviso  was  to  exonerate  the 
defendant  from  liability  should  death  incur  from  this  volun- 
tary increase  of  risk.  It  follows  that  when  the  death  occurs 
during  the  known  violation  of  law  by  the  assured,  when  such 
violation  eminently  tends  to  violence  dangerous  to  life,  the 
case  comes  within  tlie  proviso." 

§  330.  Death  by  Violence  covered  by  Policy  unless  expressly 
excepted.  —  A  life  policy  covers  death  by  violence  in  whatever 
form,  as  well  as  from  natural  causes,  unless  the  particular 
form  of  violence  is  an  expressly  excepted  cause.^ 

§  331.  Violation  of  Law  —  Evidence.  —  All  the  authorities 
agree  that  unless  it  appear  to  the  contrary,  the  criminal  laws 
of  all  civilized  countries  will  be  presumed  to  be  the  same  as 
those  having  jurisdiction  of  the  case.^ 

§  332.  Military  Service  —  Death  by  Casualty  or  Consequence 
of  War  —  Belligerent  Forces  —  Permit.  —  The  force  and  effect 
of  the  not  uncommon  exemption  from  liability  if  the  insured 
shall  enter  into  the  military  service,  and  the  scope  of  a  permit 
to  disregard  the  condition  of  the  policy  against  residing  be- 

1  99  Mass.  318. 

2  Spruill  V.  North  Carolina  Mut.  Life  Ins.  Co.,  1  Jones  (N.  C),  Law,  126. 

3  CluflF  V.  Mut.  Ben.  Life  Ins.  Co.,  13  Allen  (Mass.),  308;  Arago  v.  Currel, 
1  La.  528;  Savage  v.  O'Neil,  42  Barb.  (N.  Y.)  374;  Holmes  v.  Boughton,  10 
Wend.  (N.  Y.)  75 ;  Bradley  v.  Mut.  Ben.  Life  Ins.  Co.,  3  Lansing  (N.  Y.),  341 ; 
B.  0.  45  N.  Y.  422. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  397 

yond  a  certain  degree  of  latitude,  were  considered  in  "Welts 
V.  Connecticut  Mutual  Life  Insurance  Company/  where  it  was 
held  that  death  from  a  roving  band  of  banditti,  thieves,  and 
robbers,  such  as  usually  disturb  communities  during  insurrec- 
tionary periods,  is  not  one  of  the  "  casualties  or  consequences 
of  war  or  rebellion,"  nor  is  it  a  death  from  "  belligerent 
forces."  And  it  was  also  held  that  under  a  permit  to  reside 
in  a  district  known  to  be  in  a  state  of  war,  when  hostile  armies 
are  contending  for  its  possession,  subject  to  the  stipulation  that 
the  insurers  shall  not  be  liable  on  account  of  a  death  happen- 
ing from  such  casualties  or  forces,  a  condition  in  the  policy 
against  entering  military  service  is  so  far  modified  that  the 
insured  may  engage  in  the  incidental  service  of  bridge  build- 
ing, not  in  the  vicinity  of  any  hostile  force,  without  prejudice 
to  his  right  to  recover  under  the  policy.  The  facts  in  the  case, 
and  the  conclusions  of  the  court  thereon,  are  thus  stated  by 
Smith,  J.  :  — 

"  By  tills  permit  Welts  was  permitted  to  pass,  by  the  usual 
route  and  means  of  public  travel,  to  any  part  of  the  United 
States  south  of  the  thirty-sixth  degree  of  north  latitude,  and 
reside  there,  or  return,  during  the  term  of  one  year  from  the 
date  of  such  permit,  without  prejudice  to  said  policy  ;  provided, 
and  the  said  permit  was  issued  with  the  understanding  and 
agreement  of  the  parties  in  interest,  '  that  the  said  Welts  was 
not  insured  by  said  policy  against  death  from  any  of  the  casu- 
alties or  consequences  of  the  war  or  rebellion,  or  from  belliger- 
ent forces,  in  any  place  where  he  may  be.'  If  this  permit  had 
not  been  given  when  all  that  part  of  the  United  States  south 
of  the  thirty-sixth  degree  of  north  latitude  was  in  a  state  of 
insurrection  and  war,  and  covered  more  or  less  with  hostile 
armies,  I  should  have  considered  that  Welts  came  to  his  death 
from  the  causes  covered  by  the  proviso,  and  excepted  from  the 
policy.  But  he  was  permitted  to  go  into  any  or  all  the  insur- 
rectionary States  south  of  the  line  of  the  thirty-sixth  degree 
of  north  latitude ;  the  insurers  well  knowing,  as  well  as  the 
assured,  of  the  existence  of  the  war  of  the  rebellion  in  all  of 
these  States.  The  assured  paid  an  extra  premium  for  such 
1  46  Barb.  (N.  Y.)  412. 


398  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

permit.  He  was  killed  where,  under  the  permit,  he  had  a 
right  to  be  ;  he  was  not  killed  by  rebels  in  any  encounter  of 
arms ;  he  was  engaged  in  no  battle,  or  near  any ;  he  was 
twenty  miles  or  more  in  the  rear  of  the  United  States  forces 
at  Nashville,  and  it  does  not  appear  that  there  was  any  rebel 
force  at  the  time  north  of  the  Cumberland ;  he  was  not  ex- 
posed to  any  war  peril,  except  such  as  existed  through  all  the 
peaceful  parts  of  Kentucky  and  Tennessee.  Having  the  right 
to  be  in  the  place  in  which  he  was  killed,  the  risk  "Welts  then 
run  was  one  covered  by  the  permit.  He  was  engaged  in  no  war- 
like enterprise.  He  was  simply  rebuilding  railroad  bridges  far 
in  the  rear  of,  and  away  from  any  hostile  forces.  The  band  by 
which  he  was  killed  were,  it  seems,  mere  roving  robbers,  rob- 
bing union  men  and  rebels  alike.  They  did  not  interfere  with 
the  work  in  which  Welts  was  engaged.  They  did  not  destroy 
railroads  or  bridges,  or  make  prisoners  of  any  persons  in  Welts' 
company,  or  others.  They  merely  robbed  the  members  of  the 
company  of  their  money,  making  no  demonstrations  indicating 
that  they  were  confederate  soldiers,  or  acting  in  the  interest  of 
the  rebel  government.  It  is  true  that  Welts  ran  the  peril  of 
encountering  such  robbers  by  going  into  Tennessee,  but  this, 
I  think,  was  part  of  the  risk  contemplated  by  the  permit.  The 
same  peril  would  have  been  encountered  if  he  had  been  travel- 
ling quietly  in  that  section  of  country,  simply  passing  from 
one  place  to  another  in  any  part  of  the  United  States  south  of 
the  line  of  thirty-six  degrees  of  north  latitude. 

"  This  permit  is  to  be  construed  with  reference  to  the  known 
condition  of  the  country  at  the  time  it  was  given,  and  the 
parties  must  both  be  deemed  to  have  known  what  the  ordinary 
perils  were  in  the  country  where  the  insured  proposed  to  go, 
and  their  contract  must  be  interpreted  in  the  light  of  this 
assumption." 

And  this  case  was  affirmed  by  the  Commission  of  Appeals,^ 
the  court  observing,  amongst  other  things,  "  that  the  general 
understanding  of  the  term  includes  such  persons  only  as  are 
liable  to  do  duty  in  the  field  as  combatants." 

§  333.  Military  Service  —  What  constitutes  entering.  —  In 
1  48  N.  Y.  34. 


SPECIAL   PROVISIONS   OF   THE   CONTRA QT.  399 

Mitchell  V.  Mutual  Life  Insurance  Company  of  New  York,^  it 
appeared  that  the  insured  went  South  after  the  breaking  out 
of  the  rel)e]lion,  and  served  on  tlie  staff  of  several  generals, 
though  lie  received  no  commission.  And  the  court  thought 
that  if  the  insured  connected  himself  in  any  form  with  the  bel- 
ligerent force,  whether  he  had  a  commission  or  not,  he  entered 
the  military  service,  within  the  meaning  of  the  policy. 

§  384.  Military  Service  —  Voluntary  or  Involuntary. —  In  Dil- 
lard  V.  Manhattan  Life  Insurance  Company,^  the  insured, 
threatened  with  conscription,  entered  the  Confederate  service, 
and  occupied  the  position  of  brigade-post-quartermaster.  It 
was  claimed  by  the  plaintiff  that  this  was  substantially  an 
involuntary  entering  the  service  on  the  part  of  the  insured,  and 
if  not,  was  for  the  benefit  of  the  insurers,  as  the  risk  was  less 
than  it  would  have  been  to  take  the  chances  of  compulsory  ser- 
vice through  conscription.  But  the  court  did  not  sustain  these 
views. 

§  335.  Restrictions  upon  Residence  —  License  to  travel.  — 
When,  by  the  terms  of  the  policy,  the  residence  of  the  insured 
is  restricted  within  certain  specified  limits,  and  a  license  is 
given  to  remain  without  those  limits  till  a  certain  period,  ina- 
bility by  reason  of  sickness  and  death  to  return  within  the  time 
stated  in  the  license  will  not  work  a  forfeiture,  as  the  assured 
is  excused  on  account  of  his  inability,  which  is  the  act  of  God. 
This  was  so  held  in  Baldwin  v.  New  York  Life  Insurance  Com- 
pany,^ for  reasons  thus  stated  by  Bosworth,  C.  J.  :  — 

"  James  J.  Baldwin,  the  insured,  was  taken  sick  at  Appa- 
lachicola,  in  Florida,  on  the  11th  of  June,  1854.  If  he  had  died 
there  before  the  tenth  of  the  following  July,  of  the  disease  with 
which  he  was  attacked  on  the  11th  of  June,  the  defendants 
would  be  liable  on  the  policy.  So,  too,  if  he  had  started  north 
in  time,  and  so  as  to  have  passed  north  of  the  south  bounds 
of  Virginia  by  the  10th  of  July,  and  had  died  north  of  such 
bounds  on  the  11th  of  July,  the  insurers,  on  the  principles 
contended  for  by  them  on  the  argument  before  us,  would 
have   been    liable,   even    though   such    a  journey   performed 

i  Decided  in  the  Superior  Court  of  Baltimore,  and  cited  by  Bliss,  Ins.  643. 
2  44  Ga.  119.  s  3  Bosw.  (N.  Y.  Superior  Ct.)  530. 


400  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

under  such  circumstances  diminished  the  insured's  chance 
of  recovery. 

"  Under  this  construction  of  the  license  granted  to  the 
insured,  the  latter,  in  order  to  keep  the  policy  in  force,  if  taken 
sick  in  Florida  on  the  11th  of  June,  must  start  north,  at  what- 
ever peril  to  his  life,  in  time  to  be  and  succeed  in  being  north 
of  the  south  bounds  of  Virginia,  a  living  man,  by  the  10th  of 
July.  If  he  does  not,  this  policy  would  become  void.  And 
this  consequence  follows,  although  there  be  the  highest  moral 
certainty  that  if  he  performs  the  journey  his  disease  will  be 
thereby  so  aggravated  that  his  death  will  be  inevitable,  and  the 
company  made  liable  to  pay  the  sum  insured.  Hence,  if  that 
is  the  proper  construction  of  the  license  or  consent,  the  insured, 
jf  taken  suddenly  ill,  when  he  has  five  times  as  long  a  period 
remaining  as  is  ordinarily  required  to  perform  the  journey, 
must,  although  there  may  be  a  reasonable  prospect  of  his 
restoration  to  health  by  a  day  subsequent  to  the  10th  of  July, 
if  he  continue  where  he  is,  either  forfeit  his  policy  if  he  remains 
there,  or  earn  the  sum  insured  by  terminating  his  life  before 
the  10th  of  July  south  of  the  south  bounds  of  Virginia,  or  north 
of  them  immediately  thereafter,  by  reason  of  the  rash  and  haz- 
ardous attempt  to  perform  such  journey. 

"  In  other  words,  under  such  a  state  of  facts  as  the  evidence 
in  this  case  established,  in  order  to  keep  the  policy  in  force,  the 
insured  must  do  acts  which  will  unavoidably  subject  the  insur- 
ers to  a  loss  of  the  sum  insured,  and  thus  literally  '  die  by  his 
own  hand,'  in  which  event  the  policy,  by  its  terms,  becomes 
void. 

"  If  the  insured,  when  taken  sick,  had  been  north  of  the 
south  bounds  of  Virginia,  but  absent  from  his  home,  and  the 
nature  of  his  disease  and  its  aggravated  condition  were  such 
at  the  time  as  in  the  judgment  of  those  conversant  with  such 
subjects  death  would  inevitably  ensue  if  he  should  attempt 
to  journey  home,  while  his  recovery  would  be  in  the  highest 
degree  probable  if  he  continued  where  he  was  and  submitted 
to  the  regimen  prescribed  by  competent  professional  advisers, 
and  he  should  nevertheless,  against  such  advice,  persist  in  the 
attempt  to  journey  home,  and  by  reason  of  it  should  die  on 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  401 

the  way,  his  conduct  would  fall  within  the  spirit  of  the  condi- 
tion last  referred  to,  though  it  might  not  within  the  letter  of  it, 
as  it  has  been  judicially  interpreted.^ 

"  On  such  a  state  of  facts  it  would  be  difficult  to  say  that  the 
death  of  the  insured  was  not  caused  by  his  own  default  or 
neglect. 

"  As  the  policy  in  question  is  one  upon  the  life  of  the 
deceased,  I  think  the  terms  of  the  license  or  consent  should 
be  so  construed  as  not  to  require  him  to  attempt  to  return 
north  of  the  south  bounds  of  Virginia  by  the  10th  of  July, 
when,  in  consequence  of  sickness  suddenly  and  unexpectedly 
contracted  or  developed,  an  attempt  to  do  so  would  be  certain, 
so  far  as  the  human  mind  can  foresee  results,  to  produce  the 
death  of  the  insured. 

"  By  the  ordinary  route  and  mode  of  travel  he  could  have 
passed  from  the  place  where  he  was  taken  sick,  north  of  these 
bounds,  in  six  days.  Excluding  the  11th  of  June,  on  which 
day  he  was  taken  sick,  and  the  10th  of  July  following,  there 
were  twenty-eight  days  remaining. 

"  He  was  taken  and  became  '  so  sick  and  ill  in  body  as  to  be 
unfit  and  unable  to  travel,  and  to  start  on  his  return  home,' 
and  continued  so  until  he  died. 

"  I  do  not  think  the  consent  or  license  should  be  so  con- 
strued as  to  require  him  to  start  in  that  condition,  with  the 
certainty  that,  if  he  did  start,  he  would  die  in  consequence  of 
his  sickness  and  of  such  acts  on  his  part  south  of  the  south 
bounds  of  Virginia  before  the  10th  of  July,  or  north  of  those 
bounds  immediately  thereafter. 

"  That  it  could  not  have  been  the  intention  of  the  parties  to 
this  contract  that  the  insured,  under  the  state  of  facts  estab- 
lished by  the  special  verdict,  should  do  acts  which  would  make 
his  own  death  inevitable,  in  order  to  a  proper  performance,  on 
his  part,  of  his  duty  as  prescribed  or  declared  in  such  license 
or  consent. 

"  That,  by  a  just  construction  of  the  policy,  he  was  insured 
against  death  resulting  from  a  disease  contracted  or  first  devel- 

1  Breasted  v.  The  Farmers'  Loan  and  Trust  Company,  4  Seld.  299  ;  Parsons' 
Merc.  Law,  544,  note  1. 

26 


402  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

oped  on  the  lltli  of  June,  1854,  at  the  place  where  he  then 
was,  if  the  disease  was  of  a  character  that  his  death  was  in  the 
highest  degree  probable  if  he  attempted  to  travel. 

"  And  that  his  being  north  of  the  south  bounds  of  Virginia 
by  the  10th  of  July,  1854,  is  not  a  condition  precedent  to  tlie 
right  to  maintain  an  action  upon  the  policy  in  case  of  his  death 
in  such  sense  that,  if  in  consequence  of  sickness  discovered  on 
the  11th  of  June  (at  a  distance  from  such  bounds  of  six  days' 
ordinary  travel),  and  so  severe  that  his  death  will  be  in  the 
highest  degree  probable  if  he  attempts  to  travel,  the  insured 
must  endeavor  to  reach  these  bounds  with  the  certainty  that  if 
he  does,  he  will  die  before  the  10th  of  July,  and  before  cross- 
ing them,  or  as  soo*i  as  he  has  passed  north  of  them,  either 
on  the  10th  or  immediately  thereafter.  The  consent  or  license 
should  be  so  construed  as  to  conform  to  the  intent  of  the  par- 
ties, to  be  collected  from  the  terms  of  the  whole  agreement 
and  the  subject-matter  to  which  it  relates. 

"  I  think  it  was  the  intent  of  the  parties  that  the  defend- 
ants should  be  liable  in  the  event  that  has  happened,  and  on 
its  happening  under  the  circumstances  under  which  it  is 
proved  to  have  occurred."  ^ 

It  was  held,  however,  in  Howell  v.  Knickerbocker  Life  Insur- 
ance Company,^  that  if  payment  of  the  premium  within  the  time 
required  was  prevented  by  the  act  of  God,  as  by  a  stroke  of 
paralysis,  it  was  no  excuse,  but  a  failure  which  works  a  forfeit- 
ure. And  this  case  was  affirmed  in  the  New  York  Commission 
of  Appeals.^  Stress  was  laid  on  the  consideration  that  the  pay- 
ment of  the  premium  might  be  done  by  procuration,  and  did 
not  depend  upon  the  capacity  or  existence  of  the  life.  This 
distinguishes  the  case  in  its  facts,  if  not  in  principle,  from  the 
case  last  cited.* 

§  336.  Restrictions  upon  Residence  and  Travel.  —  But  where 
there  was  a  condition  that  the  insured  should  not  remain  more 

1  Hoffman,  J.,  also  gave  an  opinion  to  the  same  effect,  in  which  the  cases 
illustrative  of  the  doctrine  that  non  performance  of  an  obUgation  may  be  excused 
when  it  becomes  impossible  by  the  act  of  God,  are  carefully  collected  and 
stated. 

••^  3  Robt.  (N.  Y.  Sup.  Ct.)  232.  s  44  jj.  y.  276. 

*  See  Brown's  Leg.  Max.  (6th  Am.  ed.)  176. 


SPECIAL   PROVISIONS   OF  THE   CONTRACT.  403 

than  five  days  within  certain  limits,  on  penalty  of  forfeiture, 
and  the  insured  remained  there  ten  days,  when  he  was  taken 
sick,  and  died  within  the  prohibited  limits,  it  was  held  that 
there  could  be  no  recovery  under  the  policy,'  whether  the  vio- 
lation of  tlie  condition  was,  or  was  not,  in  any  way  the  cause 
of  the  death.  In  another  case,  where  there  was  a  permit  to 
travel  by  one  route,  and  the  insured  travelled  by  another, 
but  the  change  had  no  materiality  to  the  risk,  the  court  were 
divided  in  opinion  as  to  wiiether  this  would  be  a  defence.- 
The  indorsement  upon  a  policy,  however,  of  a  permit  which 
purports  to  grant  privileges  for  a  consideration  paid  therefor, 
which  are  only  such  as  may  be  enjoyed  under  the  provisions 
of  the  policy,  will  not  restrict  the  rights  of  the  insured  under 
the  policy,  —  rights  for  which  he  had  already  contracted  and 
paid.  These  rights  may  be  availed  of  as  if  no  permit  had  been 
indorsed ;  ^  and  if  such  an  indorsement  be  made  at  the  time 
the  policy  is  issued,  it  is  to  be  regarded  as  part  of  the  policy, 
modifying  any  condition  to  whicli  it  relates.'*  But  a  permit  to 
proceed  to  a  particular  place  without  the  limits  to  which  the 
insured  is  restricted  by  the  terms  of  the  policy,  written  on 
a  receipt  for  the  premium  paid  at  the  time  of  taking  out  the 
policy,  is  no  part  of  the  policy,  but  a  separate  and  independent 
agreement.  Such  a  permit  authorizes  the  insured  to  go  be- 
yond the  restricted  limits,  but  not  to  reside  there,  except  as 
allowed  under  the  terms  of  the  policy.^ 

§  337.  Restrictions  upon  Residence  and  Travel  —  Settled 
Limits.  —  The  "  settled  limits  "  of  the  United  States  means 
the  established  boundaries  of  the  Union,  and  a  death  beyond 
the  region  of  actual  settlement  is  covered  by  the  policy.  The 
word  "  settled  "  in  such  a  case,  and  in  its  connection  with  the 
word  "  limits,"  is  equivalent  to  "  fixed  "  or  '•  established."  In 
the  sense  of  occupied  or  inhabited,  it  would  give  rise  to  great, 
if  not  insurmountable  difficulties  of  proof,  and  would  be  so 
vague  and  uncertain,  that  courts  should  not  uphold  such  a 

1  Nightingale  v.  State  Mut.  Life  Ins.  Co.,  5  R.  I.  38. 

2  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  23  Conn.  244. 

3  Forbes  v.  American  Mut.  Life  Ins.  Co.,  15  Gray  (Mass.),  249. 

*  Rainsford  v.  Royal  Ins.  Co.,  1  Jones  &  Spencer  (N.  Y.  Superior  Ct.),  453. 
5  Ibid. 


404  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

view  unless  upon  the  clearest  evidence  that  such  was  the  inten- 
tion of  the  parties.^  "  The  primary  definition  of  the  word  '  set- 
tled,' "  said  Selden,  J.,  "  is  fixed,  placed,  established.  It  is 
true  it  is  also,  though  more  rarely,  used  as  descriptive  of  a 
section  of  country  that  is  '  planted  with  inhabitants ; '  but  it 
is  obvious  that  it  can  never,  with  propriety,  be  used  in  the  lat- 
ter sense  in  connection  with  the  word  '  limits.'  Limit  means 
boundary,  border,  the  outer  line  of  a  thing,  and  nothing  else, 
except  when  used  to  convey  the  idea  of  restraint.  There  may 
be  a  settled  region,  a  settled  country,  or  a  settled  territory,  but 
there  can  be  no  such  thing  as  a  settled  limit,  in  the  sense  con- 
tended for."  And  it  was  held  not  to  be  susceptible  of  mean- 
ing "  the  region  of  settlement "  as  contended  for  by  the 
insurers. 

§  338.  Restrictions  upon  Residence  and  Travel  —  Construc- 
tion. —  A  license  or  permit  about  which  there  is  any  ambiguity 
will  be  construed  most  strongly  against  the  company.  Thus  a 
permit,  setting  forth  that  the  insured  is  about  to  proceed  to, 
and  reside  at,  Belize,  and  granting  liberty  to  reside  there  for 
one  year,  may  be  availed  of  for  any  year  thereafter  during  the 
currency  of  the  policy .^  So  a  permission  to  go  by  sea  in  a  first- 
rate  vessel,  is  not  restrictive  of  the  mode  of  travel,  whether 
by  steerage  or  in  the  cabin.^  But  a  permit,  clear  in  its  terms, 
must  be  strictly  followed,  or  it  will  afford  no  protection.  Thus 
a  permit  to  make  a  voyage,  out  and  home,  to  California,  round 
Cape  Horn  or  by  the  way  of  Yera  Cruz,  will  not  authorize 
making  the  voyage  by  the  way  of  Panama,  though  this  may 
be  the  safer  route.^  The  condition  remains  in  force  in  all  its 
stringency,  except  so  far  as  it  may  be  modified  by  the  terms  of 
the  permit. 

§  339.  Restrictions  upon  Residence  and  Travel  —  "Waiver.  — 
But  the  right  to  insist  upon  a  compliance  with  such  restric- 
tions may  be  waived ;  and  a  receipt  of  the  premium  by  the 

1  easier  v.  Conn.  Mut.  Life  Ins.  Co.,  22  N.  Y.  (8  Smith)  427,  —  Comstock, 
C.  J.,  and  two  other  judges  dissenting,  who  held  that  the  words  were  equivalent 
to  the  "region  of  settlement." 

2  Notman  v.  Anchor  Ass.  Co.,  4  C.  B.  n.  s.  476. 

»  Taylor  v.  iEtna  Life  Ins.  Co.,  13  Gray  (Mass.),  434, 

*  Hathaway  v.  Trenton  Mut.  Life  Ins.  Co.,  11  Cush.  (Mass.)  448. 


SPECIAL   PROVISIONS   OF  THE   CONTRACT.  405 

insurers  after  a  known  violation  of  the  condition  against  resi- 
dence abroad,  or  of  the  terms  of  the  permit  granted,  is  a 
waiver  of  their  right  to  claim  a  forfeiture  by  reason  of  such 
violation.^  And  this  is  true  whether  the  knowledge  be  actual 
or  constructive,  as  where  the  violation  is  known  to  the  agent 
of  the  insurers  who  received  the  premium.^ 

1  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  23  Conn.  244. 

2  Wing  V.  Harvey,  5  De  G.,  M.  &  G.  265 ;  s.  c.  27  Eng.  L.  &  Eq.  140.     And 
see  also  Girdlestone  v.  N.  B.  Mar.  Ins.  Co.,  11  L.  R.  (Eq.)  197. 


W)Q  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 


CHAPTER    XY. 

OF   THE   SPECIAL   PROVISIONS    OP   THE   CONTRACT    (continued'). 

§  340.  Payment  of  the  Premium.  —  The  premium  paid  is  the 
consideration  received  by  the  insurers  for  the  risk  which  they 
undertake.  Ordinarily,  therefore,  and  in  the  absence  of  special 
stipulation  to  the  contrary,  the  delivery  of  the  policy  and  con- 
sequent assumption  of  the  risk,  and  the  payment  of  the  pre- 
mium are  coincident.  They  are  the  two  acts  on  the  part  of 
the  respective  parties  which  perfect  the  contract  and  give  it 
validity.  The  recital  in  the  policy  is,  that  the  insured  having 
paid  the  premium,  and  complied  with  certain  other  conditions, 
the  insurers  are  under  certain  obligations  to  him.  But  it  is 
also  almost  universally  provided  that  the  policy  shall  not  take 
effect  until  the  premium  be  paid.  And  in  such  case,  until 
the  payment  of  the  premium,  the  contract  will  not  take  effect, 
although  all  the  terms  may  have  been  agreed  upon,  and  the 
policy  made  out,  if  not  delivered ;  ^  nor  even  if  delivered,  if 
such  is  the  intent  of  the  parties.^  So  if  a  policy  by  its  terms 
is  not  to  cover  the  risk  while  a  premium  is  overdue,  a  loss 
after  the  time  when  the  premium  is  due,  and  before  it  is  paid, 
must  be  borne  by  the  insured.^ 

§  341.  Premium — Non-payment  —  Forfeiture.  —  If  the  policy, 
by  its  terms,  is  forfeitable  for  non-payment  of  premium,  or 
any  note  given  for  a  premium  when  due,  a  failure  to  pay  at 
maturity  a  note  given  for  a  part  of  the  premium,  or  any  instal- 
ment thereon,  when  due,  works  a  like  forfeiture.  And  the  fact 
that  no  notice  is  given  by  the  insurers  of  the  time  when  the 
note  becomes  due,  will  not  avail  the  insured,  since  they  are 

^  Schwartz  v.  Gerraania  Life  Ins.  Co.,  Sup.  Ct.  Minn.,  2  Ins.  L.  J.  449;  Flint 
V.  Ohio  Ins.  Co.,  8  Ohio,  501. 

2  Bodine  i'.  Exch.  Fire  Ins.  Co.,  N.  Y.  Com.  of  App.,  2  Ins.  L.  J.  23. 
.3  WaU  V.  Home  Ins.  Co.,  36  N.  Y.  15. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  407 

under  no  obligation  to  give  such  notice.'  In  Pitt  v.  Berkshire 
Life  Insurance  Company ,2  the  policy  purported  to  be  in  consid- 
eration of  886.40  to  the  defendants  "  in  hand  paid,"  and  of  a 
like  sum  to  be  annually  thereafter  paid,  and  was  conditioned 
to  be  void  in  case  the  insured  should  fail  to  pay  when  due  any 
notes  or  other  obligations  given  for  premium.  In  point  of 
fact,  only  a  part  of  the  first  premium  was  paid  in  hand  in  cash, 
and  for  the  balance  a  note  was  given  which  set  forth  on  its 
face  that  if  not  paid  when  due,  the  policy  should  be  void,  in 
accordance  with  the  conditions  of  the  policy.  And  the  note 
being  payable  in  instalments,  and  being  expressed  to  be  for 
the  unpaid  balance  of  the  premium,  it  was  held  that  the  giving 
the  note  was  not  a  payment  of  balance  due  of  the  premium, 
and  that  the  forfeiture  inured  on  non-payment  of  the  instal- 
ment first  due.^  An  attempt  was  made  in  "Winders  v.  Lord 
Tredegar  *  to  recover  a  lapsed  policy,  after  omission  to  pay  the 
annual  premium,  and  after  the  insured  had  taken  out  a  new 
policy  in  a  new  office.  The  original  policy  was  issued  at  a  time 
which,  if  it  was  still  in  force,  would  entitle  it  to  certain  valua- 
ble bonuses  ;  and  many  years  after  tlie  lapse  of  the  policy  the 
executors  of  the  insured  brought  their  bill  in  equity  to  recover 
the  policy  on  the  ground  that  it  had  lapsed  by  accident,  the 
insured  not  having  received  the  usual  notice,  by  reason  of  his 
change  of  residence.  But  the  "  Master  of  the  Rolls,"  the  Lord 
Justices,  and  the  House  of  Lords  on  appeal  to  them,  scouted 
the  bill. 

§  342.  But  when  the  policy  is  forfeitable  for  non-payment  of 
the  premium,  but  does  not  distinctly  provide  that  the  non- 
payment of  a  note  given  therefor  at  maturity  shall  work  a  for- 
feiture, as  this  clause  is  inserted  for  the  benefit  of  the  insurers 
it  must  be  taken  most  strongly  against  them,  and  the  iion- 

1  Robert  i;.  The  New  England  Mut.  Life  Ins.  Co.,  Disney  (Sup.  Ct.  of  Cin- 
cinnati), 355,  Gholson,  J. ;  Pitt  v.  Berkshire  Life  Ins.  Co.,  100  Mass.  500  ;  Caton 
V.  American  Life  Ins.  &  Tr.  Co.,  33  N.  J.  487  ;  Baker  v.  Union  Life  Ins.  Co.,  43 
N.  Y.  283,  reversing  s.  c.  6  Robt.  (N.  Y.  City  Sup.  Ct.)  393.  And  see  post, 
§342. 

'^   Ubi  supra. 

3  Pitt  Adm'x  V.  Berkshire  Life  Ins.  Co.,  100  Mass.  500. 

*  15  L.  T.  N.  s.  108,  H.  L. 


408  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

payment  of  the  note  at  maturity  will  not  work  a  forfeiture.^ 
The  courts  will  not  extend  the  operation  of  a  condition,  the 
breach  of  which  involves  a  forfeiture,  to  a  case  not  clearly  within 
it.  Thus,  where  two  notes  were  taken,  one  subject  to  the  con- 
dition, and  the  other  not,  the  failure  to  pay  the  latter  was  held 
not  to  work  a  forfeiture.^  And  though  the  note  itself  be  made 
payable  in  six  months,  and  by  the  terms  of  the  note  the  policy 
is  to  be  void  if  the  note  be  not  promptly  paid  at  maturity,  it 
has  been  held  that  the  non-payment  of  the  note  only  renders 
the  policy  voidable  and  not  void,  so  that  the  policy  continues 
in  force  unless  the  insurers  do  some  act  to  show  that  they 
insist  upon  the  forfeiture.^     The  case  referred  to  was  this :  — 

A  mutual  life  insurance  company  insured  the  life  of  a  mem- 
ber for  a  certain  annual  premium,  to  be  paid  at  the  begin- 
ning of  each  year,  and  if  not  so  paid,  the  policy  was  to  cease 
and  determine,  the  insured  to  forfeit  all  moneys  paid  and  all 
rights  under  such  policy.  The  insured  paid  three  annual  pre- 
miums, but  gave  his  promissory  note  for  the  next  year's  pre- 
mium, the  taking  of  which  the  company  assented  to,  payable 
six  months  after  date,  bearing  interest  at  a  higher  rate  than 
the  rules,  &c.,  of  the  company  provided  for.  The  note  pro- 
vided :  "  Being  for  premium  on  policy  No.  25,187,  and  if  not 
paid  at  maturity,  said  policy  is  to  be  void."  The  note  was  not 
paid  at  maturity,  nor  did  the  company  demand  payment  of  the 
maker,  on  the  day  it  became  due,  but  urged  payment  at  other 
times.  The  maker  was  solvent.  When  the  next  year's  pre- 
mium would  have  fallen  due,  by  the  terms  of  the  policy,  upon 
a  tender  made  of  it  to  the  agent  of  the  company,  the  latter 
refused  to  receive  it,  claiming  that  the  risk  had  determined  by 
reason  of  non-payment  of  the  note,  and  demanded  back  the 
receipt  given  for  the  previous  year's  premium,  but  continued 
to  hold  the  note.  In  an  action  brought  after  the  death  of  the 
insured,  to  recover  upon  the  policy,  the  action  was  sustained 
by  the  court.     In  giving  its  opinion  the  court  said  :  — 

"  Now,  what  is  the  legal  effect  of  the  policy  itself?     It  is  an 

1  McAllister  v.  The  New  England  Mut.  Life  Ins.  Co.,  101  Mass.  558. 

2  New  England  Mut.  Life  Ins.  Co.  v.  Hasbrook,  32  Ind.  447. 

3  Mut.  Ben.  Life  Ins.  Co.  v.  French,  2  Cin.  Superior  Ct.  Keptr.  321. 


I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  409 

agreement  to  insure  the  life  of  French  from  year  to  year  dur- 
ing his  life,  on  the  payment  to  it  each  year  of  a  certain  amount 
of  money  as  a  premium  for  the  risk  taken.  His  failure  to  pay 
such  premium  at  the  beginning  of  each  year,  unless  waived 
by  the  company,  ipso  facto,  would  cause  the  policy  to  '  cease  ' 
and  determine.  It  was  a  contract  that  could  only  continue 
from  year  to  year,  at  the  ojytion  of  the  insured,  who  could  let 
it  drop  at  any  time.  If,  on  July  6,  1867,  the  insured  had  said 
to  the  company,  '  I  will  not  pay  ;  I  do  not  wish  to  insure  longer 
in  the  company,'  it  could  not  have  compelled  him  to  do  so  ;  it 
could  not  have  sued  and  recovered  from  him  that  or  any  subse- 
quent year's  premium.  Its  remedy  was  provided  against  the 
insured  by  the  forfeiture  of  all  his  moneys  previously  paid 
and  rights  under  the  policy.  Hence  the  payment  of  each 
year's  premium  was  a  condition  precedent  to  the  further  exist- 
ence of  the  contract.^ 

"  Had  this  note  been  taken  in  pursuance  of  any  stipulation 
of  the  policy,  or  rules  or  laws  of  the  company  authorizing  it  as 
a  method  of  paying  the  annual  premium,  it  would  then  have 
been  a  condition  precedent  to  the  continuance  of  the  policy, 
which  would  have  ceased  and  determined,  as  of  July  6, 1867  ; 
but  if  not  so  provided  for,  this  would  not  necessarily  be  so.^ 

"  Let  us,  then,  inquire  whether  the  note  given  in  this  case 
could  have  been  sued  upon  and  recovered  by  the  company  after 
it  became  due,  or  whether  the  maker  could  have  successfully 
defended  against  it,  on  the  ground  that  he  had  elected  to 
insure  no  longer  with  the  company.  We  think  he  could  not. 
The  risk  for  the  whole  year  would  have  commenced ;  the  pol- 
icy for  that  year  would  have  attached,  and  the  company  would 
have  carried  it  six  months  and  three  days,  liable  in  case  of 
the  insurer's  death  during  the  whole  time.  The  payment 
of  the  note  became  a  condition  subsequent,  which  only  the 
company  could  avail  itself  of.  There  would  have  been  an 
election  on  the  part  of  the  insured  to  insure  for  another  year, 

1  See  Mut.  Ben.  Life  Ins.  Co.  i'.  Jarvis,  22  Conn.  133. 

2  McAllister  v.  New  England  Mut.  Life  Ins.  Co.,  101  Mass.  558;  Robert  v. 
New  England  Mut.  Life  Ins.  Co.,  1  Disney,  355;  s.  c.  2  ib.  106,  107  ;  New  Eng- 
land Mut.  Life  Ins.  Co.  v.  Hasbrook,  32  Ind.  449. 


410  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

and  not  a  refusal  to  do  so,  as  if  he  had  not  attempted  to  pay 
the  premium  for  the  year,  in  which  case  there  would  have 
been  no  liability  on  his  part.  Such  terms  in  the  note  made 
the  policy  merely  voidable  at  the  option  of  the  company.  For- 
feitures are  not  favored,  especially  where  delay  can  be  compen- 
sated for  in  money.^ 

"  Still  the  company  might  have  forfeited  the  policy  on  non- 
payment of  the  note  when  it  became  due,  but  it  should  have 
exercised  the  right  promptly.  It  should  have  demanded  pay- 
ment on  the  last  day  of  grace,  during  the  business  hours  of 
the  day  ;  and  if  such  payment  was  not  then  made,  it  should 
have  declared  the  policy  forfeited  or  void.  This  is  in  ac- 
cordance with  well-settled  rules  for  enforcing  forfeitures  for 
breaches  of  condition  subsequent.  No  such  demand  is  required 
in  the  case  of  the  non-performance  of  conditions  precedent^ 
as  the  stipulation  in  a  policy  for  the  payment  of  annual  pre- 
miums, though  it  is  usual  for  companies  to  notify  parties  a 
few  days  in  advance  of  the  time  such  annual  payments  are  to 
be  made  ;  but  this  is  mere  accommodation.  The  company, 
then,  did  not  determine  or  make  void  this  policy  when  the 
note  fell  due,  and  it  became  a  mere  debt,  like  the  check  given 
for  the  other  half  of  that  year's  cash  premium."  ^  And  even  a 
parol  agreement  to  pay  may  be  so  far  a  payment  as  to  prevent 
a  forfeiture  of  the  policy  by  the  mere  fact  of  non-payment.^ 

§  343.  If,  however,  the  policy  contains  no  such  proviso, 
though  the  charter  and  by-laws  require  the  payment  of  annual 
premiums,  the  non-payment  of  the  annual  premium  when 
due  does  not  work  a  forfeiture.  Such  a  policy  insures  for  the 
number  of  years  stipulated  absolutely,  leaving  the  annual  pay- 
ment of  the  premium  to  be  enforced,  not  as  a  condition,  but  as 
a  part  of  the  consideration  agreed  to  be  paid.* 

§  344.  Under  the  following  special  and  peculiar  facts  a  pol- 
icy was,  after  much  fluctuation  of  judicial  opinion,  held  void. 

1  Boyd  V.  Talbert,  12  Ohio,  212,  214  ;  Smith  v.  Wliitbeck,  13  Ohio  St.  471. 

2  Mut.  Ben.  Life  Ins.  Co.  v.  French,  2  Cincinnati  Superior  Court  Reporter, 
321. 

3  See  post,  §  346. 

4  Woodfin  V.  The  Asheville  Mut.  Ins.  Co.,  6  Jones  (N.  C),  558. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  411 

The  policy  was  headed  as  follows:  "Annual  premium,  <£33; 
whole  term,  payable  by  quarterly  instalments  of  .£8  5s.  each." 
The  policy  was  dated  Aug.  2,  1856,  and  recited  that  "  the 
assured  had  paid  £S  5s.  as  the  premium  till  2d  of  Xovem- 
ber."  It  also  stipulated  that  if  the  insured  should  die  within 
twelve  calendar  months  from  the  date  thereof,  or  should  live 
beyond  siich  period,  and  should  on  or  before  that  period,  or 
before  the  expiration  of  every  succeeding  twelve  calendar 
months,  pay  the  annual  amount  of  premium,  tlie  insurers 
should  be  liable ;  with  a  proviso,  however,  that  if  tlie  insured 
should  die  before  the  whole  of  the  quarterly  payments  shall 
become  payable  for  the  year,  the  directors  might  deduct  from 
the  sum  insured  the  whole  of  the  premium  for  that  year,  reck- 
oning it  to  commence  from  the  2d  of  August.  The  insured 
died  after  the  third  quarterly  instalment  had  become  payable, 
but  before  it  was  paid,  and  it  was  held  in  the  Queen's  Bench 
that  the  non-payment  of  the  third  instalment  rendered  the 
policy  void,  on  the  ground  that  this  was  a  policy  from  quar- 
ter to  quarter,  leaving  to  the  assured  liberty  to  drop  it  _at  the 
end  of  any  quarter,  and  not  imposing  any  continuing  liability 
on  the  insurer,  unless  the  quarterly  payment  is  made  at  the 
end  of  the  quarter  ;  and  further,  that  the  condition  as  to  the 
payment  of  all  the  quarterly  premiums  was  a  condition  prece- 
dent.^  This  judgment,  however,  was  reversed  in  the  Exchequer 
Chamber,^  on  the  ground  that  the  insurance  was  an  annual 
insurance  for  a  year,  and  from  year  to  year,  time  being  given 
to  pay  the  annual  premium  by  quarterly  instalments  ;  and  that 
the  absence  of  any  express  promise  to  pay,  and  of  any  pro- 
vision as  to  the  consequence  of  non-payment  of  the  quarterly 
premium,  prevented  their  payment  from  being  a  condition 
precedent.  But  this  judgment  was  again  reversed  in  the 
House  of  Lords,  on  the  ground  that  the  "  annual  amount "  of 
the  premium  had  not  been  paid,  and  the  proviso  was  not  meant 
to  apply  to  the  case  of  a  default  of  payment,  but  to  the  case 
where  the  payments  had  been  regularly  made  as  they  became 
due,  but  when  all  the- instalments  had  not  become  due.^ 

1  E.  B.  &  E.  loG.  2  Ibid.  160. 

3  Phoenix  Life  Ins.  Co.  v.  Sheridan,  8  H.  L.  Cas.  475. 


412  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  345.  Premium  —  "What  constitutes  Payment.  —  When  nO 
special  mode  of  payment  is  stipulated  for,  any  mode  of  pay- 
ment which  is  accepted  without  objection,  on  the  part  of  tlie 
insurers  or  their  agent,  will  suffice.  Thus,  the  actual  delivery 
to  the  agent  of  a  check  payable  to  the  order  of  the  agent,  or 
mailing  such  a  check  to  his  address,  at  his  request,  made  at 
the  time  of  the  completion  of  the  contract,  is  an  actual  pay- 
ment of  the  premium,  if  the  check  be  at  the  time,  and  after- 
wards, till  received,  continue  to  be  good.  Since  no  mode  of 
payment  is  provided,  the  agent  may  exercise  his  discretion 
and  accept  any  mode  which  suits  the  convenience  of  the  par- 
ties.^ Even  a  payment  of  the  premium  in  depreciated  funds 
to  the  local  agent  of  a  foreign  insurance  company,  if  received 
by  him  according  to  the  usual  course  of  his  business  known 
to  his  principals,  is  a  valid  payment.^  And,  of  course,  a  tender 
of  payment  in  a  like  currency  would  be  equivalent  to  the 
actual  payment  in  its  effect  upon  the  obligations  of  the  policy.^ 
So  the  payment  may  be  by  note ;  and  if  the  note  is  given  and 
accepted  as  payment,  it  will  be  sufficient.* 

§  346.  Parol  Agreement  to  Pay  —  Days  of  Grace. —  A  parol 
agreement,  made  at  the  time  of  the  annual  payment  of  the 
premium,  subsequent  to  the  issue  of  the  policy,  that  if  any 
thing  should  happen  to  the  insured  to  prevent  his  punctual 
payment  of  the  premium,  the  policy  should  not  become  void, 
but  should  continue  in  force  for  a  reasonable  time  thereafter, 
so  that  the  premium  could  be  paid,  is  valid,  though  Hunt,  C, 
thought  such  an  agreement  could  keep  the  policy  alive  upon  a 
living  subject  only,  and  that  if  the  insured  were  dead  before 
the  tender  of  the  premium,  although  the  tender  were  within  a 

1  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  39. 

2  Eob  V.  Int.  Ass.  Soc.  of  London,  42  N.  Y.  54 ;  Martina  v.  Same,  62  Barb. 
(N.  Y.)  181 ;  Sands  v.  New  York  Life  Ins.  Co.,  50  N.  Y.  626  ;  Polglass  v.  Oliver, 
2  Cr.  &  Jer.  14. 

'  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  169.  See  also  New  York 
Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.)  469. 

*  Mut.  Ben.  Life  Ins.  Co.  v.  French,  2  Cincinnati  Superior  Court  Reporter, 
321 ;  Pitt  V.  Berkshire  Life  Ins.  Co.,  100  Mass.  500.  In  point  of  fact  it  is  cus- 
tomary for  mutual  insurance  companies  to  accept  part  payment  of  the  first  as 
well  as  of  subsequently  accruing  premiums  in  the  form  of  a  note.  Of  course 
such  a  note  is,  by  the  understanding  of  both  parties,  a  payment  pro  tanto. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  413 

reasonable  time,  it  would  be  ineffectual  to  continue  the  policy. 
And  to  the  same  effect  were  the  observations  of  the  court 
in  Baptist  Church  v.  Brooklyn  Fire  Insurance  Company ,i  a 
case  of  fire  insurance.  "  A  provision  in  a  policy  already  exe- 
cuted and  delivered  so  as  to  bind  the  company,  declaratory  of 
a  condition  that  premiums  must  be  paid  in  advance,  manifestly 
has  no  effect,  except  to  impart  convenient  information  to  per- 
sons who  may  wish  to  be  insured.  As  such  a  provision  in  the 
policy  in  question  could  have  no  effect  upon  the  delivered  and 
perfect  contract  in  which  it  was  contained,  so  it  could  have 
none  to  prevent  the  same  parties  from  making  such  future 
contract  as  they  please.  In  any  subsequent  agreement  for  a 
renewal  or  continuation  of  the  risk,  it  was  competent  for  the 
parties  to  contract  by  parol,  and  to  waive  the  payment  in  cash 
of  the  premium,  substituting  therefor  a  promise  to  pay  on 
demand,  or  at  a  future  day.  Proof  of  such  an  agreement 
would  have  no  tendency  to  contradict  or  to  change  the  writ- 
ten policy  already  in  force  between  the  parties,  and  wliich 
would  be  wholly  spent  before  the  new  agreement  could  take 
its  place."  ^  But  it  seems  that  such  an  agreement,  made  at 
the  time  of  issuing  the  policy,  would  not  be  provable  as  tend- 
ing to  contradict  the  terms  of  the  policy,  nor  would  a  usage 
of  the  company  known  to  the  insured  of  allowing  such  days  of 
grace,  for  the  reason  that  it  would  be  in  plain  conflict  with  its 
provisions.^  Though  the  contrary  has  been  expressly  held  as 
to  the  proof  of  a  usage.^ 

§  347.  Where  a  policy  of  life  insurance  was  issued  stipukt- 
ing  that  the  first  year's  premium  was  to  be  paid  in  advertising 
in  the  newspaper  published  by  the  insured,  and  the  advertising 
matter  was  furnished  by  the  company  and  duly  advertised,  it 
was  held  that  it  was  incumbent  upon  the  company  to  furnish 
sufficient  amount  to  meet  the  premium,  and  the  insured  was 
not  responsible  for,  and  the  insurance  not  vitiated  by,  a  defi- 
ciency in  advertising  matter.  It  was  also  held  that  in  the 
absence  of  any  notice  from  the  company  to  the  insured  that 

1  19  N.  Y.  305. 

2  See  also  Bodine  v.  Exch.  Fire  Ins.  Co.,  N.  Y.  Com.  of  App.,  2  Ins.  L.  J.  23. 

3  Howell  V.  Knickerbocker  Life  Ins.  Co.,  44  N.  Y.  (Com.  of  App.)  279. 
*  Helme  v.  Phila.  Life  lus.  Co.,  61  Penn.  107. 


414  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  policy  would  not  take  effect  until  the  termination  of  the 
time  of  advertising,  it  took  effect  from  its  date.^  And  it  seems 
that  payment  may  be  in  board,  if  agreed  upon  by  properly 
authorized  parties.^  And,  doubtless,  in  whatever  commodity 
may  be  so  agreed  upon. 

§  348.  Premium  —  Payment — But  it  has  been  held  that  a 
promise  by  the  treasurer  of  the  insurers,  where  the  policy  has 
been  executed  but  not  delivered,  and  the  by-laws  make  pre- 
payment essential  to  the  validity  of  the  policy,  that  he  would 
see  that  the  premium  was  paid,  or  that  he  would  take  it  upon 
himself  to  keep  the  policies  good,  is  no  payment.  The  act  of 
a  treasurer,  under  such  circumstances,  is  not  that  of  the  agent 
of  the  company,  but  his  own  act  in  his  private  capacity.^  But 
the  courts  of  Massachusetts  give  the  greatest  effect  to  the  by- 
laws of  a  mutual  insurance  company  in  restricting  the  powers 
of  the  officers  and  agents  of  the  company.*  And  it  is  doubt- 
ful if  the  decision  above  cited  would  meet  with  approbation 
in  most  of  the  States.^ 

§  349.  Premium  —  Time  of  Payment — Sunday.  —  Where  the 
premium  falls  due  on  Sunday  it  may  be  paid  on  the  following 
day,  the  rule  appertaining  to  negotiable  notes  entitled  to  grace, 
that  the  payment  must  be  made  on  the  day  preceding  the  last 
day  of  grace  when  that  day  happens  on  Sunday,  not  obtaining 
in  other  contracts,  for  reasons  thus  stated  by  the  court  in  a 
case  where  the  premium  fell  due  on  Sunday  at  noon  :  — 

"  In  reference  to  notes  payable  on  a  certain  day,  but  enti- 
tled to  three  days'  grace,  it  is  said  that  in  such  case  the  note 
by  its  terms  would  be  due  and  payable  two  days  earlier  than 
Saturday,  and  that  what  was  originally  a  mere  indulgence  to 
casualty  or  oversight  should  not  be  extended,  and  therefore  if 
the  last  of  three  days  of  grace  falls  on  Sunday,  the  payment 
must  be  made  on  Saturday,  and  that  it  was  more  reasonable 
to  take  from  than  to  add  to  a  period  of  time  thus  originally 
allowed  as  mere  grace  and  favor.     But  as  to  other  contracts, 

1  The  Kentucky  Mut.  Ins.  Co.  v.  Jenks,  5  Ind.  96. 

2  Schwartz  v.  Germania  Life  Ins.  Co.,  Sup.  Ct.  Minn.,  2  Ins.  L.  J.  449. 
»  Buffura  V.  Fayette  Mut.  Ins.  Co.,  3  Allen  (Mass.),  360. 

*  See  ante,  §§  127-145.  5  See  ante,  §  134. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  415 

which  by  the  face  of  the  instrument  required  a  payment  on  a 
day  which  proves  to  be  Sunday  to  discliarge  literally  the  prom- 
ise or  duty,  the  law  seems  to  sanction  the  postponement  of  the 
time  for  doing  the  same  till  the  Monday  following.  In  other 
words,  Sunday  is  not  a  legal  day  for  the  performance  of  con- 
tracts and  doing  secular  business.  The  statute  law  forbids  all 
such  acts.  The  party  paying,  and  the  party  receiving  money 
on  that  day  in  discharge  of  a  contract,  would  subject  them- 
selves to  a  penalty  for  so  doing.  Sunday  was  not  a  day  con- 
templated by  the  parties  as  embraced  in  the  stipulation  to  pay 
a  quarterly  premium  on  the  first  day  of  October  on  each  and 
every  year  during  the  life  of  the  party  assured.  The  defend- 
ants had  no  office  open  on  that  day,  and  were  under  no  obli- 
gation to  receive  the  payment  of  the  premium  on  that  day,  if 
the  same  had  been  tendered  by  the  assured.  Such  being  the 
case,  the  assured  was  under  no  obligation  to  do  what  would 
have  been  not  only  an  illegal  act,  but  also  one  which  the  other 
party  was  not  bound  to  recognize.  In  this  view  of  the  case 
there  was  no  such  default  on  the  part  of  the  assured  in  not 
paying  the  premium  fully  due  on  the  first  of  October,  as  should 
be  iield  to  terminate  the  policy. ^ 

§  350.  Non-payment  of  Premium  —  Excuse  —  Intervening 
War.  —  But  as  the  intervention  of  war  cuts  off  all  intercourse 
between  the  contracting  parties,  if  they  reside  respectively  with 
the  belligerents,  and  neither  by  themselves  or  by  their  agents 
can  they  lawfully  have  such  intercourse,  it  is  held  by  the 
almost  universal  concurrence  of  the  authorities,  that  a  failure 
to  pay  under  such  circumstances  does  not  avoid  the  policy. 
One  may  undertake  as  against  his  own  acts  and  the  acts  of 
strangers,  but  not  as  against  tlie  acts  of  God,  his  own  govern- 
ment, or  of  the  obligee.^     The  last-named  case,  for  reasons 

1  Hammond  v.  The  American  Mut.  Life  Ins.  Co.,  10  Gray  (Mass.),  306; 
Campbell  v.  The  International  Life  Ass.  Soc,  4  Bosw.  (N.  Y.  Sup.  Ct.)  298. 
This  case  contains  an  elaborate  resume  oi  the  history  of  the  Sunday  law,  so  called, 
well  worthy  of  perusal.  A  note  not  entitled  to  grace  falling  due  on  Sunday  is 
not  payable  till  Monday.     Salter  v.  Bush,  20  Wend.  (N.  Y.)  205. 

2  See  the  authorities  cited  ante,  §§  36-42.  And  see  also  Sands  v.  New  York 
Life  Ins.  Co.,  59  Barb.  (N.  Y.)  557  ;  s.  c.  affirmed  in  the  Court  of  Appeals,  50 
N.  Y.  626,  and  Cohen  v.  Same,  50  N.  Y.  610,  reversing  s.  c.  in  the  Superior 


416  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

stated  in  the  opinion,  was  very  carefully  considered,  and  the 
conclusions  of  the  court  upon  all  the  points  raised  were  as 
follows :  — 

"  A  decision  of  this  appeal  has  been  delayed  at  the  request 
of  parties  to  other  actions  pending  in  this  court,  like  in  charac- 
ter in  some  respects  to  this,  that  before  the  questions  involved 
should  be  decided  their  appeals  might  be  heard. 

"  The  importance  of  the  questions  at  issue  induced  the  court 
to  listen  to  the  request,  and  this  case  was  substantially  re- 
argued with  Sands  v.  The  New  York  Life  Insurance  Company 
in  December  last.  The  legal  status  of  citizens  of  States  at 
war,  and  the  relation  they  mutually  occupy,  as  well  as  the 
effect  of  a  state  of  war  upon  contracts  and  obligations  of  the 
subjects  of  litigant  States,  and  their  right  to  contract  or  hold 
intercourse  with  each  other,  have  recently  been  so  frequently 
the  subject  of  judicial  discussion  and  decision  in  the  State 
and  federal  courts,  that  the  leading  principles  by  which  the 
intercourse  and  dealing  between  enemies  —  that  is,  between 
the  inhabitants  of  States  and  nations  at  war — are  prohibited, 
or  restricted  and  regulated,  and  the  effect  of  war  upon  their 
mutual  contracts  and  obligations,  are  quite  familiar.  They 
have  been  so  often  repeated  in  different  forms,  although  in 
substance  and  effect  the  same,  that  a  review  of  them,  or  a  ref- 
erence at  much  length  to  them,  would  be  out  of  place. 

"  The  general  principles  and  doctrines  as  found  in  the  trea- 
ties of  nations  upon  public  law,  and  deducible  from  the  judg- 
ments of  courts,  are  firmly  established,  and  cannot  be  ignored 
or  essentially  modified  by  courts  at  this  day.  All  that  courts 
have  to  do  is  to  apply  the  principles  thus  recognized  and  set- 
tled to  cases  as  they  are.  It  is  said,  in  general  terms,  that  in 
a  state  of  war  '  the  individuals  who  compose  the  belligerent 
States  exist,  as  to  each  other,  in  a  state  of  utter  occlusion,' 
and  all  intercourse  between  them  is  forbidden.^  This  propo- 
sition has  been  repeated  with  approval  in  several  later  cases. 
Judge  Nelson,  in  the  Prize  Cases,^  adopting  the  language  of 

Court  of  the  City  of  New  York,  cited  ante,  p.  37,  both  decided  since  those  sec- 
tions were  printed,  and  both  affirming  the  doctrine  therein  stated. 

1  Per  Johnson,  J.,  The  Rapid,  3  Cranch,  165.  2  2  Black  (U.  S.),  636, 681. 


\ 


SPECIAL   PROVISIONS   OF   THE,  CONTRACT.  417 

approved  writers  on  international  law,  says  that  one  of  the 
legal  consequences  resulting  from  a  state  of  war  is  that '  the 
people  of  the  two  countries  immediately  became  the  enemies 
of  each  other  ;  all  intercourse,  commercial  or  otherwise,  be- 
tween them,  unlawful ;  and  all  contracts  existing  at  the  com- 
mencement of  the  war,  suspended,  and  all  made  during  its 
existence,  utterly  void.  The  insurance  of  enemies'  property, 
the  drawing  of  bills  of  exchange  or  purchase  on  the  enemies' 
country,  the  remission  of  bills  or  money  to  it,  are  illegal  and 
void  ;  all  existing  partnerships  between  citizens  or  subjects  of 
the  two  countries  are  dissolved  ;  and,  in  fine,  interdiction  of 
trade  and  intercourse,  direct  or  indirect,  is  absolute  and  com- 
plete by  the  mere  force  and  effect  of  the  war  itself.^  These 
propositions,  general  and  far-reaching  as  they  are,  were,  how- 
ever, made  in  cases  relating  to  commercial  intercourse,  and 
involved  the  question  as  to  the  legality  and  effect  of  commer- 
cial dealings  and  transactions  ;  and  the  general  language  used 
in  legal  effects  extends  only  to  intercourse  and  dealings  of 
that  character,  although  all  other  intercourse  clearly  within 
the  mischief  intended  to  be  avoided  would  be  within  tlie  prin- 
ciple, and  therefore  within  the  rule  itself. 

"  I  do  not  understand  that  it  has  been  authoritatively  ad- 
judged that  all  private  contracts,  without  exception,  made 
between  citizens  or  subjects  of  States  at  war,  are  necessarily 
void,  although  the  language  of  the  court  has  been  sufficiently 
comprehensive  to  include  the  proposition  in  its  largest  extent. 
The  subject  is  elaborately  and  ably  considered  in  Kershaw  v. 
Kelsey  ;  '^  and  the  authorities,  with  the  reason  and  extent  of 
the  rule  under  consideration,  reviewed  and  discussed,  and  the 
result  of  the  examination  was  that  the  law  of  nations,  as  judi- 
cially declared,  prohibits  all  intercourse  between  citizens  of 
the  two  belligerents  which  is  inconsistent  with  the  state  of  war 
between  these  countries.  Tliis  was  regarded  as  including 
every  act  of  voluntary  submission  to  the  enemy,  or  receiving 
his  protection  in  any  act  or  contract  which  tends  to  increase 

1  See  also  Jecker  v.  Montgomery,  18  How.  110;  Hanger  v.  Abbott,  6  Wall. 
532 ;  The  Ouachita,  ib.  621 ;  Griswold  v.  Waddington,  16  Johns.  K.  438. 

2  100  Mass.  561. 

27 


418  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

his  resources,  and  every  kind  of  trading  or  commercial  dealing 
or  intercourse,  direct  or  indirect.  The  action  of  Congress  of 
July  13, 1861,^  and  the  proclamation  of  the  President  pursuant 
to  tiiat  statute,  only  proinl)ited  commercial  intercourse  be- 
tween the  citizens  of  the  States  declared  to  be  in  insurrection 
and  the  citizens  of  the  rest  of  the  States.  For  all  the  pur- 
poses of  this  action  it  may  be  assumed  that  the  rule,  thus 
restricted,  would  prohibit  the  making  of  a  contract  during  a 
state  of  war,  for  the  insurance  of  the  life  of  an  enemy. 

"  This  was  rather  assumed  by  the  counsel  for  both  parties 
upon  the  argument.  It  would  certainly  forbid  the  transmis- 
sion of  money  for  a  premium  from  one  of  the  States  at  war  to 
tlie  other,  and  it  is  said  that  the  life  of  an  alien  enemy  cannot 
be  insured  by  his  creditor,  although  the  latter  be  a  subject  of 
the  same  country  with  the  insurer.^  The  authorities  cited  to 
sustain  this  proposition  were  all,  however,  cases  of  insurance 
upon  merchandise.^  The  insurance  upon  the  life  of  the  hus- 
band of  the  plaintiff  was  a  valid  and  lawful  contract  at  the 
time  it  was  made  in  1849,  and  was  for  the  term  of  his  natural 
life,  in  consideration  of  a  sum  paid  at  tlie  date  of  the  policy, 
and  further  consideration  of  the  annual  payment  of  a  like  sum 
on  or  before  the  second  day  of  April  in  every  year.  This  was 
not  a  policy  from  year  to  year,  but  an  insurance  for  life,  sub- 
ject to  be  defeated  by  the  non-performance  of  the  condition 
prescribed,  to  wit,  the  payment  of  the  annual  premium. 

"  It  is  expressly  declared  in  the  contract  of  insurance  that 
if  the  annual  payments  should  not  be  made,  '  that  said  policy 
should  cease  and  determine,'  and  '  that  all  previous  payments 
made  thereon  should  be  forfeited  to  the  company.'  It  was  a 
life  policy.^  The  contract  was  not  as  to  all  its  stipulations,  and 
as  to  both  parties,  executory.  It  was  executed  by  the  plaintiff 
by  the  payment  of  the  annual  premiums  fi'om  1849  to  and 
including  1861,  while  it  was  wholly  executory  on  the  part  of 

1  12  U.  S.  Statutes  at  Large,  257. 

*  Bunyon's  Life  Assurance,  19. 

8  Harman  v.  Kingston,  3  Camp.  150 ;  Potts  v.  Bell,  3  T.  R.  548  ;  Flindt  v. 
Waters,  15  East,  266. 

*  Hotlsdon  V.  Guardian  Life  Ins.  Co.,  97  Mass.  144  ;  Reese  v.  Mut.  Ben.  Life 
Ins.  Co.,  26  Barb.  556  ;  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  R.  179. 


SPECIAL   PROVISIONS   OF   THE    CONTRACT.  419 

the  defendant,  its  undertaking  being  to  pay  the  amount  speci- 
fied upon  the  death  of  the  insured.  It  is  no  answer  to  say 
that  the  plaintiff  had  only  paid  for  the  risk  incurred  from  year 
to  year.  The  annual  premium  paid  during  the  first  years  of 
a  life  policy  is  in  excess  of  tlie  actual  risk,,  and  this  excess  is 
so  much  paid  in  advance  for  the  greater  risk  during  the  later 
years  in  case  of  a  prolonged  life.  The  insurers  would  be 
greatly  the  gainers  by  avoiding  all  life  policies  on  young  lives 
after  the  payment  of  the  annual  premiums  for  ten  or  fifteen 
years,  terminating  the  risk  before  the  greater  hazard  of  loss  — 
the  result  of  advanced  age  —  has  been  incurred.  The  contract 
was  a  continuing  one  in  the  sense  that  it  was  to  be  performed 
in  the  future,  but  it  was  not  a  contract  of  continuance  in  its 
performance.  The  act  to  be  performed  by  the  defendant  was 
a  single  act,  the  payment  of  a  specified  sum  upon  the  happen- 
ing of  a  certain  event,  and  in  this  respect  was  like  a  covenant 
or  promise  to  pay  a  sum  of  money  at  a  day  certain,  or  upon 
any  condition  lawful  in  itself.  There  is  no  pretence  that  a 
contract  of  the  latter  kind  would  be  dissolved  by  war.  The 
contract  would  remain,  the  remedy  would  be  suspended. 
The  act  to  be  performed  by  the  plaintiff  was  a  single  act  to  be 
performed  at  -stated  periods,  and  was  not  like  the  contract  of 
partnersiiip,  and  some  other  contracts  which  are  continuous  in 
their  performance. 

"  In  the  case  of  a  marine  insurance,  or  a  contract  of 
affreightment,  a  war  might  act  as  a  dissolution,  and  put  an 
end  to  them.  The  first  is  upon  enemies'  property,  and  an 
insurance  is  in  support  of  their  commerce,  and  entirely  incon- 
sistent with  the  allegiance  due  to  the  government  of  the 
underwriter.  As  to  such  a  contract,  the  authorities  say  tlie 
insurance  terminates  absolutely  and  at  once  by  the  very  act  of 
war,  and  the  parties  are  in  the  same  condition  as  if  no  con- 
tract was  made ;  the  one  loses  the  premium,  and  the  other 
his  security  against  loss.  But  the  rule  will  hardly  apply  to  a 
life  policy  when  large  sums  have  been  paid  for  premiums. 

"  There  is  nothing  in  the  policy  of  the  law,  or  the  interest 
of  the  public,  calling  for  an  enforcement  of  the  law  of  confis- 
cation incident  to  a  state  of  war,  after  the  war  has,  and  the 


420  insurance:  fire,  life,  accident,  etc. 

people  of  the  two  belligerent  nations  have,  again  become  one, 
solely  for  the  benefit  of  one  of  two  contracting  parties,  by  the 
forfeiture  of  the  rights  of  the  other.  This  would  be  simply  a 
confiscation  of  property  after  war  had  ceased,  at  the  instance 
and  for  the  benefit  of  individuals. 

"  By  the  payment  of  the  annual  premium  in  April,  1861, 
the  life  was  insured  until  April,  1862 ;  the  engagement  of 
the  defendant  was  then  lawful,  and  was  to  the  effect  that  the 
company  would  pay  the  plaintiff  five  thousand  dollars  upon  the 
death  of  her  husband  within  the  year.  A  promissory  note  in 
that  form,  made  upon  a  good  consideration,  would  be  obliga- 
tory, and  if  the  death  occurs  within  the  year,  although  after 
war  had  intervened,  the  right  of  action  would  be  suspended 
during  the  war,  but  revived  with  the  return  of  peace. 

"  Tliere  is  no  reason  apparent  why  the  promise  to  pay  money 
upon  the  termination  of  a  specified  life  should  necessarily  be 
terminated  by  the  happening  of  war  between  the  States  of 
which  the  parties  are  respectively  subjects,  as  unlawful  and 
inconsistent  with  the  state  of  war,  merely  because  it  is  called 
an  insurance  upon  life.  The  policy  in  this  instance  protects 
the  insurers  and  makes  void  the  policy  if  the  insured  enter 
any  military  or  naval  service,  or  dies  in  the  known  violation 
of  the  laws  of  the  United  States,  so  that  the  risk  was  not 
increased  by  the  state  of  war,  nor  the  ability  of  the  enemy  to 
fill  up  the  ranks  of  the  army  and  navy  affected  by  the  insur- 
ance upon  the  life  of  its  citizens. 

"  Those  insured  would  rather  be  deterred  from  taking  up  arms 
against  the  United  States,  lest  their  policies  should  be  avoided. 

"  Had  the  insured  died  at  any  time  before  April,  1862, 1 
think  there  can  be  no  doubt  that  the  contract  would  have  been 
regarded  as  one  of  those  which,  lawful  when  made  and  exe- 
cuted by  the  one  party,  are  not  dissolved,  but  merely  suspended 
by  the  existence  of  war,  and  that  a  recovery  could  have  been 
had  at  the  close  of  the  war. 

"  The  contracts  between  individuals    of  belligerent  States 
are  necessarily  suspended  during  the  war  of  the  States,  but 
are  not  annulled.^     Mr.  Wheaton  says  commercial  partuer- 
1  Phill.  Int.  Law,  666 ;  per  Nelson,  J.,  Prize  Cases,  supra. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  421 

ships  are  dissolved  bj  the  mere  force  and  act  of  war,  though 
as  to  other  contracts  it  only  suspends  the  remedy. ^  This 
is  upon  the  principle  that  the  States,  and  not  the  individual, 
wage  war.  The  question  then  remains  whether  the  non-pay- 
ment of  the  annual  premiums  during  the  years  1862,  1863, 
and  1864  involved  a  forfeiture  of  the  policy  and  of  all  pay- 
ments before  then  made.  That  such  would  be  the  effect  of 
the  non-performance  of  the  condition,  unless  waived  or  legally 
excused,  is  not  disputed,  and  unless  the  performance  was 
waived  by  the  defendant,  or  is  legally  excused  by  the  exist- 
ence of  the  war,  the  plaintiff  must  fail  in  her  action  and  sub- 
mit to  the  loss  resulting  from  the  forfeiture.  It  must  be  borne 
in  mind  that  the  war  was  the  act  of  the  States,  and  that  indi- 
vidual citizens  are  not  identified  with  their  government  so  as 
to  expose  them  to  the  rule  of  law,  that  he  who  by  his  own 
conduct  prevents  the  fulfilment  of  a  contract,  or  renders  its 
performance  impossible,  shall  not  take  advantage  of  a  non- 
performance on  the  other  side,  or  excuse  the  non-performance 
on  his  part.2  The  condition  of  affairs  which  made  the  pay- 
ment of  the  premiums  by  the  plaintiff  during  the  years  named 
unlawful,  and  therefore  impossible,  was  not  created  by  the  act 
or  default  of  the  plaintiff,  but  resulted  from  the  acts  of  the 
governments  of  which  the  respective  parties  were  subjects. 
There  is  a  manifest  distinction  between  mere  impediments 
and  difficulties  in  the  way  of  the  performance  of  a  condition, 
and  an  impossibility  created  by  law  or  the  act  of  the  govern- 
ment. Tills  is  clearly  recognized  in  Woods  v.  Edwards  ^  and 
People  V.  Bartlett.*  An  individual  by  his  covenant  may  under- 
take, as  against  his  own  acts  and  the  acts  of  strangers,  but  not 
against  the  acts  of  God  or  of  his  government,  or  of  the  ol)ligee.^ 
In  Wolfe  V.  Homer,^  the  performance  of  the  undertaking  be- 
came impossible  by  the  act  of  God  in  the  death  of  the  party, 
and  performance  was  held  excused  upon  the  ground  that  tlie 

1  Wheat.  Int.  Law  (8th  ed.),  403,  §  317. 

2  Odlin  V.  Ins.  Co.  of  Tennsylvania,  2  Wash.  C.  C.  R.  312 ;  Francis  v.  The 
Ocean  Ins.  Co.,  6  Cow.  404;  s.  c.  in  error,  2  W.  R,  64. 

8  19  I.  R.  205.  *  3  Hill,  570. 

5  See  per  Nelson,  C.  J.,  People  v.  Bartlett,  supra. 

6  20  N.  Y.  197. 


422  insurance:   fire,  life,  accident,  etc. 

parties  must  be  deemed  to  have  made  this  an  exception  by 
implication.  So,  too,  a  party  is  excused  from  the  performance 
of  his  covenant  when  the  performance  is  made  unlawful  by 
act  of  Parliament.  If  made  absolutely  unlawAil,  it  operates 
to  repeal  the  covenant ;  if  only  temporarily  unlawful,  it  sus- 
pends the  operation.^  Lord  Alvanley,  C.  J.,  in  Touteng  v. 
Hubbard,^  says  :  '  But  when  the  policy  of  the  State  intervenes 
and  prevents  the  performance  of  the  contract,  the  party  will 
be  excused.'  That  which  will  avoid  a  covenant  will  nullify  a 
condition,  and  vice  versa?  The  policy  of  the  law  is  to  miti- 
gate the  severity  of  wars,  and  relieve  citizens,  so  far  as  con- 
sistent with  the  interest  of  the  government,  from  the  hardships 
incident  to  it,  and,  a  fortiori,  the  stringeiit  and  severe  rule 
invoked  by  the  defendant,  should  not  be  applied  in  a  doubtful 
case  so  as  to  produce  extreme  hardship,  when,  by  adopting  a 
milder  and  more  equitable  rule,  each  of  the  contracting  par- 
ties will  secure  equal  and  exact  justice,  and  all  their  legal  and 
equitable  rights.  The  operation  of  the  statute  of  limitations 
is  held  to  be  suspended  during  the  war  by  reason  of  the  ina- 
bility to  enforce  the  claim,  and  this  is  in  harmony  with  the 
benign  tendency  of  the  age,  the  result  of  advanced  civiliza- 
tion.^ Judge  Clifford  says,  '  Neither  laches  nor  fraud  can  be 
imputed  in  such  a  case.'  At  the  time  of  making  the  contract 
in  this  case,  the  plaintiff  had  tlie  legal  right  and  ability  to 
make  the  annual  payments,  but  the  effect  of  the  war  was  to 
make  the  attempt  unlawful,  without  any  fault  on  her  part. 
The  operation  of  a  condition  as  express  and  absolute  as  in  this 
case,  was  held  suspended  during  the  war  in  Semmes  v.  Hart- 
ford Insurance  Company.'^  The  condition  there,  as  here,  was 
by  the  act  and  agreement  of  the  party,  and  yet,  its  perform- 
ance being  impossible,  it  was  held  to  be  inoperative,  and  the 
time  for  bringing  the  action  extended,  notwithstanding  the 
agreement  of  the  parties,  by  the  mere  act  and  effect  of  the  war. 
It  was  held  that  the  disability  to  sue  imposed  on  the  plaintifi 

1  Brewster  v.  Kitchin,  1  Ld.  Raym.  317. 

2  3  B.  &  P.  291. 

3  Piatt  on  Gov.  5G0  ;  Dougherty  v.  Neal,  1  Saund.  R.  214,  n.  (2). 

4  Hanger  v.  Abbott,  6  Wall.  532.  5  13  Wall.  158. 


SPECIAL    PROVISIONS    OF    THE    CONTRACT.  423 

by  the  war  relieved  him  from  the  consequences  of  fuiling  to 
make  the  annual  payments  by  the  day.  She  was  guilty  of  no 
laches,  and  why  subject  her  to  a  forfeiture  ?  No  injustice  is 
done  tiie  defendant  in  this  case  by  permitting  the  plaintiff  to 
make  now  the  payments  which  she  could  not  lawfully  make 
between  1861  and  1865. 

"  The  interest  will  compensate  for  the  noh-paymcnt  at  the 
time,  and  the  defendant  in  legal  contemplation  will  .be  pre- 
cisely in  the  situation  it  would  have  been  had  the  money  been 
paid  on  the  law-day.^ 

"  The  reasonings  of  the  prevailing  opinions  in  these  cases 
abundantly  sustain  the  judgments.  Tiie  case  comes  before  us 
on  demurrer  to  the  complaint,  and  if  there  are  any  equities,  or 
any  facts  or  circumstances  which  would  deprive  the  plaintiff 
of  the  riglits  to  whicii  the  case  made  by  the  complaint  entitled 
her,  the  defendant  may  set  them  up  by  answer. 

'•  It  was  also  claimed  that  the  defendant,  being  a  mutual 
company,  of  which  all  holders  of  policies  were  members,  it 
was  a  partnership  which  was  dissolved  by  the  war.  Trading 
and  commercial  partnerships,  and  perhaps  all  partnerships, 
are  dissolved  by  war  between  the  States  of  the  several  part- 
ners. But  whatever  analogies  there  may  be  between  mutual 
companies  and  ordinary  partnerships,  and  the  relation  of  the 
members  of  the  two  organizations,  an  incorporated  conqjany, 
although  organized  upon  the  mutual  principle,  is  in  no  proper 
or  legal  sense  a  partnership.  The  defendant  is  a  body  politic 
and  corporate,  capable  of  contracting,  and  of  suing  and  being 
sued,  and  the  relation  between  the  plaintiff  and  the  corpora- 
tion is  that  of  insured  and  insurer,  and  the  rights  and  duties 
of  the  contracting  parties  are  to  be  governed  and  determined 
by  the  terms  of  the  policy  by  which  the  insurance  is  effected, 
as  in  other  cases.  Other  and  incidental  rights  are  secured  to 
tiie  plaintiff,  as  a  member  of  the  company  and  one  of  the  cor- 
porators, but  this  does   not  make   the  members   partners  as 

1  JNIaiiliattan  Life  Ins.  Co.  v.  Warwick,  20  Grattan,  614  ;  and  New  York  Life 
Ins.  Co.  V.  Clopton,  7  Bush  (Ky.),  R.  179 ;  Hamilton  Ex'r  v.  The  Mut.  Life  Ins. 
Co.  of  New  York,  recently  decided  in  the  Circuit  Court  of  the  United  States, 
in  the  Southern  District  of  New  York,  are  precisely  in  point,  and,  if  followed, 
decisive  of  this  case. 


424  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

between  themselves,  or  affect  tlie  express  contract  of  the  corpo- 
ration. If  it  was  a  partnership,  as  claimed,  and  dissolved  liy 
the  war,  the  plaintiff  has  not  forfeited  her  share  in  the  assets 
of  the  copartnership,  but  is  entitled  to  an  accounting  as  of  the 
day  of  the  dissolution,  and  to  her  due  proportion  of  the  prop- 
erty and  assets.  This  would  lead  to  a  result  not  desired  by 
the  defendant." 

§  351.  And  as  the  right,  under  such  circumstance,  to  keep 
alive  the  policy  by  the  payment  of  overdue  premiums  remains 
in  the  insured,  so  tlie  insurers  may  demand  and  compel  pay- 
ment of  the  same.^ 

§  352,  Payment  of  Premium  —  Excuse  —  Intervening  Death.  — 
The  payment  of  the  premium  on  or  before  the  day  specified  in 
a  policy  from  year  to  year  is  a  condition  precedent,  and  its 
non-payment  from  year  to  year  as  it  becomes  due  works  a  for- 
feiture of  the  policy ;  and  the  fact  that  the  insured  is  stricken 
with  paralysis  on  his  way  to  the  office  to  pay  his  annual  pre- 
mium does  not  excuse  the  non-payment  or  save  the  policy. 
This  was  not  the  intervention  of  an  act  of  God  in  such  sense  as 
to  be  the  foundation  of  an  excuse.  Tlie  payment  of  the  premium 
is  an  act  which  can  be  performed  by  others  than  tlie  insured, 
and  does  not  depend  upon  the  continued  capacity  of  the  in- 
sured. In  point  of  fact,  a  man  may  be  mentally  and  morally, 
and  even  physically  incapable  for  years  of  existence,  yet  the  pre- 
miums may  be  paid  by  his  friends  or  relatives,  or  those  inter- 
ested in  his  case.  And  so  they  often  are.  The  act  required 
is  not  necessarily  a  personal  act,  but  may  be  performed  as  well 
by  others ;  and  the  failure  therefore  of  the  insured  to  perform 
it  personally  does  not  show  that  the  act  could  not  have  been 
performed.'-^  The  insurers  are  not  liable  unless  the  death  occur 
within  the  time  covered  by  the  policy.^ 

§  353.  Days  of  Grace  —  Payment  of  Premium  after  Death  of 
the  Insured.  —  And  upon  the  point  suggested  by  Hunt,  J.,*  that 
such  a  payment  can  only  inure  to  keep  the  policy  alive  when  tlie 

1  Lynchburgh  Hose  Fire  Ins.  Co.  v.  Knox,  Sup.  Ct.  City  of  Baltimore,  ante, 
§41. 

2  Howell  V.  Knickerbocker  Life  Ins.  Co.,  44  N.  Y.  (Com.  of  App.)  277. 

3  Lockyer  v.  Offley,  1  T.  R.  200.  4  Ante,  §  346. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  425 

subject  of  insurance  is  alive  at  the  time  of  payment,  the  case 
of  Pritchard  v.  Merchants'  and  Tradesmen's  Mutual  Life  Assur- 
ance Society  ^  has  an  important  bearing.  In  that  case  there 
was  a  condition  that  the  policy  should  be  void  "  if  the  premiums 
were  not  paid  within  thirty  days  after  they  should  become  due, 
but  that  the  policy  might  be  revived  within  three  calendar 
months,  on  satisfactory  proof  of  the  health  of  the  party  on 
whose  life  the  insurance  was  made."  The  insured  died  before 
the  expiration  of  the  thirty  days,  and  the  premium  was  for- 
warded and  received  the  day  alter  the  expiration  of  the  thirty 
days,  both  parties  being  ignorant  of  the  fact  of  the  death.  Said 
Gray,  for  the  insured,  arguendo :  "  The  receipt  of  the  premium 
after  the  expiration  of  the  thirty  days  does  not  operate  the 
creation  of  a  new  policy,  but  is  a  mere  waiver  of  a  forfeiture, 
and  an  adoption  of  the  payment  as  if  made  in  due  time.  The 
distinction,  therefore,  of  '  lost  or  not  lost,'  has  no  bearing  on  this 
case."  [Willes,  J. :  "You  say  that  the  payment  on  November 
15  had  retrospective  effect.  Is  not  that  contradictory  to  the 
terms  of  the  receipt,  which  is  stated  to  be  for  a  '  renewal '  of 
the  policy,  pointing  to  the  future  ? "  ]  "  It  is  the  ordinary 
form  of  receipt  in  use  ;  the  same  that  would  have  been  given 
if  the  payment  had  taken  place  within  the  thirty  days,  and  in 
the  lifetime  of  the  party."  [Crowder,  J. :  "  Would  an  original 
policy  have  been  good,  the  party  being  dead  at  the  time  the 
assurance  was  effected  ?  Would  not  that  be  within  the  case  of 
Coutourier  v.  Hastie  ?  ^  Was  not  this  a  receipt  of  money  in 
ignorance  of  facts,  which,  if  known,  would  have  prevented  the 
parties  from  accepting  the  payment  ?  "  ]  "  This  is  not  like 
the  case  of  an  action  to  recover  back  money  which  has  been 
paid  under  a  mistake  of  fact.  If  a  man  enters  into  a  con- 
tract under  a  mistake,  that  mistake  will  not  absolve  him  from 
the  performance  of  his  contract.  Here  the  payment  was  to 
cover  the  risk  from  October  13,  1855,  to  October  13,  1856." 
[Crowder,  J. :  "  But  the  man  was  dead  when  the  transaction 
took  place."  ]  The  counsel  for  the  plaintiff  was  stopped  by 
the  court.     Williams,  J.,  in  giving  his  opinion,  said :  — 

"  Taking  the  policy  without  the  conditions,  it  is  clear  that 
1  3  C.  B.  N.  8.  622.  2  5  House  of  Lords  Cases,  673. 


426  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  plaintiff  would  have  no  claim  whatever  against  the  company 
thereon  after  tlie  13th  of  October,  1854,  unless  he  duly  paid 
the  premium   for  each  ensuing  year  on  or  before  that  day. 
Then  comes  a  condition  (the  second)  which  provides  that  the 
policy  shall  become  void  if  the  (yearly)  premiums  be  not  paid 
within  thirty  days  after  they  become  due  respectively.     Stop- 
ping there,  it  might  be  a  question,  and  it  is  one  which  persons 
insured  would  be  wise  not  to  raise,  whether  this  does  not  con- 
template a  payment  by  the  assured  himself,  or  whether,  as  has 
been  contended  on  the  part  of  the  plaintiff,  the  effect  of  this 
condition  is  to  absolutely  extend  the  period  for  the  payment  of 
the  premium,  so  that,  if  the  assured  should  die  within  the 
thirty  days,  the  company  are  still  bound  to  accept  the  money ; 
such  payment  to  all  intents  and  purposes  inuring  as  a  payment 
within  the  time  limited  by  the  policy,  so  as  to  entitle  the  rep- 
resentatives of  the  assured  to  recover  upon  the  policy,  even 
though  the  assured  should  be  dead  at  the  time  tlie  premium 
was  paid.     The  inclination  of  my  opinion,  if  it  be  necessary  to 
express  one,  and  perhaps  it  is,  for  it  lias  an  important  bearing 
on  the  case,  is,  that  the  thirty  days  are  given  only  with  refer- 
ence to  insurance  for  future  years,  and  that,  notwithstanding 
the  life  has  become  less  valuable,  the  company  are  bound  to 
go  on  insuring  future  year-s,  provided  the  future  premiums  are 
paid  within  thirty  days  after  the  expiration  of  each  period  of 
insurance.     However  that  may  be,  the  payment  here  was  not 
made  within  the  thirty  days.    But  then  comes  this  further  con- 
dition:  '  But  this  policy  may  be  revived  within  three  calendar 
months,  on  satisfactory  proof  of  the  health  of  the  party  on  whose 
life  the  assurance  is  made,  and  the  payment  of  a  fine  of  2s.  (icZ. 
per  cent  upon  the  sum  assured,'  &c.     I  am  at  a  loss  to  see 
how  that  provision  aids  the  plaintiff's  case.     It  assumes  that 
the  subject  upon  which  the  insurance  is  to  attach  is  a  living 
person,  otherwise  the  stipulation  for  satisfactory  proof  of  health 
would  be  idle  and  absurd.     The  very  foundation  of  a  life  pol- 
icy is,  that  it  is  a  contract  for  the  payment  of  a  certain  sum 
on  the  future  death  of  a  person  in  being,  in  consideration  of 
the  present  payment  of  a  premium.     The  renewals,  like  the 
original  policy,  clearly  are  only  for  the  future  assurance  of  a 


I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  427 

living  person.  Then  it  is  said,  that,  by  accepting  the  premium 
after  the  expiration  of  the  thirty  days,  the  directors  must  be 
taken  to  have  waived  the  giving  of  proof  of  tlie  health  of  tlie 
party  on  whose  life  the  assurance  was  made,  and  that  the 
payment  inured  as  a  payment  made  in  due  time,  and  that 
the  policy  was  thereby  revived.  Taking  that  literally,  it  is, 
that  the  directors  waived  the  production  of  proof  of  the  state 
of  healtli  of  a  man  who  was  supposed  to  be  alive,  not  the  fact 
of  his  being  alive.  They  cannot  be  assumed  to  have  waived  the 
condition  that  the  person  whose  life  was  insured  should  really 
be  a  living  person  at  the  time  the  renewal  or  revival  of  the  pol- 
icy took  place.  Then  it  is  said  that  the  payment  and  accept- 
ance of  the  premium  created  a  new  contract.  But  in  truth  it 
is  no  -new  contract  at  all  ;  it  was  intended  as  a  payment  under 
the  original  contract.  The  result  is,  that  the  policy  was  not 
renewed,  and  our  judgment  must  be  for  the  defendants." 

Byles,  J. :  "I  also  think  that  the  defendants  are  entitled  to 
judgment.  An  important  question  is  glanced  at  here,  namely, 
as  to  the  effect  of  a  payment  of  the  premium  on  a  life  policy 
aftqr  the  expiration  of  the  period  covered  by  the  policy,  and 
within  the  number  of  days  usually  allowed  by  the  conditions 
for  making  the  payment,  or,  as  they  have  been  called,  the  days 
of  grace.  I  am  not  aware  of  any  authority  upon  that  subject, 
except  what  fell  from  the  court  in  the  recent  case  of  Simpson 
V.  Tlie  Accidental  Death  Company.^  It  is  unnecessary  on  the 
present  occasion  to  pronounce  any  opinion  upon  that  question. 
It  may  be  observed  that,  whatever  might  have  been  the  construc- 
tion of  the  policy  if  it  had  been  utterly  silent  in  this  respect, 
here  it  is  in  terms  a  contract  or  undertaking  against  the  hap- 
pening of  a  future  event.  '  Dead  or  alive '  —  which  would  be 
equivalent  to  '  lost  or  not  lost,'  in  a  marine  policy  —  seems  to 
be  excluded  by  the  terms  of  the  policy  and  the  third  condition. 
But  the  objection  that  the  payment  did  not  take  place  within 
the  thirty  days,  clearly  appears  to  me  to  be  fatal  to  the  plain- 
tiff's claim.  The  payment  and  receipt  were  ultra  the  condi- 
tion and  under  a  mistake.  The  effect  would  be  that  the  plain- 
tiff might 'maintain  an  action  to  recoverback  the  premium  so 

1  2  C.  B.  N.  s.  257. 


428  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

paid,  on  the  ground  of  its  having  been  paid  and  received  under 
a  mistake  of  facts." 

§  354.  Days  of  Grace  —  Payment  of  Premium  after  Death.  — 
The  case  of  Simpson  v.  Accidental  Death  Insurance  Company, 
referred  to  in  the  last  section,  was  this.  The  insured  took  out 
a  policy  against  death  by  accident,  the  premium  iipon  which 
was  payable  on  the  twenty-isecond  day  of  January,  aniuially. 
One  of  the  conditions  provided  that  the  premium  should  be 
paid  "  within  twenty-one  days  from  the  day  on  which  the 
same  should  accrue  or  become  due,"  and  that,  "  provided 
the  same  should  be  from  time  to  time  paid  within  such  space 
of  twenty-one  days,  the  policy  should  not  be  void,  notwith- 
standing the  happening  before  the  expiration  of  such  space  of 
twenty-one  days  of  the  event,  upon  the  happening  whereof  the 
amount  secured  by  the  policy  should,  according  to  the  terms 
hereof,  become  payable."  Another  condition  provided  that  "  if 
the  premium  should  be  unpaid  for  twenty-one  days  next  after 
it  should  become  due,  the  policy  should  be  absolutely  void." 
And  it  was  also  provided  in  another  condition  that  "  in  every 
case  where  a  new  premium  should  become  payable,  the  direc- 
tors should  be  at  liberty  to  terminate  the  risk  by  refusing  to 
accept  the  premium."  The  insured  was  killed  by  accident  on 
the  1st  of  February,  the  premium  due  on  the  22d  of  January 
preceding  not  having  been  paid  nor  tendered,  nor  was  it  after- 
wards until  after  the  expiration  of  the  twenty-one  days.  Upon 
these  facts  it  was  held  that  the  premium  was  to  be  paid  by  the 
insured  and  not  by  his  executor,  and  that  if  the  latter  had  ten- 
dered it  within  the  twenty-one  days,  it  would,  if  not  accepted, 
have  been  of  no  avail ;  that  the  non-payment  within  the  time 
limited  rendered  the  policy  void ;  and  that  under  the  terms  of 
the  last  condition  neither  the  executor  nor  the  assured,  had  he 
been  living,  would  have  had  an  absolute  right  to  keep  the  pol- 
icy alive  by  the  payment  or  tender  of  the  premium  within  the 
twenty-one  days,  as  the  insurers  had  received  the  option  to 
continue  or  to  refuse  to  continue  at  their  discretion. 

§  355.  Days  of  Grace  —  Payment  of  Premium  after  Death  — 
Prospectus.  —  And  to  the  same  effect  is  Mutual  Benefit  Life 
Insurance  Company  v.  Ruse,^  where  the  policy  was  to  be  void 

1  8  Ga.  534. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  429 

if  the  annual  premiums  were  not  paid  on  or  before  a  specified 
day  of  eacli  year.  But  the  company  issued  a  prospectus,  not 
referred  to  in  the  policy,  stating  among  other  things  that  any 
one  neglecting  to  pay  his  premium  for  thirty  days  after  the 
same  became  due,  forfeited  his  insurance.  The  premium  was 
not  paid  on  the  day  specified,  but  was  tendered  before  the 
expiration  of  thirty  days,  though  not  till  after  the  death  of  the 
insured,  and  refused.  And  the  question  was  wiiether  the  pro- 
spectus was  admissible  in  evidence  to  control  the  provisions  of 
the  policy  and  to  extend  the  time  of  payment  of  the  premium 
for  thirty  days.  And  the  court  held  the  prospectus  inadmis- 
sible, and  also  if  it  were  admissible,  that  it  could  not  have  the 
effect  of  reviving  a  policy  where  the  insured  had  died  before 
the  payment  of  the  premium  within  the  thirty  days.  "  If," 
said  the  court,  "  a  tender  of  the  premium  had  been  made  in 
this  case  after  the  day  of  payment  named  in  the  policy,  and 
before  the  expiration  of  thirty  days,  the  insured  hei7ig  in  life,  I 
should  incline  to  tlie  opinion  that  they  would  have  been  bound 
by  it ;  but  if  made  within  the  thirty  days,  the  insured  being 
dead,  and  the  fact  of  his  death  known  to  the  parties,  there 
would  be  in  that  event  no  contract,  no  consideration  for  the 
insurance,  no  mutuality.  It  would  be  an  act  of  mere  futility, 
out  of  which  no  liability  could  spring.  .  .  .  There  can  be  no 
valid  contract  for  the  insurance  of  the  life  of  a  dead  man." 
And  upon  the  same  facts  the  Court  of  Appeals  of  New  York^ 
came  to  the  same  conclusion,  reversing  the  decision  in  the  same 
case  in  the  court  below.^ 

§356.  Non-payment  of  Premium  —  Excuse  —  Prospectus. — 
Afterwards,  however,  upon  a  motion  for  a  rehearing,  and  upon 
the  citation  of  three  English  cases,^  the  court  observed  that  the 

1  Ruse  V.  Mut.  Ben.  Life  Ins.  Co.,  23  N.  Y.  516. 

2  26  Barb.  (N.  Y.)  656.  There  seems  to  be  some  confusion  about  the  facts. 
In  the  report  of  the  case  in  the  Supreme  Court,  it  is  stated  by  the  judge  who 
gave  the  opinion  tliat  the  tender  of  the  premium  was  before  the  death,  —  a  fact 
which  if  true  would  doubtless  justify  that  decision.  But  the  opinion  in  the  Court 
of  Appeals,  as  well  as  the  same  case  in  Georgia,  show  that  the  tender  was  not 
till  after  the  death  of  the  insured.  In  neither  case,  however,  do  the  court  seem 
to  lay  much  stress  on  the  fact  of  the  time  of  payment. 

3  Wood  V.  Dwarris,  11  Exch.  493  ;  Wheelton  v.  Hardisty,  92  E.  C.  L.  231  ; 
Collett  V.  Morrison,  9  Hare,  173. 


430  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

cases  referred  to  did  certainly  hold  that  the  prospectus  might 
equitably  be-  regarded  as  forming  a  part  of  and  controlling  the 
terms  of  the  contract,  and  that  it  was  not  improbable  that  an 
examination  of  these  cases  would  have  led  to  a  ditferent  con- 
clusion than  the  one  arrived  at  upon  that  point ;  but  as  the  judg- 
ment was  right  upon  another  ground,  it  would  not  disturb  it.^ 
The  first  two  of  the  English  cases  referred  to  held  that  a  pro- 
spectus issued  by  the  company,  contemporaneously  with  the  pol- 
icy, stating  that  these  policies  are  indisputable  except  upon  the 
ground  of  fraud,  estop  the  companies  from  setting  up  the  de- 
fence of  a  misrepresentation,  unless  it  be  alleged  that  it  was 
fraudulent  as  well  as  false.  The  last  case  ^  merely  holds  that 
equity  will  reform  a  policy  not  made  out  according  to  the  agree- 
ment of  the  parties.  But  a  still  later  English  case  than  any 
of  the  three  before  cited  ^  holds  tiiat  a  party  interested  may 
avail  iiimself  of  the  statements  contained  in  such  a  prospectus 
to  relieve  himself  from  tlie  obligations  of  a  contract  which  he 
has  entered  into,  and  to  which  tlie  prospectus  refers.  In 
Salvin  v.  James,**  it  seems  to  have  been  taken  for  granted  that 
such  a  prospectus  was  to  be  deemed  a  part  of  the  contract. 
In  the  opinion  of  Lord  Campbell,^  a  statement  in  the  prospectus 
of  a  company  that  all  policies  will  be  indisputable  except  for 
fraud,  waives  all  forfeitures  except  for  personal  fraud  on  the 
part  of  the  insured.  The  fraud  of  third  parties  does  not  avoid 
such  a  policy,  and  it  is  as  if  the  statement  were  broadly  that 
all  policies  were  indisputable  ;  since  the  law  would  interpose  to 
protect  the  insurers  against  the  personal  fraud  of  the  insured. 
§  357.  Payment  of  Premium  —  Days  of  Grace  —  Cy  pres  Per- 
formance. —  In  an  early  case,  when  policies  of  insurance  were 
usually  under  seal,  an  attempt  was  made  to  introduce  the  doc- 
trine of  c//  pre-i  into  the  interpretation  of  these  contracts,  in 
analogy  to  the  rule  as  to  the  interpretation  of  conditions 
respecting  real  estate,  claiming  that  such  conditions  need  not 
be  strictly  performed  according  to  the  letter,  but  it  is  enough 
if  they  be  performed  as  near  as  may  be  and  according  to  the 

1  24  N.  Y.  633.  2  CoUett  v.  Morrison,  the  earliest  in  date. 

3  Central  Railway  Co.  v.  Kisch,  2  H.  L.  Cas.  99. 

*  6  East.  571.  ^  Wheelton  v.  Hardisty,  8  E.  &  B.  282. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  431 

intent.     The  case  was  one  where  a  party  for  the  benefit  of  liis 
wife,  in  consideration  of  quarterly  payments  to  be  made  by  him 
during  his  life,  stipulated  for  the  payment  of  an  annuity  to  his 
wife  from  and  after  his  decease  during  her  life.     The  insurers 
covenanted  to  pay  such  annuity  on  condition  that  the  assured 
should  pay,  in  addition  to  the  quarterly  premium,  the  propor- 
tion of  contributions  which  the  members  of  the  society  should, 
during  his  life,  be  called  on  to  make ;  and  by  the  rules  of  the 
society,  if  any  member  should  neglect  to  pay  the  quarterly  pre- 
miums for  fifteen  days  after  they  respectively  become  due,  the 
policy  should  be  void,  unless  the  member^  continuing  in  as  good 
health  as  tvhen  the  policy  expired,  should  pay  up  the  arrears 
within   six   months.     The  member  died,  leaving  a  quarterly 
payment  due  and  unpaid  at  the  time  of  his  death,  and  his  exec- 
utor tendered  the  amount  due  within  fifteen  days  after  it  became 
due.     But  the  court,  after  referring  to  the  authorities  in  favor 
of  such  a  construction  of  conditions  annexed  to  real  estate, 
and  to  the  argument  for  the  plaintiff  that  the  payment  of  the 
premium  in  these  cases  was  analogous  to  a  condition  to  create 
an  estate,  declared  that  the  aiuilogy  did  not  hold  good,  and  that 
the  rules  applicable  to  conditions  with  respect  to  real  estate 
did  not  apply,  and  that  this  being  a  contract  of  insurance  must 
be  construed  according  to  the  intent  of  the  parties  expressed 
in  the  deed  or  policy.     The  executor's  tender  of  the  amount 
due  within  fifteen  days  after  it  became  due,  the  insured  not 
being  then  a  member  continuing  in  as  good  health  as  when  the 
policy  expired,  did  not  revive  the  policy.^     And  in  Tarleton  v, 
Stainforth,^  in  a  case  of  fire  insurance  where  the  premium  was 
tendered  within  the  fifteen  days'  grace  allowed,  but  not  till  after 
the  loss,  it  was  upon  the  same  principle  held  that  the  tender 
would  not  revive  the  policy.     In  this  case  the  insurance  was 
from  hajf-year  to  half-year,  "  as  long  as  the  insurers  sliould 
agree  to  accept  the  same  "  within  fifteen  days  after  the  expira- 
tion of  the  former  half-year ;  biit  there  was  to  be  no  insurance 
till  the  premium  was  actually  paid.^     In  McDonnell  v.  Carr,^ 

1  Want  V.  Blunt,  12  East,  183. 

2  5  T.  R.  6'J5 ;  affirmed  in  the  Exch.  1  B.  &  P.  470. 
<*  See  also  Salvin  v.  James,  6  East,  571. 

♦  Hayes  &  Jones  (Irish),  256. 


432  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

however,  where  the  policy  was  renewable  from  year  to  year,  at 
the  discretion  of  the  insurers,  but  provided  that  "  no  policy 
will  be  considered  valid  for  more  than  fifteen  days  after  tlie 
expiration  of  the  period  limited  therein,"  unless  the  premium 
be  paid,  it  was  held  that  the  insurers  were  liable  for  a  loss 
before  payment  of  the  premium  within  fifteen  days,  as  the  con- 
tract was  in  effect  an  insurance  for  a  year  and  fifteen  days. 

§  358.  Non-payment  of  Premium  —  Excuse  —  Insolvency  of 
Insurers.  —  The  non-payment  of  a  premium  falling  due  after 
an  order  issued,  upon  the  petition  of  the  insurers,  to  wind  up 
the  atfairs  of  the  insurance  company,  does  not  work  a  forfeiture 
of  the  rights  of  the  insured  against  the  company.  This  is  prac- 
tically a  determination  of  the  contract  by  them,  and  not  by 
the  policy  holder.  He  therefore  need  take  no  further  steps  to 
keep  his  policy  alive,  but  may  prove  his  claim  for  damages,  as 
of  the  day  when  the  order  to  wind  up  took  effect.^  And  the 
measure  of  damages  in  such  case  is  the  same  which  an  insur- 
ance company  charging  the  same  rate  of  premium  will  require 
to  continue  the  policy.^ 

§  359.  Premium  —  Payment  —  Evidence.  —  The  recital  in  the 
policy  of  the  receipt  of  the  premium  is  prima  facie  evidence  of 
the  payment,  but  only  prima  facie.  Like  all  other  receipts,  it 
is  open  to  explanation.^  In  Norton  v.  Phoenix  Life  Insurance 
Company,^  it  appeared  that  the  local  agent  of  a  life  insurance 
company  took  out  a  policy  on  his  own  life  for  the  benefit  of  his 
wife.  He  was  supplied  by  his  principal  with  renewal  receipts, 
all  of  which  by  their  terms  were  to  be  valid  only  upon  their 
being  countersigned  by  the  agent.  He  took  a  receipt  for  the 
premium  paid  by  him  one  year,  but  did  not  countersign  it. 
It  was  not  disputed  that  the  premium  was  paid  for  that  year. 

1  Re  Albert  Life  Ins.  Co.,  22  Law  Times,  n.  s.  (James,  V.  C.)  92 ;  s.  c.  Law 
Rep.  9  Eq.  703. 

2  Ibid.  ;  Law  Times,  n.  s.  697  ;  Law  Rep.  9  Eq.  706. 

3  Pitt  V.  Berkshire  Life  Ins.  Co.,  100  Mass.  500  ;  Sheldon  v.  Atlantic  Fire  and 
Mar.  Ins.  Co.,  26  N.  Y.  117  ;  Baker  v.  Union  Life  Ins.  Co.,  43  N.  Y.  283,  over- 
ruling s.  0.  6  Abb.  Pr.  (n.  8.)  144  ;  New  England  Mut.  Life  Ins.  Co.  v.  Has- 
brook,  32  Ind.  447.  Contra,  in  Illinois,  Provident  Life  Ins.  Co.  v.  Fennell,  40 
III.  398 ;  and  in  Louisiana,  unless  the  insurers  can  show  fraud  or  duress. 
Michael  v.  Nashville  Ins.  Co.,  10  La.  An.  737. 

4  36  Conn.  503. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  433 

But  for  the  next  year  only  a  renewal  receipt,  not  countersigned 
by  him,  was  found  among  his  papers  after  death,  and  payment 
of  the  loss  was  resisted  on  the  ground  that  the  premium  for 
the  last  year  was  not  paid.  But  an  equally  divided  court  held 
that  there  was  no  error  in  the  instruction  to  tlie  jury  that 
the  last-named  receipt  was  prima  facie  evidence  of  the  pay- 
ment of  the  premium.  And  in  Myers  v.  Keystone  Mutual  Life 
Insurance  Company,^  the  court  were  inclined  to  the  same  opin- 
ion. But  in  Massachusetts,  in  a  case  ^  where  the  policy  pro- 
vided tliat  it  should  not  be  in  force  till  countersigned  by  the 
agent,  and  as,  in  the  Connecticut  cases,  the  policy  was  upon 
the  life  of  such  agent,  and  was  found  after  his  death  amongst 
his  papers,  but  not  countersigned,  the  court  held  that  the  policy 
never  was  in  force. 

§  360.  Payment  of  Premium  —  Waiver.  —  But  the  prepayment 
of  a  premium  may  be  waived,  as  by  an  assurance  that  the  pay- 
ment of  the  money  on  delivery  of  the  policy  "  makes  no  differ- 
ence." ^  And  if  the  agent  be  authorized  to  receive  the  premium, 
an  agreement  between  the  applicant  and  the  agent  that  the  lat- 
ter will  be  responsible  to  the  company  for  the  amount,  and  hold 
the  applicant  as  his  personal  debtor  therefor,  is  a  waiver  of  the 
stipulation  in  the  policy  that  it  shall  not  be  binding  till  the  pre- 
mium is  received  by  the  company  or  its  accredited  agent.'*  The 
same  is  true  if  the  language  of  the  policy  is  that  the  premium 
shall  be  paid  before  the  policy  shall  become  valid. °  And  if  the 
policy  requires  actual  payment,  and  the  assured  offers  to  draw 
his  check  for  the  amount  of  the  premium  upon  the  bank  where 
the  agent  also  keeps  his  account,  the  cashier  telling  him  at  the 
time  the  arrangement  for  insurance  was  made  that  he  could 
have  the  money,  but  the  agent  said,  "  Let  the  money  lie  and  I 
will  draw  for  it  when  I  want  it,"  and  did  actually  draw  it,  but 
not  till  after  the  loss,  this  is  also  a  waiver  of  prepayment.^ 

1  27  Penn.  St.  268. 

2  Badger  v.  American  Pop.  Life  Ins.  Co.,  103  Mass.  244. 

3  Bragdon  v.  Appleton  Mat.  Ins.  Co.,  42  Me.  259 ;  Bodine  v.  Exch.  Fire  Ins. 
Co.,  N.  Y.  Com.  of  App.,  2  Ins.  L.  J.  23. 

4  Sheldon  V.  Conn.  Mut.  Life  Ins.  Co.,  2-5  Conn.  207. 

5  Bouton  V.  American  Mut.  Life  Ins.  Co.,  25  Conn.  542. 

6  New  York  Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.)  469  ; 
Hallock  V.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268. 

28 


434  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

And  in  fact  the  delivery  of  the  policy,  without  exacting  the  pay- 
ment, raises  the  presumption  that  a  credit  is  intended,  and  is  a 
waiver  of  the  condition  of  prepayment.^  And  the  waiver  may 
be  inferred  from  a  variety  of  circumstances  ;  in  fact,  from  any 
circumstances  from  which  the  jury  may  fairly  infer  that  the 
insurers  did  not  intend  to  insist  upon  the  prepayment  of 
the  premium  as  a  condition  precedent.^  And  so  of  the  non- 
payment of  an  annual  premium  due  on  a  specified  day. 

§  361.  Practice  of  Company  to  accept  Premium  -within  thirty- 
Days  after  due.  —  Forfeitures  are  so  odious  in  law  that  they  will 
be  enforced  only  where  there  is  the  clearest  evidence  that  such 
was  the  intention  of  the  parties.  If  the  practice  of  the  com- 
pany and  its  course  of  dealings  with  the  insured,  and  others 
known  to  the  insured,  have  been  such  as  to  induce  a  belief 
that  so  much  of  the  contract  as  provides  for  a  forfeiture  in 
a  certain  event  will  not  be  insisted  on,  the  company  will  not 
be  allowed  to  set  up  such  forfeiture,  as  against  one  in  whom 
their  conduct  has  induced  such  belief.  Accordingly,  a  custom 
amongst  insurance  companies  to  receive  premiums,  if  tendered 
at  any  time  within  thirty  days  of  the  time  they  fall  due,  pro- 
vided the  insured  is  in  usual  health,  and  that  this  is  the  custom 
among  companies  issuing  policies  stipulating  that  non-payment 
of  premiums  at  the  day  specified  shall  work  a  forfeiture,  has 
been  held  to  be  admissible  against  a  company  having  a  simi- 
lar provision  for  forfeiture,  which  is  shown  to  have  repeatedly 
received,  within  thirty  days  after  due,  of  the  assured,  against 
whom  it  insists  upon  the  forfeiture,  premiums,  which  by  the 
terms  of  the  policy  were  payable  on  a  certain  day  on  penalty 
of  forfeiture.^  And  a  part  payment  accepted  is  a  waiver  of  a 
forfeiture  for  non-payment  at  maturity.*     But  a  mere  demand, 

1  Wood  V.  Pouglikeepsie  Ins.  Co.,  32  N.  Y.  G19  ;  Bouton  v.  American  Mut. 
Life  Ins.  Co.,  25  Conn.  542;  Boehen  v.  Williamsburg  Ins.  Co.,  35  N.  Y.  131; 
Miller  v.  Brooklyn  Life  Ins.  Co.,  12  Wall.  (U.  S.)  288;  Sheldon  v.  Atlantic 
Fire  and  Mar.  Ins.  Co.,  26  N.  Y.  4G0. 

2  Heaton  v.  Manhattan  Fire  Ins.  Co.,  7  R.  I.  502 ;  Goit  v.  Nat.  Prot.  Ins.  Co., 
25  Barb.  (N.  Y.)  189. 

3  Helme  v.  Philadelphia  Life  Ins.  Co.,  61  Penn.  St.  107 ;  Tliompson  i^.  St. 
Louia  Ins.  Co.,  Sup.  Ct.  Mo.,  2  Ins.  L.  J.  422;  Buckbee  v.  U.  S.  Ins.  &  Tr.  Co., 
18  Barb.  541. 

*  Hodsdon  r.  Guardian  Life  Ins.  Co.,  9)  Mass.  144. 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  435 

or  even  suit  brouglit,  for  the  premium,  not  yielded  to,  is  no 
waiver.^ 

§  362.  Premium  —  Acceptance  of  part  Payment  —  Waiver.  — 
And  generally  the  acceptance  of  a  premium  after  full  knowl- 
edge of  the  violation  of  the  condition  of  a  policy,  respecting 
the  payment  of  the  premium,  or  otherwise,  is  a  waiver  of  any 
forfeiture  thereby.  Thus,  where  a  policy  inhibits  the  insured 
from  passing  without  the  limits  of  the  United  States,  but  has 
indorsed  thereon  a  permit  to  go  to  California  by  a  certain 
route,  and  the  insured  goes  by  a  different  route,  and  the  insur- 
ers, after  the  arrival  of  the  insured  in  California,  and  with  full 
knowledge  of  the  fact  of  deviation,  accept  one  or  more  annual 
premiums  (whether  there  is  or  is  not  a  forfeiture  by  reason 
of  the  deviation  is  a  question  which  was  not  decided),  it  is  not 
open  to  the  insurers  to  take  the  objection,  for  the  acceptance 
of  a  subsequently  accruing  premium  with  knowledge  is  a 
waiver  of  the  forfeiture,  if  any  there  be.  And  parol  evidence 
is  admissible  to  show  such  knowledge,  and  thus  establish  the 
waiver.2  And  such  acceptance  has  been  held  to  be  a  waiver  of 
forfeiture  by  reason  of  concealment  in  the  application.^ 

§  3(33.  Premium  —  Part  Payment  and  Acceptance  —  Waiver. — 
In  Thompson  v.  St.  Louis  Mutual  Life  Insurance  Company,* 
an  attempt  seems  to  have  been  made  to  avoid  the  effect  which 
courts  are  inclined  to  give  to  the  acceptance  of  postpaid  pre- 
miums, by  a  statement  at  the  foot  of  the  policy  that  "  if  a 
premium  is  received  by  the  company  after  the  day  named  in 
the  policy  for  its  payment,  it  is  considered  by  the  company  and 
by  the  assured  as  an  act  of  grace  or  courtesy,  and  forms  no 
precedent  as  regards  future  payments."  But  tiie  court  held, 
nevertheless,  a  known  practice  of  receiving  payments  of  pre- 
miums after  they  were  due  to  be  a  practical  construction  of 
the  force  and  effect  of  the  provision  for  prompt  payment,  and 
a  waiver  of  a  forfeiture  by  reason  of  a  failure  strictly  to  con- 
form thereto.     "  In  contracts  of  insurance,  as  in  other  con- 

1  Edge  V.  Duke,  18  L.  J.  Ch.  183. 

2  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  23  Conn.  244  ;  Wing  v.  Harvey,  5  De 
G.,  M.  &  G.  265. 

*  Armstrong  v.  Turquand,  9  Ir.  C.  L.  32. 

*  Sup.  Ct.  of  Mo.,  2  Ins.  L.  J.  422. 


436  insurance:  fire,  life,  accident,  etc. 

tracts,"  said  tlie  court,  by  Adams»  J.,  "  the  parties  may  make 
the  time  of  the  performance  of  any  stipulation  of  the  very 
essence  of  the  contract.  In  such  case  the  contract  becomes 
utterly  at  an  end  or  void  as  soon  as  the  default  is  made.  The 
stipulation  in  regard  to  the  time  of  the  payment  of  the  pre- 
miums in  this  policy  I  do  not  regard  as  of  the  essence  of  the 
contract.  It  was  not  so  regarded  by  the  parties  themselves. 
By  their  acts  and  conduct  the  parties  have  construed  this  con- 
tract for  themselves.  It  was  not  regarded  by  either  party  as 
of  the  essence  of  the  policy  that  the  premiums  would  be  paid 
on  the  very  day  that  they  became  due.  The  memorandum  at 
the  foot  of  the  policy  did  not  give  any  additional  force  to  the 
stipulation  in  the  policy,  if  we  may  consider  it  as  having  any 
effect  whatever.  If  it  had  any  force,  it  seemed  to  be  looked 
upon  by  the  parties  as  a  license  or  invitation  to  the  plaintiff  to 
disregard  the  exact  day  of  payment,  and  to  rely  upon  the  cour- 
tesy of  the  company.  The  plaintiff  pursued  this  course,  and, 
instead  of  making  his  payments  on  the  very  day  when  due,  let 
them  lie  over  for  a  short  time,  and  still  they  were  received 
without  objection.  The  plaintifl"  was  thus  induced  to  believe 
that  a  failure  of  strict  payment  on  the  day  would  not  prejudice 
his  riffhts." 


SPECIAL   PROVISIONS    OF   THE   CONTRACT.  437 


CHAPTER    XVI. 

OF   THE   SPECIAL   PROVISIONS   OF   THE  CONTRACT    (^continued). 

§  364.  Other  Insurance.  —  It  is  important  for  the  insurers  to 
know  the  amount  of  insurance  upon  the  particular  subject- 
matter,  in  order  that  they  may  duly  estimate  the  risk,  since 
the  greater  the  amount  of  tlie  insurance  the  greater  the  tempta- 
tion to  destroy  the  property  or  life  or  other  subject-matter,  or 
in  some  other  way  to  bring  about  the  event  upon  which  the  loss 
is  made  payable.  And  it  is  obvious  that  the  interest  to  know  the 
fact  of  other  insurance  is  the  same,  whether  it  exist  at  the  time 
of  entering  into  the  new  contract,  or  be  procured  afterwards. 
Such  insurance  is  sometimes  called  over  insurance  or  double 
insurance.  It  is  also  of  importance  to  the  insurer  to  know  of 
other  insurance,  that  he  may  determine  his  proportionate  lia- 
bility in  case  of  being  called  upon  to  contribute  towards  the 
indemnity  for  a  loss.  Insurers  may  be  presumed  to  rely  more 
upon  the  interest  than  upon  the  character  of  the  insured  for 
protection  against  the  carelessness  and  fraud  of  the  owners, 
and  therefore  take  care  that  the  property  be  so  far  uncovered  by 
insurance  that  it  is  for  the  interest  of  the  owner  that  it  should 
not  be  destroyed.  To  enable  them  to  do  this,  it  is  necessary 
that  they  should  be  informed  whether  the  property  on  which 
insurance  is  applied  for  is  elsewhere  insured,  and  to  what 
extent ;  and  that  this  interest  of  the  insured  may  not  after- 
wards be  decreased  by  his  procurement  of  further  insurance, 
the  stipulation  that  the  policy  shall  be  void  if  other  insur- 
ance exist  at  the  time  and  be  not  disclosed,  or  subsequent 
insurance  be  obtained  and  be  not  notified  to  the  company,  is 
resorted  to.^  The  general  doctrine  that  a  previous  or  subse- 
quent insurance  without  notice,  under  a  policy  requiring  notice 
of  such  insurance,  upon  pain  of  forfeiture,  discharges  the  insur- 

1  Hutchinson  v.  West.  Ins.  Co.,  21  Mo.  97. 


438  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

ers  from  any  obligation  to  pay  for  a  loss  happening  under  such 
circumstances,  is  well  settled  and  universally  recognized.  That 
this  should  be  the  effect  of  the  concealment  or  failure  to  give 
notice  as  the  case  may  be,  is  not  only  a  part  of  the  contract, 
and  obligatory  upon  that  ground,  but  the  forfeiture  is  just  and 
reasonable.  The  insurer  can  never  know  the  full  extent  of  his 
risk  unless  he  knows  every  thing  that  bears  upon  the  risk.  He 
has  a  right  to  take  into  account  the  fact  that  the  insured  has 
a  greater  or  less  unprotected  interest,  whereby  his  vigilance 
may  be  quickened  in  the  preservation  of  the  property.  But 
in  order  to  estimate  this  interest  truly,  he  must  know  to  what 
extent  insurance  is  actually  had.  It  may  be  that  the  insurance 
is  to  such  an  amount  as  to  stimulate  to  neglect  in  the  preserva- 
tion, or  even  to  the  fraudulent  destruction,  of  the  property 
insured.  This  prudent  insurers  should  endeavor  to  guard 
against ;  and  deception  or  failure  to  notify  when  required  on 
this  point,  operates  as  a  fra,ud  upon  them.  They  have  con- 
tracted for  that  protection,  and  have  a  right  to  its  advantages ; 
and  the  insured  cannot  be  permitted  to  show  that  there  was 
no  fraud  in  fact,  that  the  property  was  vigilantly  guarded,  that 
the  insured  could  not  have  prevented  the  loss,  or  even  that  the 
insurer —  as  in  case  the  loss  is  less  than  the  amount  insured 
by  all  the  policies — is  benefited  by  the  over  insurance,  since 
he  will  only  be  required  to  pay,  by  way  of  contribution,  his 
proportion  of  the  loss  instead  of  the  whole  amount  stipulated. 
This  is  one  of  those  provisions  not  regarded  with  the  jealousy 
due  to  those  ordinarily  working  forfeitures,  but  will  be  upheld 
without  reluctance  as  a  fair  and  just  provision  for  a  reasonable 
and  proper  purpose.^ 

§  365.  What  amounts  to  other,  over,  or  double  Insurance. — 
It  is  additional  and  valid  insurance,  prior  or  subsequent,  upon 
the  same  subject,  risk,  and  interest,  effected  by  the  same  in- 
sured or  for  his  benefit,  and  with  his  knowledge  or  consent. 
Owners  of  different  interests  in  the  same  property  may  respec- 
tively insure  their  interest  without  risk  of  violating  a  provision 
against  other  insurance.^     The  additional  insurance  must  be 

1  Obermeyer  i;.  Globe  Mut.  Ins.  Co.,  43  Mo.  573. 

2  ^tna  Ins.  Co.  v.  Tyler,  12  Wend.  (N.  Y.)  507 ;  8.  c.  affirmed,  16  Wend. 


I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  439 

valid.  Siibsequent  insurance,  void  by  its  own  terms,  because 
it  is  additional  and  without  notice  of  prior  insurance,  is  no 
insurance  witliin  the  meaning  of  the  usual  condition  against 
other  insurance.^  So  if  a  prior  insurance  is  void,  by  reason 
of  a  violation  of  some  other  condition,  its  non-disclosure  will 
not  avoid  a  policy  requiring  notice  of  prior  insurance.^  This 
doctrine  is,  however,  denied  by  some  most  respectable  author- 
ities.2  In  Georgia,  by  the  Code,  a  second  insurance,  without 
consent  of  the  first  insurers,  avoids  the  policy.  Under  this 
statute  it  is  held  that  a  second  insurance,  though  invalid,  avoids 
the  policj.^  A  distinction  has,  however,  been  taken  between 
a  policy  apparently  securing  over  insurance  which  was  void  at 
the  time  of  the  loss,  in  which  case  recovery  may  be  had,  and 
a  like  policy  which  is  voidable  only  by  reason  of  some  breach 
of  condition  which  works  a  forfeiture,  but  which  forfeiture  has 
been  waived,  in  wliich  case  the  over  insurance  is  at  the  time 
of  the  loss  an  existing  fact,  and  a  recovery  cannot  be  had.^ 
In  Atlantic  Insurance  Company  v.  Goodall,^  it  was  held  that, 
where  a  policy  was  upon  condition  to  be  void  if  other  insurance 
should  not  be  indorsed  on  it,  the  existence  of  prior  insurance 
did  not  make  it  absolutely  void,  but  voidable  only,  and  that  it 

387  ;  Sloat  v.  Royal  Ins.  Co.,  49  Penn.  St.  14 ;  Forbush  v.  West  Mass.  Ins.  Co., 
4  Gray  (Mass.),  337;  Nichols  v.  Fayette  Mut.  Ins.  Co.,  1  Allen  (Mass.),  63; 
Harris  v.  Ohio  Ins.  Co.,  5  Ohio,  467  ;  Franklin  Ins.  Co.  v.  Drake,  2  B.  Mon. 
(Ky.)47;  Park  v.  Phoenix  Ins.  Co.,  19  Upper  Canada  (Q.  B.),  110;  Root  v. 
Cincinnati  Ins.  Co.,  1  Disney  (Ohio),  138.    But  see  post,  §  366. 

1  Stacey  v.  Franklin  Ins.  Co.,  2  W.  &  S.  (Penn.)  506  ;  Jackson  v.  Mass.  Mut. 
Fire  Ins.  Co.,  23  Pick.  (Mass.)  418 ;  Gale  v.  Belknap  County  Ins.  Co.,  41  N.  H. 
170;  Schenck  v.  Mercer  County  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  447  ;  Philbrook 
V.  New  England  Mut.  Ins.  Co.,  37  Me.  137  ;  Hardy  v.  Union  Mut.  Fire  Ins.  Co., 
4  Allen  (Mass.),  217  ;  Rising  Sun  Ins.  Co.  v.  Slaughter,  20  Ind.  520. 

-  Jackson  v.  Farmers'  Mut.  Ins.  Co.,  5  Gray  (Mass.),  52;  Clark  v.  New  Eng- 
land Mut.  Ins..Co.,  6  Cush.  (Mass.)  342. 

3  Bigler  v.  New  York  Central  Ins.  Co.,  22  N.  Y.  402  ;  Campbell  v,  ^tna  Ins. 
Co.,  Sup.  Ct.  Nova  Scotia,  1860,  cited  in  Clarke's  Digest  of  Fire  Ins.  Cases ; 
Ramsay,  &c.  v.  Mut.  Fire  Ins.  Co.,  11  Upper  Canada,  516. 

■•  Lackey  v.  Georgia  Home  Ins.  Co.,  42  Ga.  457. 

5  Mitchell  V.  Lycoming  Mut.  Ins.  Co.,  51  Penn.  402 ;  Carpenter  v.  Prov.  Ins. 
Co.,  16  Pet.  (U.  S.)  495;  Jacobs  v.  Equitable  Ins.  Co.,  19  Upper  Canada,  250, 
257. 

6  35  N.  H.  328. 


440  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

might  be  confirmed  and  made  valid  by  acts  of  the  company 
showing  a  waiver  of  the  defect.  And  in  New  England  Fire 
Insurance  Com})any  v.  Schettler,^  it  was  held  that  if  the  other 
insurance  had  ceased  by  its  own  limitation,  before  the  loss 
claimed  under  a  subsequent  policy,  the  right  of  recovery  on 
the  last  policy  would  not  be  affected.  In  David  v.  Hartford 
Insurance  Company ,2  it  was  held  that  a  policy  securing  subse- 
quent insurance,  upon  its  face  valid,  and  the  amount  of  which 
upon  a  loss  happening  had  been  paid,  constituted  additional 
insurance  within  the  meaning  of  the  condition,  although  it 
might  have  been  avoided  by  extrinsic  evidence  of  a  forfeiture 
for  condition  broken.  And  in  Mitchell  v.  Lycoming  Mutual 
Insurance  Company,^  the  rule  was  stated  thus :  When  policies, 
alleged  to  be  for  other  insurance,  are  void  at  the  time  of  the 
loss,  they  are  no  obstacle  to  a  recovery  on  the  policy  on  which 
the  claim  is  made ;  but  if  voidable  only  for  some  breach  of 
condition  for  which  the  insurers  might  have  avoided  them,  but 
which  nevertheless  they  have  waived,  double  insurance  exists. 
•  This  subject  was  also  much  discussed  in  a  very  recent  case  in 
lowa,^  where  there  were  two  policies  upon  the  same  property, 
each  having  a  condition  against  both  prior  and  subsequent 
insurance.  The  opinion  of  the  majority  of  the  court '^  upon 
this  point  was  given  by  Beck,  J.,  who,  after  stating  the  conclu- 
sions of  the  court  upon  two  preliminary  questions,  —  first,  that 
the  policy  of  the  Hartford  company  was  prior  in  date,  and  sec- 
ond, that  the  receipt  given  by  the  agent  of  the  Phoenix  company 
amounted  to  a  contract  of  insurance  upon  the  usual  terms  and 
conditions  as  expressed  in  the  policy  which  the  agent  was 
empowered  to  issue,  —  thus  proceeds  :  — 

"  The  policy,  which  is  the  foundation  of  this  action,  con- 
tains a  condition  in  the  following  words  :  '  If  the  assured  shall 

1  38  111.  16G.  2  13  Iowa,  G9. 

8  51  Penn.  St.  408. 

*  Hubbard  v.  Hartford  Fire  Ins.  Co.,  33  Iowa,  325,  very  similar  to  Gale  v. 
Belknap  Ins.  Co.,  nhi  supra. 

5  Miller,  J.,  dissented,  on  the  ground  that  when  the  policy  was  taken  from 
the  Phoenix  office,  there  was  no  insurance  in  the  other,  and  therefore  it  became 
void  when  the  policy  was  received  from  the  Hartford  office  the  next  day,  there 
being  then  for  the  first  time  double  insurance. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  441 

have,  or  shall  hereafter  make,  any  other  insurance  upon  the 
property  hereby  insured,  without  the  consent  of  the  company 
written  hereon,  in  such  case  this  policy  shall  be  void.'  As  a 
defence  the  defendant  alleges  that,  in  violation  of  the  condi- 
tion, the  insured,  Howe,  did  cause  the  property  to  be  insured 
by  a  policy  issued  by  the  Phoenix  Insurance  Company,  Jan. 
21,  1867.     The  policy  sued  on  is  dated  Jan.  10,  1807. 

"  It  appears  from  the  evidence  that  Howe  applied  to  the 
agent  of  the  defendant  on  the  eighteenth  day  of  December, 
1867,  for  insurance,  and  it  was  arranged  that  the  policy  should 
be  issued  and  sent  to  him  on  that  day.  Howe  not  having 
received  the  policy  from  defendant's  agent,  nor  heard  from  him 
in  regard  to  the  business,  on  the  21st  of  the  same  month 
applied  to  the  agent  of  the  Phoinix  Insurance  Company  for  a 
policy  covering  his  property.  Tiie  terms  of  the  insurance  were 
agreed  upon,  but  the  agent  having  no  blank  policies,  executed 
a  receipt  to  Howe  for  the  amount  of  the  premium  then  paid 
him,  specifying  the  property  to  be  insured,  which  was  the  same 
covered  by  the  policy  issued  by  defendant,  and  stipulating  that 
a  policy  would  be  issued  as  soon  as  the  blanks  should  be 
received.  The  agent  of  the  Phoenix  company  was  not  informed 
by  Howe  of  his  application  to  defendant's  agent  for  insurance, 
and  it  appears  that  Howe,  at  the  time,  did  not  expect  to  receive 
the  policy  of  the  defendant,  as  it  had  not  been  sent  to  him, 
according  to  the  prior  arrangement.  On  the  22d,  the  day  sub- 
sequent to  the  transaction  with  the  agent  of  the  Phoenix  com- 
pany, the  agent  of  the  defendant  delivered  to  Howe  the  policy 
sued  on,  dated  on  the  18th,  and  received  payment  of  the  pre- 
mium. Howe  did  not  inform  him  of  his  transaction  with  the 
Phoenix  company.  The  property  covered  by  these  policies  was 
destroyed  by  fire  on  the  26th.  Under  these  facts  defendant 
insists  that  the  transaction  with  the  Phoenix  Insurance  Com- 
pany is  in  violation  of  the  conditions  of  the  policy  against 
other  insurance  quoted  above,  and  that  defendant's  contract  is 
avoided  thereby.  The  question  here  presented  is  of  very  great 
difficulty,  and  its  solution,  either  upon  principle  or  authority, 
is  not  entirely  free  from  doubt.  .  .  .  We  now  have  the  case  of 
two  policies,  given  at  different  dates,  covering  the  same  prop- 


442  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

ertj,  each  having  a  condition  against  other  insurance,  both 
prior  and  subsequent,  and  providing  that  a  breach  thereof 
shall  avoid  the  respective  instruments.  The  question  for  us 
to  determine  is  which,  if  either,  of  these  instruments  is  valid, 
and  vrhich  is  avoided  by  the  operation  of  a  breach  of  the  con- 
dition. 

"  It  will  be  remembered  that  a  breach  of  the  condition  does 
not  absolutely  render  void,  and  of  no  effect,  the  policy ;  it 
simply  renders  it  voidable,  —  its  binding  force  and  effect  being 
subject  to  be  defeated  at  the  option  of  the  company  issuing  the 
instruments.  If  no  objection  be  made  by  the  company  on 
account  of  the  breach  of  the  condition,  the  policy  may  be 
enforced  as  though  no  forfeiture  had  ever  happened.  The 
act  of  the  company,  whereby  it  is  shown  that  the  instrument 
is  treated  as  avoided,  must  be  shown  in  order  to  defeat  recov- 
ery thereon.  If  no  such  act  or  objection  on  the  part  of  the 
company  be  shown,  the  contract  will  be  considered  binding. 
It  is  not  necessary  here  to  state  what  will  amount  to  an  act 
avoiding  the  contract,  or  when  it  must  be  done,  further  than 
to  observe  that  it  must  appear  that  the  underwriter  relied 
upon  the  breach  of  the  condition  to  defeat  the  contract. 

"  Of  course  the  company  issuing  the  subsequent  policy  eould 
not  rely  upon  the  breach  of  the  condition,  in  order  to  avoid 
the  instrument  until  knowledge  thereof  was  acquired,  and  its 
acts  treating  the  policy  as  avoided  would  be  sufficient,  if  shown 
to  have  been  done  after  such  knowledge.  The  same  principles 
will  apply  to  the  prior  policy.  It  was  not  absolutely  void  on 
account  of  the  subsequent  insurance,  but  was  voidable  only. 
It  was  a  binding  instrument  when  executed,  and  would  so 
continue  until  some  act  done  by  defendant  intended  to  avoid 
it,  on  account  of  the  breach  of  the  condition  against  the  sub- 
sequent insurance.  But  it  could  not  be  avoided  on  account  of 
the  Phoenix  policy,  unless  that  instrument  itself  was  valid.  If 
it  so  happened  that  when  the  action  was  brought  on  defend- 
ant's policy,  or  even  at  the  trial,  it  was  made  to  appear  that 
the  Phcenix  policy  could  not  be  enforced,  was  avoided  on  ac- 
count of  a  breach  of  the  condition  therein,  it  is  obvious  that 
the  existence  of  that  instrument,  shown  to  be  in  operation, 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  443 

■would  not  constitute  a  breach  of  the  condition  in  defendant's 
policy  against  subsequent  insurance.  That  condition  is  against 
actual  insurance  to  be  subsequently  made.  The  Phoinix  policy 
created  no  insurance ;  it  was  avoided  by  the  act  of  the  com- 
pany, and  therefore  did  not  constitute  a  breach  of  defendant's 
policy.  The  general  principle  of  law  may  be  stated  as  fol- 
lows :  In  order  to  avoid  a  policy  on  account  of  a  subsequent 
insurance  against  an  express  condition  therein,  it  must  appear 
that  such  subsequent  insurance  is  valid,  and  that  the  policy 
upon  which  it  is  made  is  capable  of  being  enforced.  If  it 
cannot  be  enforced,  it  is  no  breach  of  the  prior  policy.  .  .  .  The 
doctrine  which  we  have  assumed  does  not  go  to  the  full  extent 
of  some  of  the  cases  just  cited.^  It  is  held  in  Philbrook  v. 
New  England  Mutual  Insurance  Company  that  the  prior  policy 
is  valid,  even  though  the  subsequent  policy  is  not  avoided  by 
the  underwriter  issuing  it,  but  the  loss  thereon  is  paid.  And 
in  others  of  these  cases  the  rule  is  not  expressly  based  upon 
the  fact  that  tlie  subsequent  policy  was  treated  by  the  under- 
writer issuing  it  as  avoided. 

"  Tlie  doctrine  which  we  recognize  here  is  based  upon  the 
fact  that  the  subsequent  policy  was  treated  and  considered  as 
avoided  by  the  company  issuing  it  as  soon  as  it  had  notice  of 
the  prior  insurance.  In  our  view  this  is  a  most  important 
consideration  ;  for,  if  the  underwriter  in  the  second  policy  does 
not  treat  it  as  avoided,  it  cannot  be  so  considered  by  the  in- 
sured, or  the  company  issuing  the  prior  policy.  The  condition 
against  prior  insurance  in  the  subsequent  policy  is  for  the 
benefit  of  the  insurer,  who  may,  at  his  option,  waive  it  or  insist 
upon  enforcing  its  terms.  If  he  seeks  to  enforce  the  condi- 
tion, and  treats  the  policy  as  a  void  contract,  it  is  indeed  diffi- 
cult to  see  upon  what  grounds  it  may  be  regarded  as  valid,  as 
an  insurance  that  will  defeat  the  prior  poHcy.  In  this  view, 
our  conclusion  is  not  in  conflict  with  David  v.  Hartford  Insur- 
ance Company  and  Bigler  v.  New  York  Central  Insurance 
Company.  In  the  first  of  these  cases  an  action  was  brought 
upon  a  policy  containing  a  condition  against  subsequent  insur- 

1  The  cases  of  Gale,  Schenck,  Stacey,  Philbrook,  Clark,  and  of  the  two  Jack- 
sons,  cited  supra. 


444  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

ance.  Other  insurance,  taken  after  the  date  of  the  policy,  was 
relied  on  to  defeat  it.  The  plaintiff  claimed  that  the  subse- 
quent policies,  on  account  of  certain  conditions  therein  which 
were  violated,  were  void.  It  was  held  that  these  policies  are 
not  void,  but,  on  account  of  the  breach  of  these  conditions, 
might  have  been  avoided.  As  they  were  treated  as  valid  con- 
tracts by  both  of  the  parties  thereto,  the  losses  occurring 
thereon  having  been  paid  by  the  companies  executing  the  sub- 
sequent policies,  the  breaches  of  the  conditions  were  regarded 
as  waived,  and  the  instruments  held  to  be  binding  upon  the 
respective  underwriters.  The  argument  supporting  the  conclu- 
sion reached  by  the  court  may  not  entirely  accord  with  the 
reasoning  we  have  above  adopted,  but  the  result  reached,  we 
believe,  is  not  inconsistent  with  the  views  herein  expressed. 
Bigler  v.  New  Yoi'k  Central  Insurance  Company  in  its  facts 
very  nearly  resembles  that  case,  the  underwriter  taking  the 
subsequent  risk  having  waived  the  forfeiture  and  paid  the  loss 
under  the  policy.  There  are  arguments  and  positions  taken 
in  the  opinions  in  this  case  which  are  not  consistent  with  the 
views  we  have  adopted.  They  reach  further  than  the  mere 
support  of  the  conclusion  arrived  at  upon  the  facts  involved 
in  the  case,  the  Court  of  Appeals  holding  (two  justices  dissent- 
ing) that  the  first  policy  would  be  defeated  even  though  the 
second  was  utterly  void.  This  point  was  not  in  the  case. 
While  we  may  not  be  inclined  to  dispute  the  conclusion  arrived 
at  upon  the  facts  presented,  which  we  think  not  at  all  in  con- 
flict with  our  views,  we  cannot  assent  either  to  the  reasoning 
adopted  by  the  court,  or  the  conclusions  reached  upon  facts 
not  before  it  for  adjudication. 

"  Carpenter  v.  Providence  Washington  Insurance  Company  ^ 
is  cited  in  support  of  the  rule  that  where  there  are  two  insur- 
ance policies,  both  containing  conditions  of  avoidance  on  ac- 
count of  other  prior  or  subsequent  insurance  without  notice, 
the  first  may  be  avoided  on  account  of  the  second  insurance. 
This  case,  we  have  observed,  is  often  cited  in  support  of  tiiis 
rule,  and  was  so  in  the  two  cases  just  referred  to.  If  such  a 
rule  be  found  in  the  case,  —  but  it  does  not  so  appear  to  us,  — 
1  16  Pet.  (U.  S.)  495. 


SPECIAL   PROVISIONS   OF  THE   CONTRACT.  445 

its  annunciation  was  not  called  for  by  the  facts  before  the  court 
and  made  the  basis  of  the  decision.  The  policy  upon  which 
the  suit  was  brought  is  considered  in  the  opinion  the  second 
instrument,  and  the  court  holds  that  it  was  defective  1)y  a  con- 
dition therein  against  prior  insurance,  which  in  fact  existed 
when  it  was  issued.^  The  conclusion  arrived  at,  we  think, 
is  not  in  conflict  with  the  course  of  argument  adopted  by  us, 
and  the  result  reached  in  this  case.  The  argument,  however, 
adopted  by  the  court  in  reaching  the  conclusion  is  hardly  con- 
sistent either  with  our  reasoning  or  its  results.  But  inasmuch 
as  the  facts  are  dissimilar  to  those  before  us,  and  the  point 
ruled  not  necessarily  in  conflict  with  our  decision,  the  case 
cannot  be  regarded  as  an  authority  against  the  principles  we 
herein  recognize." 

And  when  a  party  who  already  has  insurance  takes  by 
assignment  a  policy  requiring  notice  of  prior  insurance,  a  fail- 
ure to  give  notice  of  the  prior  insurance  will  avoid  the  policy.^ 
If  the  policy  provides  that  it  shall  be  void  if  any  other  insur- 
ance be  made,  reference  is  had  only  to  subsequent  insurance  ;  ^ 
and  if  two  policies  are  made  out  and  delivered  simultaneously 
by  two  companies,  co-operating  together,  the  clause  in  either 
policy  requiring  notice  of  prior  or  subsequent  insurance  can 
have  no  application.* 

§  366.  Identity  of  Interest.  —  When  it  is  said  that  the  insur- 
ance, in  order  to  come  within  the  prohibition,  must  be  the  same, 
it  is  not  meant  that  it  is  the  same  in  all  respects;  i.e.,  that 
the  description  of  the  subject-matter  of  insurance  be  the  same 
in  both.  It  is  enough  if  the  subsequent  insurance  covers  a 
part  of  the  interest  embraced  in  the  prior  insurance,  as  when 
an  undivided  half  of  a  house,  already  insured,  is  covered  by 
the  new  insurance  ;  ^  or  the  subject-matter  of  the  subsequent 
insurance  embraces  the  property  covered  by  the  prior  insur- 

1  16  Pet.  (U.  S.)  500. 

2  Leavitt  v.  Western  Mar.  and  Fire  Ins.  Co.,  7  Rob.  (La.)  351;  Walton  v. 
La.  St.  Mar.  and  Fire  Ins.  Co.,  2  ib.  563. 

3  Mussey  v.  Atlas  Mut.  Ins.  Co.,  4  Ker.  (N.  Y.)  79. 

*  AVashington  Fire  Ins.  Co.  v.  Davidson  et  al.,  30  Md.  91. 
5  Columbus  Ins.  Co.  v.  Walsh,  18  Mo.  229  ;  Liscom  v.  Boston  Mut.  Fire  Ins. 
Co.,  9  Met.  (Mass.)  205;  Mussey  v.  Atlas  Mut.  Ins.  Co.,  4  Ker.  (N.  Y.)  79. 


446  insurance:  fire,  life,  accident,  etc. 

ance,  and  other  property  besides.^  But  removing  goods  located 
in  one  store  already  insured  into  another  store,  also  having 
its  goods  insured  in  another  policy,  though  both  lots  of  goods 
belong  to  the  same  person,  is  not  a  case  of  double  insurance.^ 
The  somewhat  peculiar  case  of  Hough  et  al.,  appellants  v.  Peo- 
ple's Insurance  Company^  was  this:  The  Baltimore  Warehouse 
Company,  which  received  goods  on  storage,  and  issued  receipts 
or  certificates  therefor  to  the  depositors,  effected  an  insurance 
in  the  Associated  Firemen's  Company  for  $10,000  against  loss  by 
fire  for  one  year  "  on  merchandise  generally,  hazardous  or  extra 
hazardous,  held  by  them  or  in  trust,"  contained  in  a  particular 
warehouse  ;  they  also  took  out  a  policy  in  the  Home  Insurance 
Company,  to  the  amount  of  $20,000,  "  on  merchandise,  hazard- 
ous or  extra  hazardous,  their  own,  or  held  by  them  in  trust,  or 
in  which  they  had  an  interest  or  liability,"  contained  in  the  same 
warehouse.  The  appellants,  on  the  20th  of  June,  1870,  depos- 
ited fifteen  bales  of  cotton  in  the  same  warehouse,  and  received 
a  receipt  or  certificate  therefor  from  the  warehouse  company, 
and  on  the  same  day  procured  a  policy  of  insurance  on  the  cot- 
ton so  deposited  from  the  appellee.  On  the  27th  of  June  they 
deposited  thirteen  bales,  for  which  a  like  receipt  was  given, 
and  on  the  same  day  they  effected  an  insurance  for  the  cotton 
with  the  appellee.  Under  the  policies  issued  to  the  appellants, 
the  loss,  if  any,  was  payable  to  the  Baltimore  Warehouse  Com- 
pany. Tlie  appellants  had  other  cotton  to  a  large  amount 
stored  with  the  warehouse  company.  The  warehouse  company 
advanced  to  the  appellants  over  $48,000  upon  the  cotton  belong- 
ing to  them,  and  stored  in  the  warehouse.  In  the  policies  to 
the  appellants,  as  well  as  in  those  to  the  warehouse  company, 
it  was  stipulated  that  in  case  of  loss  the  assured  should  not 
be  entitled  to  recover  on  such  policy  any  greater  proportion  of 
the  loss  or  damage  sustained  to  the  subject  insured  than  the 
amount  thereby  insured  should  bear  to  the  wliole  amount  of 
the  several  insurances  thereon.    On  the  18th  of  July,  1870,  the 

1  Ramsay,  &c.  v.  Mut.  Fire  Ins.  Co.,  11  Upper  Canada,  516;  McMahon  v. 
Portsmouth  Fire  Ins.  Co.,  2  Fost.  (N.  H.)  15;  Walton  v.  La.  St.  Mar.  and  Fire 
Ins.  Co.,  2  Uob.  (La.)  563 ;  contra,  Sloat  v.  Royal  Ins.  Co.,  49  Penn.  St.  14. 

^  Vose  V.  Hamilton  Mut.  Ins.  Co.,  39  Barb.  (N.  Y.)  302. 

8  36  Md.  398. 


SPECIAL   PROVISIONS   OP   THE   CONTRACT.  447 

wareliouse  was  burned,  and  of  the  cotton  stored  therein  some  of 
the  bales  were  saved,  some  were  partially  destroyed,  and  others 
totally  destroyed.  In  an  action  by  the  appellants,  for  the  use  of 
the  warehouse  company,  on  the  policies  of  insurance  issued  by 
the  appellee,  upon  these  facts  it  was  held  that  the  policies  sued  on 
having  been  made  to  the  warehouse  company  inured  to  the  benefit 
of  the  company,  and  might  be  considered  as  in  favor  of  the  same 
assured,  on  the  same  interest,  in  the  same  subject,  and  against 
the  same  risks  as  the  policies  which  were  issued  directly  to  the 
warehouse  company,  and  with  the  latter  policies  constituted  a 
double  insurance  ;  and  the  companies  therefore  issuing  the  poli- 
cies were  bound  to  contribute  their  respective  portions  of  the 
loss.^  Where,  however,  one  deposits  goods  covered  by  a  floating 
policy  with  a  warehouseman,  who  subsequently  insures  by  a  pol- 
icy on  goods  "  his  own,  in  trust,  or  on  commission,"  the  latter 
is  not  a  double  insurance  within  the  prohibition .^  But  where 
a  ship  was  insured  "  for  account  of  owners,  as  interest  may 
appear,"  and  two  of  the  owners  afterwards  procured  insurance, 
this  was  held  to  be  additional  insurance.^  And  insurance  upon 
the  same  life,  applied  for  by  the  same  person,  though  payable  to 
a  different  person  from  the  payee  in  a  second  policy,  is  other 
insurance  within  the  meaning  of  a  proviso  making  a  policy 
void  if  there  be  other  insurance  undisclosed.^  The  interests 
of  mortgagor  and  mortgagee  are  distinct,  and  therefore  insur- 
ance by  a  mortgagee  of  his  interest  at  his  own  expense  is  not 
within  the  prohibitory  clause  of  a  prior  policy  iu  favor  of  the 
mortgagor.  If,  however,  such  insurance  is  at  the  expense'  of 
the  mortgagor,  and  for  his  benefit,  it  is  within  the  clause.^  The 
different  interests  of  joint  owners  are  likewise  distinct.'^ 

§  367.  Other  Insurance  —  Condition  construed  strictly.  — 
And  this  condition,  like  others  working  forfeitures,  will  be  con- 

1  Hough  et  al.  v.  People's  Ins.  Co.,  36  Md.  398. 

2  Donaldson  v.  Manchester  Ins.  Co.,  14  Ct.  of  Sess.  Cas.  (Scotch)  GOl. 
a  Mussey  v.  Atlas  Ins.  Co.,  4  Ker.  (N.  Y.)  79. 

*  Sparrow  v.  Mut.  Ben.  Life  Ins.  Co.  (U.  S.  C.  Ct.),  1st  Jud.  Dist.  (Mass.), 
Shepley,  J.,  tried  in  April,  1873,  and  not  yet  reported. 

5  Holbrook  v.  American  Ins.  Co.,  1  Curtis  (U.  S.  C.  Ct.)  103. 

6  FrankUn  Mar.  and  Fire  Ins.  Co.  v.  Drake,  2  B.  Mon.  (Ky.)  47.  And  see 
also  Burbank  v.  Rock.  Ins.  Co.,  4  Post.  (N.  H.)  550 ;  Woodbury  Savings  Bank 
V.  Charter  Oak  Ins.  Co.,  31  Conn.  518. 


448  insurance:  fire,  life,  accident,  etc. 

strued  strictly.  Thus,  under  a  policy  insuring  a  building,  and 
prohibiting  other  insurance  upon  property  "  connected  with  it," 
insurance  upon  goods  in  the  building  is  not  other  insurance, 
within  the  meaning  of  the  prohibition. ^  And  though  the  de- 
scription of  the  property  in  the  respective  policies  may  cover, 
and  apparently  does  cover,  the  same  interests,  it  is  a  matter 
of  evidence  whether  it  does  or  not.^  So  where  the  same  per- 
son had  three  several  policies  issued  by  separate  offices  on  "a 
stock  of  dry  goods  contained  in  a  four-story  brick  store,"  and 
afterwards  obtained  another  policy  from  a  different  company  on 
"  a  stock  of  merchandise  contained  in  the  chambers  of  a  four- 
story  brick  and  slated  building,"  being  the  same  building,  it 
was  claimed  by  the  last  company  that  as  the  goods  lost  were 
in  the  same  building,  they  were  liable  only  to  their  proportion- 
ate loss.  But  it  being  shown  that  when  the  first  three  policies 
were  issued  the  plaintiff  did  not  occupy  the  chambers,  and  had 
no  goods  there,  —  evidence  held  admissible  as  explanatory  of 
a  doubt  as  to  what  goods  the  several  policies  might  apply,  — 
the  defendants  were  held  to  be  liable  for  the  whole  loss  on  the 
goods  in  the  chambers.  Tliis  in  fact  was  no  additional  insur- 
ance, but  was  as  much  an  independent  risk  as  if  the  goods  had 
been  in  a  different  building.^ 

§  368.  Notice  —  What  sufficient  —  When  to  be  given.  —  Parol 
notice  is  sufficient,  unless  other  notice  be  required.^  Notice 
must  be  within  reasonable  time,  and  need  not  be  till  a  reason- 
able time  has  elapsed.  What  would  be  a  reasonable  time  is  a 
question  for  the  jury,^  if  the  facts  are  in  dispute,  otherwise  it 
is  a  question  of  law  for  the  court.*^  And  notice  given  seven 
months  after  the  destruction  of  the  property  is  not  within  rea- 
sonable time.     And  so  is  an  unexplained  delay  of  nineteen 

1  Jones  V.  Maine  Mut.  Fire  Ins.  Co.,  18  Me.  155 ;  Illinois  Mut.  Ins.  Co.  v. 
O'Neil,  13  ni.  89. 

2  Stacey  v.  Franklin  Ins.  Co.,  2  W.  &  S.  (Penn.)  506;  Clark  v.  Hamilton 
Mut.  Ins.  Co.,  9  Gray(Mass.),  148. 

8  Storer  v.  Elliot  Fire  Ins.  Co.,  45  Me.  175. 

i  McEwen  v.  Montgomery  County  Mut.  Ins.  Co.,  5  Hill  (N.  Y.),  101 ;  Schenck 
V.  Mercer  County  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  447. 

5  Jacobs  V.  Equitable  Ins.  Co.,  19  Upper  Canada,  250,  257. 

6  Kimball  v.  Howard  Fire  Ins.  Co.,  8  Gray  (Mass.),  33. 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  449 

dajs.^  Notice  erroneous  in  some  particulars  which  are  not 
necessary  unless  inquired  for,  if  the  amount  of  the  other  insur- 
ance be  correctly  given, is  sufficient.^  And  it  seems  that  notice 
should  be  given,  when  the  subsequent  insurance  is  applied  for, 
a  few  days  before  the  destruction  of  the  property  insured  in  the 
prior  policy,  but  the  policy  is  not  delivered  till  after.^ 

§  369.  Other  Insurance  —  Notice  in  "Writing  —  Indorsement 
on  Policy.  —  In  many  policies  the  notice  of  other  insurance  is 
required  to  be  in  writing  and  indorsed  on  the  policy.  And  it 
has  formerly  been  frequently  held  to  be  essential  that  these 
particulars  should  be  literally  complied  with,  and  that  verbal 
notice,  or  any  thing  short  of  the  notice  and  the  formalities  sub- 
sequent thereto  required  by  the  condition,  would  subject  the 
delinquent  to  forfeiture.  Thus  where  the  insured,  after  pro- 
curing subsequent  insurance,  gave  a  memorandum  of  it  to  the 
agent  of  the  company  which  issued  the  prior  policy,  to  be 
entered  on  the  records,  the  policy  not  being  at  hand,  the  agent 
saying  that  such  entry  would  answer  every  purpose,  and  the 
agent  afterwards  told  the  assured  that  he  had  made  the  entry, 
it  was  held  that  the  condition  was  violated.* 

§  370.  Other  Insurance  —  Notice  —  Consent  in  "Writing.  —  But 
the  courts  have  become  more  liberal  in  favor  of  the  assured  in 
their  construction  of  this  sort  of  stipulation  in  policies  of  insur- 
ance. While,  as  we  have  seen,  the  old  rule  required  the  consent 
to  be  in  writing  and  indorsed  on  the  policy,  it  is  the  decided 
tendency  of  tlie  modern  cases  to  hold  that  if  the  notice  be  duly 
given  to  the  company,  or  its  agent,  of  the  additional  insurance, 
and  no  objection  is  made,  the  company  will  be  estopped  from 
insisting  on  a  forfeiture  of  the  policy,  because  their  consent 
thereto  was  not  indorsed,  as  literally  required  by  the  stipula- 

J  Mellen  v.  Hamilton  Fire  Ins.  Co.,  17  N.  Y.  609,  affirming  s.  c.  5  Duer 
(N.  y.  Sup.  Ct.),  101. 

-  Benjamin  v.  Saratoga  Countj  Mat.  Ins.  Co.,  17  N.  Y.  415. 

8  Inland  Ins.,  &c.  Co.  v.  Stautfer,  33  Penn.  St.  397. 

*  Worcester  Bank  v.  Hartford  Fire  Ins.  Co.,  11  Cush.  (Mass.)  265.  And  see 
also  Conway  Tool  Co.  v.  Hudson  K.  Ins.  Co.,  12  Cusli.  (Mass.)  144;  Pendar  v. 
American  Mut.  Ins.  Co.,  ib.  469;  Forbes  v.  Agawara  Ins.  Co.,  9  Cush.  (Mass.) 
470 ;  Stark  County  Mut.  Ins.  Co.  v.  Hurd,  19  Ohio,  149 ;  Carpenter  v.  Prov. 
"Wash.  Ins.  Co.,  16  Pet.  (U.  S.)  495;  Hale  v.  Mechanics'  Mut.  Ins.  Co.,  6  Gray 
(Mass.),  169. 

29 


450  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

tion.^  An  office  which  issues  a  subsequent  policy  will  be  pre- 
sumed to  have  notice  of  the  prior  one.^  And  where  both  pol- 
icies are  negotiated  through  the  same  person,  who  is  agent  for 
both  companies,  his  knowledge  is  the  knowledge  of  each  com- 
pany .^  But  the  knowledge  of  the  broker  through  which  both 
insurances  are  effected,  is  not  the  knowledge  of  the  insurers.* 
§371.  Other  Insurance  —  Approval — Consent.  —  Where  the 
approval  of  other  insurance  is  required  in  writing,  a  letter  from 
the  secretary  of  the  insurers,  in  reply  to  a  notice  from  the 
insurer,  and  stating  that  he  has  received  the  notice  of  addi- 
tional insurance,  is  an  approval  in  writing  within  the  meaning 
of  the  condition.  Thus  where,  in  case  of  further  insurance, 
the  insured  is  to  give  notice  thereof  to  the  company,  and  have 
the  same  indorsed  on  the  policy,  or  otherwise  acknowledged  or 
approved  by  them  in  writing,  and  such  insurance  is  obtained, 
notice  whereof  is  immediately  given  to  the  secretary  of  the 
company,  who  acknowledges  by  letter  the  receipt  of  the  notice, 
without  more,  this  has  been  held  to  be  an  approval  in  writing. 
"  It  is  said,"  was  the  language  of  the  court,  "  this  was  no 
approval.  That  may  be  true  if  we  look  only  at  the  literal 
reading  of  the  answer  which  the  defendants  gave  to  the  notice. 
But  I  take  the  rule  to  be  that  a  writing  contains  all  that  may 
be  fairly  implied  from  it ;  and  it  is  difficult  to  read  the  answer 
without  inferring  that  the  defendants  meant  to  approve  as  well 
as  acknowledge  the  notice  of  further  insurance.  What  else 
could  the  defendants  have  intended  ?     They  say  to  the  plain- 

1  Thompson  i;.  St.  Louis  Mut.  Life  Ins.  Co.,  Sup.  Ct.  Mo.,  2  Ins.  L.  J.  422 
Hayward  v.  National  Ins.  Co.,  Sup.  Ct.  Mo.,  2  Ins.  L.  J.  503,  overruling  Huteli- 
ins  V.  Western  Ins.  Co.,  21  Mo.  97  ;  Horwitz  v.  Equitable  Mut.  Ins.  Co.,  40  Mo. 
557  ;  Franklin  v.  Atlantic  Fire  Ins.  Co.,  42  Mo.  45G  ;  Combs  v.  Ham.  Sav.  and 
Ins.  Co.,  43  Mo.  148  ;  Northup  v.  Miss.  Val.  Ins.  Co.,  47  Mo.  435  ;  Viele  v.  Ger- 
mania  Ins.  Co.,  26  Iowa,  55;  Walsh  v.  ^tna  Life  Ins.  Co.,  30  Iowa,  133;  Van 
Bories  v.  United  Life,  Fire  and  Mar.  Ins.  Co.,  8  Bush  (Ivy.),  133 ;  Peck  v.  New 
London  County  Mut.  Ins.  Co.,  22  Conn.  575 ;  Hutton  v.  Beacon  Ins.  Co.,  16 
Upper  Canada  (Q.  B.),  316  ;  National  Fire  Ins.  Co.  v.  Crane  (in  equity),  16  Md. 
260. 

-  Barnes  v.  Union  Ins.  Co.,  45  N.  H.  21 ;  Horwitz  i'.  Equitable  Ins.  Co.,  40 
Mo.  657. 

3  Van  Bories  v.  United  Life,  &c.,  Ins.  Co.,  8  Bush  (Ky.),  133. 

*  Mellen  v  Hamilton  Mut.  Fire  Ins.  Co.,  17  N.  Y.  609,  aflarming  s.  c.  5  Duer 
(N.  Y.  Superior  Ct.),  101. 


SPECIAL  PROVISIONS   OP  THE   CONTRACT.  451 

tiff,  '  We  have  received  your  notice  of  additional  insurance,' 
and  then  stop.  Tliere  was  no  disapproval,  nor  was  there  any 
suggestion  that  the  matter  was  reserved  for  further  considera- 
tion. The  plaintiff  could  not  hut  understand  from  the  answer 
that  the  notice,  or  the  further  insurance,  if  such  be  the  true 
reading  of  the  clause,  was  '  acknowledged  and  approved,'  and 
that  nothing  furtiier  remained  to  he  done."  ^  And  where  the 
consent  of  the  directors  is  required,  it  need  not  be  signihed  by 
formal  vote,  or  even  in  writing,  but  may  be  inferred  from  the 
proof  of  other  facts,  as  of  tlieir  knowledge  of  all  the  facts, 
where  two  directors  in  one  company,  being  also  directors  in 
anotiier  company,  took  the  additional  insurance.  So  if  it  be 
required  that  prior  insurance  be  indorsed  on  the  subsequent 
policy  when  it  issues,  leave  to  keep  insured  to  an  amount 
greater  than  is  stated  in  the  policy  thus  issued,  indorsed  on 
the  policy,  is  the  equivalent  of  such  indorsement,  as  it  may 
refer  to  prior  as  well  as  subsequent  insurance.^  So  is  the  fact 
that  the  prior  insurance  is  stated  in  the  policy.^  Assent  to 
subsequent  insurance  is  also  assent  to  a  renewal  of  the  same 
in  the  same  or  any  other  office.*  And  notice  of  prior  insur- 
ance in  tlie  application  for  a  subsequent  policy  is  notice  of  a 
renewal  of  the  prior  insurance.^  But  in  Massachusetts,^  in 
a  case  where  the  insurance  was  not  a  renewal  strictly,  but  an 
insurance  in  another  company,  to  take  the  place  of  an  insur- 
ance which  had  been  assented  to,  though  for  a  less  amount, 
it  was  held  that  the  assent  did  not  apply  to  the  substituted 
insurance.  But  notice  of  "changes  in  additional  insurances" 
is  sometimes  required  by  the  terms  of  the  policy.^     In  Sykes 

1  Per  Bronson,  J.,  Potter  v.  Ontario  ami  Liv.  Mut.  Ins.  Co.,  5  Hill  (N.  Y.), 
147  ;  Robertson  i-.  French,  4  East,  135. 

-  Blake  v.  Exch.  Ins.  Co.,  12  Gray  (Mass.),  148;  Pliilbrook  v.  New  England 
Mut.  Ins.  Co.,  37  Me.  137  ;  Kimball  v.  Howard  Fire  Ins.  Co.,  8  Gray  (Mass.), 
33;  Benedict  v.  Ocean  Ins.  Co.,  1  Daly  (N.  Y.  Sup.  Ct.),  8  ;  Warner  v.  Peoria 
Mar.  and  Fire  Ins.  Co.,  14  Wis.  318. 

3  Baptist  Soc.  V.  Hillsborough  Mut.  Fire  Ins.  Co.,  19  N.  H.  680  ;  Ames  r.  New 
York  Union  Ins.  Co.,  14  N.  Y.  258. 

«  Baptist  Soc.  V.  Hillsborough  Mut.  Fire  Ins.  Co.,  19  N.  H.  680. 

5  Brown  v.  Cattaraugus  County  IMut.  Fire  Ins.  Co.,  18  N.  Y.  385. 

6  Burt  V.  People's  Mut.  Ins.  Co.,  2  Gray  (Mass.)  397. 
^  Simpson  v.  Penn.  Fire  Ins.  Co.,  38  Penn.  St.  250. 


452    ,  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

V.  Perry  County  Mutual  Fire  Insurance  Company ,i  the  distinc- 
tion is  taken  between  notice  and  knowledge  of  an  alteration,  at 
least  so  far  as  an  agent  is  concerned,  that  while  knowledge  of 
the  agent  is  not  knowledge  of  the  company,  notice  to  the  agent 
would  be  notice  to  the  company.  But  knowledge  of  the  agent 
of  a  fact  existing  at  the  time  insurance  is  effected,  is  knowl- 
edge of  the  insurers.^  And  this  knowledge  runs  through  all 
renewals  of  the  same  insurance.^ 

§  372.  Other  Insurance  —  "Waiver  of  Forfeiture  for  breach  of 
Condition. —  But,  as  has  already  been  seen,'^  forfeiture  by  rea- 
son of  a  breach  of  the  condition  may  be  waived  by  any  act  of  the 
insurers  recognizing  the  validity  of  the  policy  after  knowledge 
of  a  breach  of  the  condition.  A  failure  to  give  notice  of  such 
insurance,  when  in  fact  it  is  already  known  to  the  insurers 
themselves,  as  where  they  have  issued  a  prior  but  still  outstand- 
ing policy  on  the  same  property,  will  not  avoid  the  policy,  the 
issue  of  the  subsequent  policy  with  knowledge  being  a  waiver 
of  the  condition.^  And  if  the  company  have  a  right  to  avoid 
after  notice  of  breach,  and  neglect  so  to  do  for  an  unreasonable 
time,  it  will  be  a  waiver  of  the  forfeiture.*^ 

§  373.  Overvaluation.  —  Akin  to  the  Subject  of  double  or 
over  insurance  is  the  subject  of  overvaluation,  which  in  fact 
is  more  properly  over  insurance.  Tliis  is  sometimes  prohib- 
ited in  the  policy  on  pain  of  forfeiture,  sometimes  stated  as  a 
restriction  upon  the  relative  amount  of  the  value  which  the 
insurers  will  assume  the  risk  of,  and  sometimes  not  mentioned 
at  all  in  the  policy.  The  same  reasons  exist  on  the  part  of  the 
insurers  against  overvaluation  that  we  have  already  stated  exist 
against  double  insurance.  In  both  cases  the  interest  of  the 
insured  in  the  preservation  of  the  property  is  weakened,  and 
motives  supplied  to  desire  its  destruction.  And  it  is  not  unusu- 
ally stipulated  against.     But  an  overstatement  of  the  value  of 

1  34  Penn.  St.  79. 

2  People's  Ins.  Co.  v.  Spenser,  53  Penn.  St.  353. 

3  Ibid.';  Liddell  v.  Market  Tire  Ins.  Co.,  4  Bosw.  (N.  Y.)  179. 

*  Ante,  §§  143,  365. 

6  Rowley  v.  Empire  Ins.  Co.,  36  N.  Y.  650 ;  Wash.  Ins.  Co.  v.  Davidson,  30 
Md.  91. 

*  Van  Bories  v.  United  Life,  Fire  and  Mar.  Ins.  Co.,  8  Bush  (Ky.),  135. 


I 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  453 

tlie  property  for  insurance  upon  which  application  is  made,  will 
defeat  the  policy,  whether  there  be  any  condition  or  stipulation 
in  tlie  policy  to  that  effect  or  not.  It  is  a  material  fact  in  that 
it  is  of  importance  that  the  insured  should  be  interested  in  the 
protection  of  the  property.  The  smaller  the  amount  of  the  insur- 
ance, therefore,  the  stronger  his  interest  in  the  protection.  The 
pro!)able  loss,  in  case  of  the  destruction  of  the  property  by  fire, 
is  the  incentive  to  vigilance  in  the  protection  of  the  whole,  as 
well  that  which  is  covered  by  the  policy  as  that  which  is  not ; 
for  whatever  threatens  the  interest  of  the  insurers  threatens 
also  the  interest  of  the  insured.  But  the  law  will  not  here 
interest  itself  in  trifling  discrepancies  and  insignificant  differ- 
ences, such  as  may  be  readily  accounted  for  by  that  natural 
tendency  to  overestimate  which  self  interest  always  engenders. 
The  overvaluation,  in  order  to  work  a  forfeiture  of  the  right 
of  recovery,  must  be  a  clear  one  ;  so  clear  that  it  is  obvious  at 
a  glance,  and  cannot  be  accounted  for  upon  the  principle  that 
every  man  is  naturally  prone  to  put  a  favorable  estimate  upon 
his  own.  It  is  not  necessary  that  the  overvaluation  be  inten- 
tional and  fraudulent  to  have  the  effect  of  vitiating  the  policy. 
The  effect  is  the  same  if  it  be  done  by  mistake,  and  overvalu- 
ation by  the  agent  is  imputable  to  tlie  principal.^  It  is  usual 
to  provide  that  fraudulent  overvaluation  shall  avoid  the  policy ; 
and,  in  point  of  fact,  whether  the  provision  be  against  fraud- 
ulent overvaluation  or  simply  overvaluation,  it  is  of  but  little 
moment.  For  no  overvaluation  but  a  gross  and  clear  one,  and 
such  as  is  or  must  be  presumed  to  be  known  to  be  such  by  the 
insured,  and  therefore  false  and  fraudulent,  will  in  cither  case 
be  held  to  vitiate  the  policy  ;  and  such  a  one  will  avoid  the 
policy  whether  provided  against  or  not.^ 

§  374.  Overvaluation.  —  But  the  rule  as  to  overvaluation  is 

1  Carpenter  v.  American  Ins.  Co.,  1  Story  (U.  S.  C.  Ct.)  57  ;  Catron  v.  Tenn. 
Ins.  Co.,  6  Humph.  (Tenn.)  176;  Carpenter  v.  Prov.  Wash.  Ins.  Co.,  16  Pet. 
(U.  S.)495;  Shaw  V.  St.  Lawrence  County  Mut.  Ins.  Co.,  11  Upper  Canada 
(Q.  B.),  73. 

2  Hersey  v.  Merrimack  County  Mut.  Ins.  Co.,  7  Fost.  (N.  H.)  140  ;  Dickson 
V.  Equitable  Fire  Ins.  Co.,  18  Upper  Canada  (Q.  B.),  246  ;  Wilbur  v.  Bowditch 
Mut.  Ins.  Co.,  10  Cush.  (Mass.)  446;  Prot.  Ins.  Co.  v.  Hall,  15  B.  Men.  (Ky.) 
411. 


454  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

not  applicable  to  the  case  of  an  open  policy  upon  a  stock  of 
goods  which  is  constantly  varying  in  amount,  nor  where  the 
insurer  is  to  be  liable  only  for  a  proportion  of  the  loss.  Thus, 
where  a  merchant  procures  insurance  upon  his  stock  of  goods, 
and  fixes  the  valuation  neither  upon  the  reduced  stock  which 
he  happens  to  have  on  hand  at  the  end  of  the  busy  season 
when  the  insurance  is  applied  for,  nor  upon  the  unusually 
large  stock  on  hand  at  the  commencement  of  the  season,  but 
upon  a  fair  average  between  the  two,  this  is  permissible,  because 
it  is  within  the  intention  of  the  parties,  although  the  incentives 
to  vigilance,  and  the  temptation  to  destroy  on  the  part  of  the 
insured,  may  vary  with  the  varying  amount  of  the  stock.  So 
if  the  insurer  is  in  no  case  to  be  responsible  beyond  a  certain 
fixed  proportion,  as  for  instance  two-thirds  of  the  loss,  the 
insured  has  always  before  him  the  same  unvarying  proportion 
of  the  risk,  and  the  usual  objections  to  overvaluation  do  not 
obtain.^ 

§  375.  Overvaluation  —  Renewals  upon  changing  Stock.  —  It 
may  happen  that  under  repeated  renewals  of  insurance,  with- 
out any  change  in  the  application,  upon  the  same  property,  a 
depreciation  in  its  value  may  take  place,  so  that  the  representa- 
tions as  to  its  value  at  the  time  of  the  first  insurance  may  not 
be  strictly  true  at  the  date  of  the  last  insurance.  But  such  a 
variance  is  no  fraudulent  overvaluation  or  misrepresentation.^ 

§  376.  Restriction  of  Value  by  Charter  or  By-laws  or  Terms 
of  the  Policy.  —  The  charters  of  mutual  insurance  companies 
usually  restrict  the  amount  of  the  risk  which  they  are  per- 
mitted to  assume  to  a  certain  proportion  of  the  value  of  the 
property  insured.  In  such  cases  the  restriction  is  to  be  re- 
garded as  directory  merely,  and  not  prohibitory.  The  viola- 
tion of  the  charter  is  a  matter  for  the  insurers  to  settle  with 
those  who  gave  them  their  charter,  but  they  cannot  set  up  their 
own  misconduct  in  defence  against  the  claim  of  the  insured  for 
indemnity,  as  by  showing  that  in  insuring  to  the  stipulated 
amount  they  have  infringed  one  of  their  own  by-laws.^     An 

1  Lee  V.  Howard  Fire  Ins.  Co.,  11  Cush.  (Mass.)  324. 

-  Gerhausen  v.  North  Brit,  and  Mer.  Ins.  Co.,  7  Nev.  174. 

3  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Scliell,  29  Tenn.  St.  31 ;  Hoxsie 


SPECIAL   PROVISIONS   OF   THE   CONTRACT.  455 

estimate,  whether  by  the  agent  of  the  insurers  or  by  him  and 
the  insured  combined,  in  the  absence  of  all  fraud,  collusion, 
and  misrepresentation,  fixed  by  agreement,  an  estimate  upon 
which  premiums  are  paid  and  assessments  laid,  and  the  amount 
to  be  paid  by  the  company  in  case  of  loss  deter  nincd,  is  the 
best  evidence  of  the  value  of  the  premises  insured,  and  can- 
not be  treated  as  a  valuation  not  permitted  by  the  charter  or 
by-laws.^ 

V.  Prov.  Mut.  Fire  Ins.  Co.,  6  R.  I.  517  ;  Fuller  v.  Boston  Fire  Ins.  Co.,  4  Met. 
(Mass.)  206.     And  see  ante,  §§  23,  63,  65. 

1  Fuller  V.  Boston  Fire  Ins.  Co.,  4  Met.  (Mass.)  206;  Wiibur  v.  New  Eng- 
land Mut.  Fire  Ins.  Co.,  31  Me.  219. 


I 


456  insurance:  fire,  life,  accident,  etc. 


CHAPTER    XVII. 

OF   THE   ASSIGNMENT   OF  THE   POLICY. 

§  377.  Assignment  of  Policy  —  Not  permitted  by  the  Common 
Law.  —  We  have  already  considered,  in  the  chapter  on  aliena- 
tion, the  effects  of  a  transfer  of  the  property  insured.  We  are 
now  to  consider  tlie  effect  of  a  transfer  of  the  policy  of  insur- 
ance, or,  as  it  is  usually  termed,  the  assignment  of  the  policy. 
It  is  usual  to  provide  that  if  the  policy  be  assigned  without  the 
consent  of  the  insurers,  it  shall  be  void.  At  common  law  a  pol- 
icy of  insurance  against  fire  is  not  assignable  in  any  such  sense 
as  to  give  the  assignee  a  right  to  sue  in  his  own  name.  By  an 
assignment  the  assignee  acquires  merely  a  diose  in  action, 
giving  to  the  holder  at  most  an  equitable  claim,  which  he  can 
assert  and  enforce  only  in  the  name  of  the  assignor.  With  a 
very  few  exceptions,  as  in  the  case  of  bills  of  exchange,  bills 
of  lading,  and  policies  of  marine  insurance,  the  common  law 
has  steadily  denied  the  right  of  one  man  to  make  over  his 
right  of  action  against  another  to  a  third  party,  a  stranger  to 
the  contract,  as  against  public  policy,  and  tending  to  the  mul- 
tiplication of  suits.  In  the  case  of  marine  policies,  custom 
seems  to  have  established  a  rule  different  from  that  of  the  com- 
mon law,  and  to  have  made  the  policies  transferable  with  the 
subject-matter  of  insurance.  In  fact,  in  early  times,  in  marine 
insurance,  policies  were  issued  in  blank  as  to  the  assured,  and 
passed  from  hand  to  hand  without  indorsement  or  assignment, 
but  merely  by  delivery,  like  a  promissory  note  payable  to 
bearer,  along  with  the  thing  insured.  And  to  this  day,  if  there 
be  an  assignment  of  the  policy,  coupled  with  a  transfer  of  the 
subject-matter  of  insurance,  although  there  be  no  consent  of 
the  insurers  to  either  the  assignment  or  the  transfer,  the 
assignee  thereby  acquires  a  claim  against  the  insurers,  which 
he  can  enforce  in  a  suit  at  law  in  his  own  name.    This  distinc- 


ASSIGNMENT   OF   THE   POLICY.  457 

tiou  is  said  to  rest  upon  the  fact  that  there  is  less  of  mere  per- 
sonal consideration,  in  regard  to  the  risk,  in  marine  insurance 
than  in  fire,  and  that  practically,  if  not  theoretically,  the  insur- 
ance here  is  rather  of  the  thing  than  of  the  particular  owner  ; 
while  in  fire  insurance,  on  the  contrary,  it  is  rather  of  the 
owner  than  of  the  thing,  the  character  of  the  owner  as  a  man 
of  prudence,  integrity,  and  watchfulness  entering  much  more 
largely  as  an  element  into  the  estimate  of  the  risk.  Com- 
mercial convenience  also  doul)tless  has  much  to  do  with  the 
distinction.^  But  whatever  maybe  the  grounds  of  the  distinc- 
tion, it  is  certain  that  it  exists ;  and  while  marine  policies  have 
always  been  iield  assignable  without  the  consent  of  the  insur- 
ers, the  contrary  has  always  been  and  still  is  the  law  with  ref- 
erence to  fire  policies.- 

§  378.  Different  Modes  of  Assignment,  and  their  Effects.  — 
Though,  strictly  speaking,  no  assignment  of  the  policy  can  be 
made,  yet  there  are  certain  transfers  of  it  which  are  often  made, 
which  have  a  validity  recognized  by  the  courts,  and  which,  ac- 
cording as  they  are  effected  by  mere  delivery  or  in  writing,  and 
with  or  without  the  transfer  of  the  property  upon  which  they 
are  issued,  and  with  or  without  the  consent  of  the  insurers  to 
the  transfer  of  the  policy  and  the  property,  are  attended  by 
different  consequences.  In  the  case  of  Fogg  v.  Middlesex 
Mutual  Fire  Insurance  Company,  some  exceedingly  valuable 
observations  were  made  upon  the  general  subject,  as  well  as 
upon  the  different  modes  of  assignment  and  their  effect,  which 
we  give  in  the  language  of  the  court,  per  Shaw,  C.  J. :  — 

"  As  a  policy  of  insurance  is  not  a  negotiable  instrument,  it 
cannot  be  legally  transferred  so  as  to  enable  the  assignee  to 
maintain  a  suit  in  his  own  name  without  the  consent  of  the 
other  party.  But  in  general,  at  the  common  law,  where  one 
party  assigns  all  his  riglit  and  interest  in  the  contract,  and  the 
assignee  gives  notice  to  the  other  jiarty  to  the  contract,  and  he 
agrees  to  it,  this  constitutes  a  new  contract  between  one  of 

1  And  see  also  post,  §  380. 

2  ^Etna  Fire  Ins.  Co.  i-.  Taylor,  16  Wend.  (N.  Y.)  385;  Columbian  Ins.  Co. 
r.  Lawrence,  2  Pet.  (U.  S.)  2.5  ;  Lynch  r.  Dalzell,  -1  Brown,  P.  C.  431 ;  Simeral 
V.  Dubuque  Mut.  Fire  Ins.  Co.,  18  Iowa,  319. 


458  insurance:  fire,  life,  accident,  etc. 

the  original  parties  and  the  assignee  of  the  other,  the  terms 
of  which  are  regulated  and  fixed  by  those  of  the  original  con- 
tract. This  rule  applies  to  policies  as  well  as  other  contracts, 
and  it  is  often  convenient  and  desirable  to  apply  it ;  and  there 
are  two  cases  where  tliis  application  frequently  happens. 

"  The  first  is,  when  the  insured  property  is  alienated  or  sold 
by  the  assured.  After  such  sale,  if  nothing  more  is  done,  no  sur- 
render or  change  of  the  policy,  and  the  goods  should  be  burnt, 
nobody  could  recover  on  the  policy  ;  not  the  original  assured, 
for  he  has  sustained  no  loss,  the  property  was  not  liis,  and  the 
loss  of  it  was  not  his  loss ;  not  the  purchaser,  because  he  has 
no  contract  with  the  company.  And  although  in  popular  lan- 
guage the  goods  are  said  to  be  insured  against  loss  by  fire,  yet,  in 
legal  effect,  the  original  assured  obtains  a  guaranty  by  the  con- 
tract that  he  shall  sustain  no  damage  by  their  destruction  by  fire. 
But  in  case  of  such  sale  or  alienation  of  the  insured  property, 
the  original  assured  having  no  longer  any  interests  in  the  pol- 
icy, except  to  claim  a  return  of  premium,  if  he  will  assign  his 
policy,  or  his  contract  of  insurance  to  such  purchaser,  and 
the  company  assent  to  it,  here  is  a  new  and  original  contract, 
embracing  all  the  eletoents  of  a  contract  for  insurance  between 
the  assignee  and  the  insurers.  The  property  having  become 
the  purchaser's,  is  at  his  risk,  and  if  burnt,  it  is  his  loss,  and 
he  has  a  good  original  contract,  upon  a  valid  consideration,  to 
guarantee  him  against  such  loss.  Accordingly,  provision  is 
made  in  the  charter  and  by-laws,  and  also  by  the  terms  of 
the  policy,  for  an  assignment  of  the  contract.  The  company 
returns  no  part  of  the  premium,  but  the  assignee  has  the  ben- 
efit of  it  upon  such  terms  as  he  and  his  assignor  may  deter- 
mine;  the  assignment  is  indorsed  on  the  policy  and  presented 
to  the  president  of  the  company,  who  ordinarily  is  authorized 
to  give  the  assent  of  the  company  to  the  assignment;  the  old 
deposit  note  is  surrendered,  and  a  new  deposit  note  given  by 
the  assignee. 

"  In  the  regulations  of  this  company  in  a  circular  of  instruc- 
tion to  agents,  a  form  is  given  for  such  transfer,  notifying  the 
sale  of  the  property,  naming  the  purchaser,  and  assigning  to 
such  purchaser,  liis  executors,  &c.,  the  policy  of  insurance,  and, 


ASSIGNMENT   OF  THE  POLICY.  459 

in  case  of  loss,  directing  the  amount  to  be  paid  to  the  said  pur- 
chaser, his  heirs,  &c.  Upon  each  assignment  perfected  there 
is  an  entire  change  in  the  contract,  in  the  party  contracted 
with,  in  the  insurable  interest  in  the  property  at  risk ;  and  it 
becomes  an  insurance  on  the  property  of  the  assignee,  and 
ceases  to  be  a  contract  of  insurance  of  the  property  of  the 
assignor.! 

"  But  there  is  another  species  of  assignment,  or  transfer  it 
may  be  called,  in  the  nature  of  an  assignment  of  a  chose  in 
action.  It  is  this :  '  In  case  of  loss,  pay  the  amount  to  A.  B.' 
It  is  a  contingent  order  or  assignment  of  the  money,  should  the 
event  haf)pen  upon  which  money  will  become  due  on  the  con- 
tract. If  the  insurer  assents  to  it,  and  the  event  happens,  such 
assignee  may  maintain  an  action  in  his  own  name,  because, 
upon  notice  of  the  assignment,  the  insurer  has  agreed  to  pay 
the  assignee  instead  of  the  assignor.^  But  the  original  con- 
tract remains  ;  the  assignment  and  assent  to  it  form  a  new 
and  derivative  contract  out  of  the  original.  But  the  contract 
remains  as  a  contract  of  guaranty  to  the  original  assured  ;  he 
must  have  an  insurable  interest  in  the  property,  and  the  prop- 
erty must  be  his  at  the  time  of  the  loss.  The  assignee  has  no 
insurable  interest  prima  facie,  in  the  property  burnt,  and  does 
not  recover  as  the  party  insured,  but  as  the  assignee  of  a  party 
who  has  an  insurable  interest  and  a  right  to  recover,  which 
right  he  has  transferred  to  the  assignee,  with  the  consent  of 
the  insurers."  ^ 

§  379.  What  is,  and  what  is  not,  an  Assignment  of  a  Policy. 
—  Having  recognized  that  certain  acts  may  amount  to  what 
has  come  to  be  treated  as  an  assignment  of  the  policy,  the 
courts  have  been  called  upon  to  consider  the  question  what  con- 
stitutes an  assignment  of  the  policy  within  the  meaning  of  the 
condition  which  prohibits  it  without  the  assent  of  the  insurers, 
and  under  such  condition  will  woric  a  forfeiture.  And  here- 
upon the  cases  are  numerous.     Not  every  assignment  which 

1  See  also  Foster  v.  Eq.  Mut.  Ins.  Co.,  2  Gray  (Mass.),  216. 

2  Mowry  v.  Todd,  12  Mass.  281. 

'  See  also  Wilson  v.  Hill,  3  Met.  (Mass.)  G6  ;  Carpenter  i".  Prov.  Wasli.  Ins. 
Co.,  16  Pet.  (U.  S.)  495;  Pratt  v.  N.  Y.  Central  Ins.  Co.,  64  Barb.  (N.  Y.)  689. 


460  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

gives  sucli  rights  as  a  court  of  law  or  equity  would  feel  hound 
to  recognize  and  protect  would  amount  to  an  assignment  which 
works  a  forfeiture.  The  rule  in  the  former  case  would  douht- 
less  be  one  of  liberality  in  favor  of  the  assignee,  while  in  the 
latter  it  would  be  one  of  strictness  against  the  insurers.^  An 
alienation  or  transfer  of  the  property  is  not  of  itself  an  assign- 
ment of  the  policy,  does  not  carry  the  policy  with  it,  nor  is  it 
necessary  to  the  validity  of  an  assignment  of  the  policy .^  Nor 
is  an  alienation  of  the  property  after  the  loss  made  in  exe- 
cution of  a  contract  entered  into  before  the  loss,  coupled  with 
an  agreement  to  assign  the  policy  ;  ^  nor  a  mortgage  of  a  stock 
of  goods  insured,  coupled  with  an  agreement  to  hold  the  policy 
for  the  benefit  of  the  mortgagee,  an  assignment  of  the  policy 
within  the  meaning  of  a  condition  that  the  policy  is  to  l)e  void  if 
assigned  without  the  consent  of  the  insurers;*  nor  an  unexe- 
cuted agreement  to  assign,  whether  by  parol ^  or  in  writing;^ 
nor  is  a  pledge  of  the  policy  as  collateral  security;''  nor  is  a 
general  assignment  of  all  personal  property  for  the  benefit  of 
creditors;^  nor  is  a  designation  in  the  policy  of  a  certain  per- 
son not  interested  in  the  property — a  stranger — as  payee  in 
case  of  loss  an  assigiimcint  within  the  meaning  of  such  a  condi- 
tion ;^  nor  is  an  indorsement  on  the  back  of  the  policy  to  that 
effect  assented  to  by  the  insurers. ^^^  And  where  tlie  policy  is 
merely  made  payable  in  case  of  loss  to  the  mortgagee,  this  is  no 
assignment  of  the  policy.  Nor  does  it  convert  the  policy  into  a 
contract  of  insurance  with  the  mortgagee  ;  and  he  is  liable  to  all 
the  defences  against  the  policy  to  which  the  applicant  would  be. 

1  Lazarus  v.  Com.  Ins.  Co.,  5  Pick.  (Mass.)  70. 

2  PhillijiH  V.  Merrimack  Miit.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  .%0;  Stout  v. 
City  Fire  Ins.  Co.,  li^  Iowa,  5^71. 

'  Wheeling  Ins.  Co.  v.  Morrison,  1  Leigh  ( Va),  354  ;  Pierce  v.  Nashua  Mut. 
Fire  Ins.  Co.,  TjO  N.  II.  297. 

*  Prows  V.  Oiiio  Val.  Ins.  Co.,  2  Cincinnati  Superior  Court  Reporter,  14. 

«  Cromwell  v.  Brooklyn  Fire  Ins.  Co.,  39  Barb.  (N.  Y.)  227. 

«  Smitli  V.  Monmouth  Mut.  Fire  Ins.  Co.,  &0  Me.  9G. 

'  Ellis  V.  Kreutginger,  27  Mo.  311. 

»  People  V.  Beigler,  Hill  &  Denio  (N.  Y.),  133;  Lazarus  v.  Com.  Ins.  Co.,  5 
Pick.  (Mass.)  70. 

9  Frink  v.  Ilamptlen  Ins.  Co.,  4-5  Barb,  (N.  Y.)  884;  Birdseye  v.  City  Fire 
Ins.  Co.,  20  Cotm.  100. 

i"  Fogg  V.  Middlesex  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  837. 


ASSIGNMENT   OF   THE   POLICY.  461 

He  is  subject  to  all  the  conditions  of  the  policy,  and  takes  the 
risks  growing  out  of  the  acts  or  conduct  of  the  insured,  even 
thougli  by  the  terms  of  the  policy  loss  is  to  be  paid  to  the 
assignor,  as  his  interest  nuiy  aj)i)ear ;  and  the  assent  of  Ihe 
insurers  does  not  operate  to  produce  a  new  contract  between 
them  and  the  assignee,  but  merely  to  save  the  policy  from  for- 
feiture. The  insurers  are  only  bound  to  pay  to  the  mortgagee 
what  may  be  found  due  the  insured  in  case  of  loss ;  and  if  he 
by  his  conduct,  by  alienation,  or  otherwise,  has  forfeited  the 
right  to  recover,  there  is  nothing  to  be  paid  the  mortgagee.^ 
In  such  cases,  whether  the  transfer  be  to  a  stranger  or  to  the 
mortgagee,  the  assignment  is  a  mere  equitable  transfer  of  the 
right  to  receive  any  sum  that  may  be  due  in  the  event  of  a 
loss.  But  while  sucli  mortgagee  is  not  an  assignee,  the  prom- 
ise to  pay  to  him  in  case  of  loss,  though  not  an  assignment  to 
work  a  lorfeiture,  is  so  far  an  assignment,  and  gives  to  the 
mortgagee  such  rights  under  the  policy,  that,  in  the  absence  of 
any  special  provision  in  the  policy  with  reference  to  arbitration 
in  case  of  loss,  the  mortgagor  and  insurer  cannot  conclude  the 
mortgagee  by  a  reference  of  the  claim  for  loss  to  arbitration.^ 
So,  where  a  policy  with  the  insurer's  consent  has  been  assigned 
to  a  mortgagee.^  Though  there  are  respectable  autiiorities 
that  the  assignee  under  such  circumstances  is  no  longer 
responsible  for  the  defaults  of  the  assignor,  and  has  greater 
rights  than  he,'*  yet  these  cases  rest  upon  the  authority  of  The 

*  Loriiig  V.  MamifiiL'turers'  Iiis.  Co.,  8  Griiy  (Mass.),  28;  Homo  Mat.  Ins.  Co. 
V.  Hansleiii,  Sup.  Ct.,  111.,  I  Ins.  L.  J.  818  ;  Grosvenor  i'.  Atlantic  Firo  Ins.  Co., 
17  N.  Y.  yl  ;  overruling  on  this  point  s.  c.  1  IJosvv.  (N.  Y.  Superior  Ct.)  4G9, 
and  5  Duer  (ib.),  317  ;  Trader's  Ins.  Co.  v.  liebert,  U  Wend.  (N.  Y.)  404  ;  and 
Tillou  V.  Kingston  Mut.  Fire  Ins.  Co.,  1  Seld.  (N.  Y.)  405 ;  s.  c.  7  IJarl).  (N.  Y.) 
670. 

'■*  Brown  v.  Hartford  Ins.  Co.,  6  K.  I.  304  ;  Same  o.  Uoger  Williams  Ins.  Co., 
ibid. 

»  State  Mut.  Fire  Ins.  Co.  v.  Roberts,  31  IVnn.  St.  438 ;  Kdes  v.  Hamilton 
Mut.  Ins.  Co.,  3  Allen  (Mass.),  362;  Buflalo  Steam-Fngine  Works  i;.  Sun  .Mut. 
Ins.  Co.,  17  N.  Y.  401  ;  Lawrence  v.  Ilolyoke  Ins.  Co.,  11  Allen  (Mass.),  387; 
I'eepke  r.  Resolute  Fire  Ins.  Co.,  17  Wis.  378;  Iloxsie  i'.  I'rov.  Mut.  Ins.  Co., 
6  U.  I.  1)17. 

••  I'ullard  I'.  Somerset  Mut.  Fire  Ins.  Co.,  4'2  Me.  '2'2\  ;  New  Fngland  Fire  and 
Mar.  Ins.  Co.  v.  Wetmore,  32  111.  221  ;  City  Fire  Ins.  Co.  of  llarttord  v.  Murk, 
45  111.  482. 


462  INMUUANCR:    KIlli:,    I.ITK,    ACCIOKNT,    KTr. 

TiJulcrs'  liisiirMin'o  (\)Mi|)!»iiy  r.  Iu>l>i'i(s,  and  tlu'  otlici'  Now 
\\)\k  fiisos  rtillDwing  ihiU,  nil  of  whicli,  ns  wo  lmvi>  just  soiMi, 
luivo  luHMi  ovimmmiUmI.'  Ami  il  has  oviMi  Ikmmi  held  ihul  this 
woulil  bo  tlio  (*i\so  wIhm'o  tho  iiisui'ors  w«m-(>  nolilnMl  ot  tho  iiilou- 
tiou  of  llio  insuioil  I.)  Mssi^n  at  I  ho  saiwo  tim(>  tho  polioy  was 
issnoil,  to  which  ilii>v  nssontod,  hut  no  assij;nmont  was  aotiially 
matlo  till  allor  u  h>ss.'-'  Hut  this  oaso  staiuls  ah>no,  aiul  rosts 
\i|ioM  iho  saino  ovornMotl  Nimv  York  oast«s,''  ami  oaiinot  hi>  law. 
Nor  is  a  tiaiislor  ot'  an  iii\tlivi(loil  iiiliM't'st  in  tho  lu'oporly  in- 
siirinl  to  a  third  party,  as  hy  taking;  in  a  partnor,  oouplod  with 
tho  wrillon  oonsont  of  tho  insurers  that  llu>  policy  shall  ronuiiu 
good  to  tho  insured  and  lo  iho  nlionoo.  and  an  onliy  hy  tho 
insurers  in  thoir  hooks  rooou;ni/.ing  such  alii^noo  as  a  luomhor 
of  tho  oouipany,  an  assi^nnuMit  o\'  {\\o  policy  within  tho  ujoaii- 
iwiH  ot  a  piovision  that  tin*  alii'uci"  (>t  tlu*  property  insiu'od, 
having"  Iho  poliey  nssi^'-ntMl  and  ralilU^d  to  him  hy  the  e(»mpany, 
sl»ould  l>o  outitled  to  all  tho  rights  and  privih\i;es  ol"  tho  ori^;i- 
ual  insured,  so  as  to  enable  tho  aliouoo  to  sue  in  his  own 
name. 

v^  ;>S0.  AwnlK.nturnt  tii  'Whole  or  In  Pwrt,  —  An  assiniimont  of 
a  policy  as  e(tllaleral  sei'urity  avoids  a  policy  which  stipulates 
against  an  assigni\»tMit  in  whole,  ov  o\'  any  interest  in  il,  under 
penalty  o['  t"i>rl"eituri\  'V\\o  sugs;estion  sometimes  made  that 
us  such  an  assig;nment  canimt  injure  tho  insurers,  it  cannot  bo 
supposed  that,  tlu^  insnriM's  nuMut  to  pi-ohihit  undiM*  such  a  pro- 
vision, is  not  si>uud.  Il  may  injure  hin\  in  two  ways.  In  tho 
first  plavH\  incund»rances  are  objootiv»nal»le,  antl  are  usually 
inquired  alter;  lor,  as  they  iuoroaso,  the  iuti'rest  of  the  owner 
of  the  proptM't V  in  its  preseivatioi\  duninishcs.  True,  il  lu>n08t, 
he  is  inliMosted  in  the  payment  ot  his  iU>bis.  Hut  this  is  a  dilVer- 
out  interest  iVom  that  which  a  man  tools  in  the  preseryation  of 
the  prt^perly,  the  interest  in  which  insnreis  are  nh>re  partio- 
ularly  evMu-erned,  which  he  can  continue  to  enjoy,  ami  which 
bi^longs  to  him  and  not  to  his  creditors.  Most  men  will  look 
more  vigilantly  lo  the  prescr\alion  of  pii>pcriy  which,  it  saved, 

'  S«'o  uisi>  Sl;»(('  M\i(  l"ii^<  Ins,  Co.  «>.  Kt>lH<iis.  ;'>l  Tomm.  St,  -IJIS. 
S  iMuuUvvlou  luti,  v'i  I'nisl  To,  v.  Novo.  'J  MoMullau  (S.  C.),  -117. 
*  7th  of  WcuvU'll,  .<M^'Mi. 


ASSIGNMENT   OF   THE   POLICY.  463 

thoy  can  enjoy,  than  to  the  preservation  of  that  which,  if 
destroyed,  will  merely  reduce  their  ability  to  pay  their  debts. 
If  the  privilege  of  transferring  the  policy  as  collateral  security 
for  goods  purchased,  or  money  borrowed,  tends  to  the  increase 
of  incuuil»ranccs,  the  company  has  a  motive  to  prohibit  it. 
That  it  does  so  tend  is  matter  of  common  experience.  A 
mortgage  covering  the  value  of  the  property,  accom|)anied  by 
a  transfer  of  the  policy,  is  worth  just  as  much  more  in  conse- 
quence of  such  transfer  as  the  value  of  the  policy  itself.  But 
in  another  and  more  important  manner  does  such  a  transfer 
injure  the  insurer.  It  may  create  an  interest  directly  hostile 
to  him.  If  the  assignee  be  a  second  or  third  incumi)rancer, 
his  interest  may  be  for  the  destruction  of  the  property.  The 
owner  cannot  be  insured  to  the  entire  value,  nor  a  stranger 
to  it  to  any  amount  whatever;  since  in  neither  case  would 
there  be  any  interest  to  preserve,  and,  in  the  last  case,  no 
interest  but  to  destroy.  But  this  interest  of  a  stranger  to 
destroy  may  be  the  same  as  that  of  such  incumbrancer.  If 
the  buildings  are  preserved,  the  lien  before  his  will  take  their 
value  ;  if  destroyed,  he  will  get  it ;  and  the  circumstances  may 
be  such  that  he  will  get  nothing  else,  as  when  the  preceding 
liens  cover  the  entire  value  of  the  property.  But  suppose  the 
property  be  on  account  of  indebtedness  without  lien.  Then 
the  only  way  in  which  it  can  be  of  any  value  is  through  the 
destruction  of  the  property.^ 

§  381.  Assignment  —  Transfer  of  Interest.  —  No  transfer  of 
interest  will  work  a  forfeiture  under  the  clause  contained  in  a 
policy  forbidding  a  transfer  of  ''  the  interest  of  the  assured  in 
the  policy,  or  in  the  property  insured  "  thereby,  without  the 
written  consent  of  the  company,  which  does  not  so  dei)rive 
the  assignor  of  all  insurable  interest  as  to  prevent  his  recovery 
on  the  policy  for  his  benefit  if  that  clause  was  not  contained 
in  it.  To  take  away  the  cause  of  action  in  one  case,  and  to 
render  void  the  policy  in  the  other,  equally  require  a  transfer 
or  termination  of  the  entire  insurable  interest.  So  long  as  the 
insured  retains   such  an  interest  that  he  may  suffer  loss,  the 

1  Ferree  v.  Oxford  Fire  lus.  Co.,  8  Pliila.  Kep.  512. 


464  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

policy  protects  that  interest.^  Where  the  transfer  of  the  entire 
interest  of  the  insured  in  the  policy,  or  in  the  property  insured, 
is  forbidden,  under  penalty  of  forfeiture,  without  the  consent 
of  the  company,  if  there  be  a  sale  of  the  property  insured,  but 
without  assignment  of  the  policy  to  the  purchaser,  in  that  case 
the  vitality,  or  rather  activity,  of  the  policy  as  the  means  of 
securing  an  indemnity  becomes  suspended  ;  not  from  any  vice 
in  the  policy,  but  for  want  of  any  subject-matter  to  which  it 
may  attach.  If  a  fire  occurs  during  the  period  of  suspension, 
no  recovery  can  be  had  under  the  policy;  not  because  it  has 
become  void,  but  because  at  the  time  of  the  fire  the  insured 
has  no  property  covered  by  it,  and  the  purchaser  has  no  policy 
to  cover  his  interest.  The  moment,  however,  the  interests 
become  united  by  the  union  of  the  ownership  of  the  property 
and  the  interest  in  the  policy  in  the  same  person,  the  policy 
reattaches  to  the  goods,  and  becomes  valid  and  effectual  to 
protect  the  property  to  which  it  so  reattaches.^  And  where  the 
assignment  of  the  policy,  with  the  consent  of  the  insurers,  is 
absolute  to  one  who  has  become  the  entire  owner  of  the  sub- 
ject of  insurance,  it  becomes  a  new  contract  of  insurance 
between  the  underwriters  and  the  assignee.  If  the  assign- 
ment, taken  in  connection  with  the  policy,  plainly  transfers  the 
assured's  whole  interest,  the  underwriter's  consent  to  it  is  evi- 
dently equivalent  to  the  agreement  to  become  directly  answer- 
able to  the  assignee.  In  such  cases  the  proceedings  to  enforce 
payment  may  be  in  the  assignee's  hand  ;  and  he  becomes  to  all 
intents  and  purposes  the  substituted  party  to  the  contract.^ 

Assignment  —  "Interest  of  the  Assured  in  the  Policy."  —  In 
a  case  where  it  is  provided  that  the  "  interest  of  the  assured 
in  the  policy  "  should  not  be  assignable,  without  consent,  and 

1  Shearman  v.  Niagara  Fire  Ins.  Co.,  2  Sweeney  (N.  Y.  Superior  Ct.),  474  ; 
Fessenden  v.  Great  West.  Ins.  Co.,  3  Rob.  (ib.)  458  ;  Van  Deuzen  v.  Charter  Oak 
Ins.  Co.,  1  Rob.  (ib.)  55;  Phelps  v.  Gerhard  Fire  Ins.  Co.,  9  Bosw.  (ib.)  405; 
Hitchcock  V.  North  Western  Ins.  Co.,  26  N.  Y.  68. 

2  Ibid. 

3  The  court  rely  upon  Hooper  v.  Hudson  River  Fire  Ins.  Co.,  17  N.  Y.  424 ; 
"Wolfe  V.  Security  Fire  Ins.  Co.,  39  N.  Y.  51 ;  both  of  which  were  cases  of  insur- 
ance upon  stocks  of  goods  kept  for  sale,  and  constantly  undergoing  a  change. 
But  the  court  tliought  the  same  rule  ought  to  apply  to  the  insurance  of  a  house. 


ASSIGNMENT  OP  THE  POLICY.  465 

in  case  of  the  transfer  or  termination  of  the  interest  of  the 
insured  without  consent  the  policy  should  be  void,  it  was  held 
that  the  latter  interest  spoken  of  is  the  same  as  the  first,  and 
that  an  assignment  of  the  policy  was  an  assignment  of  that 
interest,  was  itself  null  and  void,  and  avoided  the  policy  also.^ 
But  about  the  same  time,  and  doubtless  without  having  seen 
the  case  from  New  York,  Mr.  Justice  Story,  in  giving  the  opin- 
ion of  the  court  in  Carpenter  v.  Providence  Washington  Insur- 
ance Company ,2  said  that  the  interest  last  spoken  of  was 
"  manifestly  the  interest  of  the  owner  in  the  premises  insured, 
and  not  merely  the  interest  in  the  policy." 

§  382.  Assignment  by  Consent  —  Assignment  •with  Assent  — 
Legal  Effect.  —  The  purpose  for  which  an  assent  to  the  assign- 
ment is  required  is,  as  we  have  seen,^  that  the  insurers  may 
have  an  opportunity  to  know  who  is  to  become  interested  in 
the  policy,  and  so  more  or  less  in  the  destruction  or  preserva- 
tion of  the  property  insured, —  the  character  of  the  person  so 
interested  being  oftentimes  an  important  element  in  the  esti- 
mation of  the  risk.  It  is  no  part  of  its  purpose  to  enlarge 
the  engagements  of  the  insurers,  nor  to  waive  the  conditions 
on  the  performance  of  which  their  liability  depends.  It  is  not 
to  give  new  privileges  to  the  insured,  which  without  it  he 
would  not  have,  but  it  is  solely  for  their  protection.  The 
assignment  does  not  change  the  contract.  It  simply  converts 
one  of  the  parties  into  a  trustee  for  a  third  person,  and  every 
condition  upon  which  the  liability  to  pay  is  made  to  depend 
remains  as  before.  Were  it  not  so,  it  would  not  be  an  assign- 
ment, but  a  new  contract.*  The  legal  effect  of  an  assignment 
to  a  stranger  with  the  consent  of  the  insurers,  by  a  mortgagee, 
to  whom  the  policy,  issued  upon  the  property  of  the  mortgagor, 
is  made  payable  in  case  of  loss  of  all  his  interest  in  the  policy, 
is  not  to  assign  the  policy,  but  merely  to  hold  the  insurers  to 
the  payment  to  the  assignee  in  case  of  loss,  whatever  the  per- 
son originally  insured  by  the  policy  may  be  entitled  to  receive. 

1  Smith  V.  Saratoga  County  Mut.  Fire  Ins.  Co.,  1  Hill,  497 ;  s.  c.  affirmed, 
3  Hill  (N.  Y.),  508. 

'^  16  Pet.  495.  3  Ante,  §§  377,  380. 

♦  State  Mut.  Fire  Ins.  Co.  v.  Roberts,  36  Penn.  St.  438 ;  Buckley  v.  Garrett 
et  al.,  47  Penn.  St.  204. 

30 


466  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

It  is  only  a  contingent  order  or  assignment  of  what  may  be- 
come due  under  the  contract,  and  not  an  absolute  transfer  by 
virtue  of  which  the  assignee  acquires  the  full  rights  of  an 
assignee  of  a  chose  in  action.  The  original  contract  with  the 
mortgagor  still  subsists,  and  it  is  his  interest  which  is  insured. 
The  assignee  must  claim  in  his  right  and  not  in  his  own.  It 
is  only  what  the  mortgagor  may  have  a  right  to  receive  under 
the  contract  that  the  assignee  can  in  any  event  claim.  If, 
therefore,  the  mortgagee,  before  the  loss  happens,  violates  a 
provision  of  the  policy  whereby  he  forfeits  the  right  to  recover, 
his  assignee  is  equally  barred  of  his  remedy.^ 

§  383.  Assignment  —  What  is  an  Assent.  —  The  assent  to  an 
assignment  of  the  policy  by  the  secretary  of  the  insurers  is 
sufficient,  unless  prohibited  by  the  charter  or  by-laws.  He 
will  be  presumed  to  be  acting  within  the  scope  of  his  authority 
in  so  doing.  And  this  is  true  although  by  the  charter  policies 
must  be  signed  by  the  president.^  So  where  the  assent  and 
approval  of  the  directors  is  requisite  to  the  validity  of  the 
assignment  of  a  policy,  and  it  is  brought  to  their  knowledge 
that  the  secretary  has  assented  to  such  assignment,  by  an  entry 
of  tbe  fact  in  the  company's  books  and  an  indorsement  upon 
the  policy,  this  will  be  a  sufficient  assent  and  approval  on  the 
part  of  the  directors,  and  a  formal  vote  is  not  necessary.^  The 
habit  of  the  president  or  secretary  giving  such  assent,  known 
to  tbe  directors,  and  not  objected  to  by  them,  is  equivalent  to 
an  express  vote.*  Indeed,  that  any  particular  officer  of  the 
company  has  been  in  the  habit,  known  to  the  directors,  of 
attending  to  any  particular  branch  of  the  business,  or  of  doing 
any  particular  class  or  kind  of  acts  in  the  management  of  the 
business,  is  enough  to  give  the  acts  validity,  as  done  with  the 
assent  and  approval  of  the  directors,  there  being  no  stipulation 
or  rule  known  to  the  party  who  sets  up  the  validity  of  the  act 
that  such  assent  must  be  in  writing."  And  an  agent  of  the 
insurers  may  bind  the  company  by  an  assurance  that  the  pol- 

1  Hale  V.  Mechanics'  Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  169. 

2  New  England  Mar.  Ins.  Co.  v.  De  Wolf,  8  Pick.  (Mass.)  56. 

3  Durar  v.  Hudson  County  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  171. 

4  Phillips  V.  Merrimack  Mut.  Fire  Ins.  Co.,  10  Cush.  350. 
s  Topping  V.  Bickford,  4  Allen  (Mass.),  120. 


ASSIGNMENT   OF   THE   POLICY.  467 

icy  will  remain  good  after  transfer  of  title  till  a  certificate  of 
consent  to  an  assignment  of  the  policy  can  be  obtained  from 
the  company,  though  the  transfer  without  consent  avoids  the 
policy.^  And  a  designation  in  the  policy  of  the  payee  has 
been  held  to  be  the  equivalent  of  an  assent,  required  to  be  by 
indorsement  on  the  policy,  to  an  assignment  so  as  to  prevent 
a  forfeiture  on  account  of  a  subsequent  assignment ;  -  and  in 
Keeler  v.  Niagara  Fire  Insurance  Company,^  such  a  designa- 
tion written  across  the  face  of  the  policy  was  regarded  as  the 
equivalent  of  an  assignment,  or  rather  rendered  an  assign- 
ment and  notice  unnecessary  in  order  to  keep  alive  the  policy. 
And  insurance  of  partnership  property  is  an  assent  to  all  such 
changes  in  the  relation  of  the  individuals  of  the  firm  to  the 
property,  whether  by  death  or  dissolution,  as  by  law  follow  such 
events.'*  And  in  some  cases  it  has  been  held  that  the  issuing 
a  policy  payable  to  a  third  person  is  tantamount  to  an  assent 
in  advance  to  the  assignment ;  ^  and  so,  also,  that  the  hidorse- 
ment  of  the  same  provision  has  the  same  effect.'^ 

§  384.  Cure  of  void  Policy  by  Assent  to  Assignment.  —  But  an 
assent  to  an  assignment  after  forfeiture  because  of  alienation 
does  not  restore  a  policy  originally  void  on  other  grounds.  The 
authority  conferred  by  the  by-laws  of  a  mutual  insurance  com- 
pany upon  the  directors  to  ratify  and  confirm  assignments  in 
cases  of  the  sale  or  alienation  of  the  property  insured,  applies 
only  to  policies  which  are  made  void  by  such  alienation,  and 
not  to  such  as  were  originally  void ;  and  the  assent,  therefore, 
to  tlie  assignment  of  a  policy,  originally  void,  after  an  aliena- 
ation  and  for  the  purpose  of  ratifying  it,  does  not  cure  the 
original  infirmity  in  the  policy.'^ 

§  385.  Assignment  —  Consent  in  Writing  —  Fraud-  —  If  the 
assent  to  an  assignment  be  procured  by  fraud,  it  is  like  all 

1  niinois  Mut.  Fire  Ins.  Co.  v.  Stanton,  Sup.  Ct.  111.,  1872,  2  lus.  L.  J.  29. 

-  National  Fire  Ins.  Co.  v.  Crane,  16  Md.  260. 

3  16  Wis.  523. 

*  Wilson  V.  Genesee  County  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  511. 

s  Brown  v.  Roger  Williams  Ins.  Co.,  5  R.  I.  394 ;  Bidwell  v.  St.  Louis  Float- 
ing Dock  Ins.  Co.,  40  Mo.  42. 

6  National  Fire  Ins.  Co.  v.  Crane,  16  Md.  260 ;  Franklin  v.  National  Ins.  Co., 
43  Mo.  491. 

'  Eastman  v.  Carrol  Co.  Mut.  Fire  Ins.  Co.,  45  Me.  307. 


468  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

other  contracts  thus  procured,  voidable,  and  may  be  repudiated. 
But  if,  after  knowledge  of  the  fraud,  it  is  treated  by  the  in- 
surer as  a  valid  assignment,  as  by  demanding  and  receiving 
assessments  for  losses  and  expenses  subsequent  to  the  fraud 
under  it  from  the  assignee,  this  will  waive  the  fraud.  But  a 
failure  to  state  the  interest  of  the  assignee,  certainly,  if  not 
asked,  is  no  fraud. ^  If  the  assent  to  the  assignment  is  by  the 
terms  of  the  policy  to  be  in  writing,  it  must  be  strictly  com- 
plied with,  unless  there  be  a  waiver ;  and  knowledge  that  an 
assignment  is  contemplated  by  the  assured,  the  mortgagor,  to 
the  mortgagee,  without  objection,  is  no  consent.  The  only  fair 
inference  from  such  facts  is  a  tacit  agreement  that  the  com- 
pany would  consent  when  the  mortgagee  had  put  himself  in 
a  position  to  ask  it.^  If  its  validity  be  dependent  upon  depos- 
iting a  note  with  the  secretary  or  agent,  to  be  approved  by 
the  directors,  leaving  the  note  with  the  agent,  who  neglects  to 
notify  the  company,  is  not  a  compliance  with  the  conditions.^ 

§  386.  But  this  inhibition  of  an  assignment  without  consent 
applies  only  to  an  assignment  before  the  loss.  An  assignment 
after  the  loss  is  not  the  assignment  of  the  policy,  but  the  assign- 
ment of  a  claim  or  debt,  a  chose  in  action,  which  is  always  as- 
signable in  equity.*  And  a  prohibition  of  an  assignment  after 
the  loss  is  invalid,  and  void  as  contrary  to  law.^ 

§  387.  Assignment — Limitation  as  to  Time  —  Consent  arbi- 
trarily withheld.  —  Boynton  v.  Farmers'  Mutual  Insurance 
Company  was  a  case  where  the  policy  provided  that  upon 
alienation  of  the  property  the  policy  should  be  void,  but  that 

1  Cumberland  Valley  Mut.  Prot.  Ins.  Co.,  48  Penn.  St.  374.  And  see  post, 
Ch.  on  Waiver  and  Estoppel. 

■^  Smith  V.  Saratoga  County  Mut.  Ins.  Co.,  3  Hill  (N.  Y.),  508. 

3  Pogg  V.  Middlesex  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  337. 

*  Brichta  v.  New  York  Lafayette  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  372; 
Perry  v.  Merchants'  Ins.  Co.,  25  Ala.  355;  Mellen  v.  Hamilton  Fire  Ins.  Co.,  5 
Duer  (N.  Y.  Superior  Ct.),  101 ;  s.  c.  17  N.  Y.  609 ;  Hughes  v.  Mut.  Fire  Ins. 
Co.  of  Newcastle,  9  Upper  Canada  (Q.  B.),  387  ;  Wilson  v.  Hill,  3  Met.  (Mass.) 
66  ;  Sadler's  Co.  v.  Badcock,  2  Atk.  554  ;  Courtney  v.  New  York  City  Ins.  Co., 
28  Barb.  116  ;  Carter  v.  Humboldt  Fire  Ins.  Co.,  12  Iowa,  284;  Carroll  v.  Char- 
ter Oak  Ins.  Co.,  38  Barb.  (N.  Y.)  402 ;  s.  c.  40  Barb.  (N.  Y.)  292. 

5  Goit  V.  Nat.  Prot.  Ins.  Co.,  25  Barb.  (N.  Y.)  189;  West  Branch  Ins.  Co.  v. 
Helfenstein,  40  Penn.  St.  289  ;  Carroll  v.  Charter  Oak  Ins.  Co.,  38  Barb.  (N.  Y.) 
402.     CoiUra,  Dey  v.  Poughkeepsie  Mut.  Ins.  Co.,  23  Barb.  (N.  Y.)  623. 


ASSIGNMENT  OF  THE   POLICY.  469 

the  alienee  having  the  policy  assigned  might  have  the  same 
ratified  and  confirmed  to  him  upon  application  to  the  directors 
and  with  their  consent,  within  thirty  days  next  after  the  alien- 
ation, upon  certain  terms.  After  alienation  and  assignment 
and  loss,  but  within  the  thirty  days,  the  assignee  presented 
the  assignment  for  ratification,  and  offered  to  comply  with  the 
usual  terms,  and  it  was  held  on  a  bill  in  equity  that  the  com- 
pany could  not  arbitrarily  and  without  cause  refuse,  and  a 
decree  was  entered  in  favor  of  the  assignee  for  the  same 
amount  as  the  grantor  could  have  recovered  if  there  had  been 
no  alienation. 1  We  have  before  seen  that  where  a  contract 
has  been  made  between  the  applicant  for  insurance  and  the 
agent  of  the  insurers,  subject  to  the  approval  of  his  principal, 
that  approval  cannot  be  withheld  without  reason.^  Applica- 
tion to  an  insurance  company  for  its  consent  to  the  assignment 
of  the  policy  is  tantamount  to  notice,  by  the  applicant,  of  the 
acquisition,  contemplated  or  actual,  by  him  of  an  interest  in 
the  property  insured,  as  without  that  the  assignment  would  be 
valueless.^ 

§  388.  Life  Policy  —  Assignment. — The  reasons  which  lead 
to  caution  as  to  the  assignment  of  policies  in  fire  insurance  * 
do  not  exist,  at  least  not  to  the  same  extent,  in  life  insurance. 
There  may  indeed  be  cases  where  they  would  apply,  but  they 
occur  so  seldom,  that  generally,  almost  universally,  the  claims 
arising  out  of  life  policies  are  recognized  as  assignable  either 
absolutely  or  by  way  of  security,  without  the  assent  of  the  in- 
surers. Even  notice  is  not  always  required ;  and,  when  required, 
is  only  necessary  to  protect  the  company  from  the  possibility  of 
being  obliged  to  pay  both  the  assignee  and  the  legal  representa- 
tives. Indeed,  in  the  case  of  a  policy  for  life,  the  payment  can- 
not be  made  to  the  insured  ;  and  in  fire,  also,  the  policy  runs  to 
the  legal  representatives  and  assigns.  Much  of  the  usefulness 
of  life  insurance  depends  upon  the  mobility  of  policies,  and  the 

1  43  Vt.  256. 

2  Ante,  §  57.  And  see  also  Illinois  Mut.  Ins.  Co.  v.  Stanton,  cited  ante, 
§383. 

3  Hooper  v.  Hudson  River  Fire  Ins.  Co.,  3  Smith  (N.  Y.),  424. 
*     *  Ante,  §§  377  et  seq. 


470  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

companies  have  for  obvious  reasons  been  desirous  to  promote 
that  end,  —  a  desire  which  the  courts  have  been  willing  to 
encourage,  so  far  as  consistent  with  legal  principles.^  It  has 
accordingly  been  held  that  where  the  promise  is  to  "  the  as- 
sured, his  executors,  administrators,  and  assigns,"  to  pay  the 
"  legal  representatives  "  of  the  assured,  the  policy  is  neverthe- 
less assignable,  and  that  the  provision  to  pay  the  legal  repre- 
sentatives was  designed  to  apply  only  to  a  case  where  the 
insured  died  without  having  previously  assigned  the  policy, 
and  was  not  to  be  construed  in  any  sense  as  limiting  the  power 
of  the  party  insured  to  assign.^  So  an  assignment  by  a  hus- 
band to  his  creditor,  out  of  the  proceeds  to  pay  the  debt,  and 
the  remainder  to  be  paid  to  the  widow,  was  held  to  take  the 
whole  interest  to  the  assignee  for  himself  and  in  trust,  as 
against  the  administrator.^ 

§  '389.  Life  Policy  —  Requisites  of  a  valid  Assignment.  —  The 
requisites  to  a  valid  assignment  of  a  life  policy  have  been  thus 
well  stated  by  Shaw,  C.  J. :  *  — 

"  According  to  the  modern  decisions,  courts  of  law  recognize 
the  assignment  of  a  chosse  in  action^  so  far  as  to  vest  an  equita- 
ble interest  in  the  assignee,  and  authorize  him  to  bring  an 
action  in  the  name  of  the  assignor,  and  recover  a  judgment 
for  his  own  benefit.  But  in  order  to  constitute  such  an  assign- 
ment, two  things  must  concur :  first,  the  party  holding  the 
chose  in  action  must,  by  some  significant  act,  express  his  inten- 
tion that  the  assignee  shall  have  the  debt  or  right  in  ques- 
tion, and,  according  to  the  nature  and  circumstances  of  the 
case,  deliver  to  the  assignee,  or  to  some  person  for  his  use, 
the  security,  if  there  be  one,  bond,  deed,  note,  or  written 
agreement,  upon  which  the  debt  or  cliose  in  action  arises  ;  and, 
secondly,  the  transfer  shall  be  of  the  whole  and  entire  debt  or 
obligation  in  which  the  chose  in  action  consists,  and  as  far  as 
practicable  place  the  assignee  in  the  condition  of  the  assignor, 
so  as  to  enable  the  assignee  to  recover  the  full  debt  due,  and 
to  give  a  good  and  valid  discharge  to  the  party  liable. 

1  New  York  Life  Ins.  Co.  v.  Flock,  3  Md.  341.  '^  Ibid. 

'  McCord  V.  Noyes,  3  Bradford,  139  ;  Harrison  v.  McCarkey,  2  Md.  Ch.  34. 

4  Palmer  v.  Merrill,  6  Cush.  (Mass.),  282. 


ASSIGNMENT  OF   THE   POLICY.  471 

"  The  transfer  of  a  cliose  in  action  bears  an  analogy,  in  some 
respect,  to  the  transfer  of  personal  property ;  there  can  be  no 
actnal  niannal  tradition  of  a  chose  in  action,  as  there  mnst  be 
of  personal  i)ropcrty,  to  constitnte  a  lien,  bnt  there  mnst  be 
that  which  is  similar,  a  delivery  of  the  note,  certificate,  or 
other  docnment,  if  there  is  any,  which  constitutes  the  chose 
in  ai'tion,  to  the  assignee,  wnth  full  power  to  exercise  every 
species  of  dominion  over  it,  and  a  renunciation  of  any  power 
over  it  on  the  part  of  the  assignor. 

'•  The  intention  is,  as  far  as  tlie  nature  of  the  case  will 
admit,  to  substitute  the  assignee  in  place  of  the  assignor  as 
owner.  A  man  cannot  by  his  own  act  charge  a  personal  chat- 
tel, a  carriage  and  horses,  for  instance,  with  a  lien  in  favor  of 
a  particular  creditor,  and  yet  retain  the  dominion  and  posses- 
sion of  them  till  his  death  ;  a  fortiori,  where  he  retains  the 
memorandum  or  instrument  of  transfer  of  such  chattel  in  his 
own  possession  and  under  his  own  control.  It  seems  to  us 
equally  impracticable  to  charge  a  debt  due  to  him,  by  an  order 
or  memorandum  retained  in  his  own  possession,  purporting  to 
give  to  a  particular  creditor  an  equitable  lien  by  the  assign- 
ment of  such  chose  in  action,  without  a  transfer  or  delivery  of 
the  security  by  which  it  is  manifested." 

§  8*J0.    Conflicting   Cleiims  —  Creditor   and   Administrator.  —  A 

case  of  some  novelty  occurred  recently  in  Massachusetts,  where 
an  insurance  company  in  that  State  insured  the  life  of  a  citizen 
of  another,  and  the  insured  assigned  the  policy  to  a  creditor, 
resident  in  the  first  State.  After  death,  the  administrator  at 
the  domicile  of  the  insured  brougiit  suit ;  but  subsequent  thereto 
the  assignee  of  the  policy  was  appointed  ancillary  administrator 
at  the  domicile  of  the  creditor,  and  brought  suit ;  and  it  was 
held  that  the  first  suit  was  no  bar  to  the  second,  and  that  the 
right  of  the  ancillary  administrator,  representing  as  he  did  the 
equitable  interest  of  the  assignee,  and  the  legal  capacity  to 
sue,  was  superior  to  that  of  the  original  administrator.^  In  this 
case  the  coin-t  say  :  — 

"  There  was  a  rigiit  of  possession  in  the  assignee  superior 
to  that  of  the  intestate  or  his  administrator,  and  which  ho 

I  Merrill  v.  New  England  Mut.  Life  Ins.  Co.,  108  Mass.  246. 


472  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

might  pass  over  to  the  administrator  in  Massachusetts  upon 
such  terms  as  he  saw  fit,  consistent  with  his  limited  rights. 
His  interest  in  the  policy  is  not  a  mere  order  for  a  part  of  the 
proceeds,  but  extends  to  the  whole  policy  alike.  With  his  con- 
currence the  auxiliary  administrator  may  maintain  a  suit  and 
collect  the  proceeds  of  the  policy.  Without  it,  neither  he  nor 
the  principal  administrator  could  control  the  possession  or  col- 
lect the  proceeds.  The  pledge  makes  it  no  longer  a  question 
of  jurisdiction,  as  affected  by  priority  of  suit,  comity  between 
the  States,  or  otherwise,  but  one  merely  of  the  right  of  the 
respective  parties  claiming  an  interest  in  the  policy.  The  right 
of  the  plaintiff  in  this  suit  is  superior  to  that  of  the  principal 
administrator  in  Illinois,  because  he  represents  the  equitable 
interest  and  right  of  immediate  possession  and  control  of  the 
pledgee,  as  well  as  the  legal  capacity  to  sue,  which  remains  in 
the  representatives  of  the  estate  of  the  insured.  That  legal 
right  to  sue  is  held  by  the  administrators  of  the  insured,  wher- 
ever appointed,  in  trust  for  the  benefit  of  the  equitable  assignee 
of  the  claim.  The  assignee  is  entitled  to  control  any  suit 
brought  for  its  recovery.  His  right  would  be  protected  by  the 
courts  against  any  attempt  of  the  administrator  to  collect  or 
release  the  demand  in  disregard  of  his  interests.  Upon  the 
same  principle,  it  would  be  equally  protected  against  prejudice 
from  any  attempt  to  anticipate  him  by  means  of  a  suit  insti- 
tuted by  such  administrator  in  his  own  behalf,  and  without 
recognition  of  the  rights  of  the  assignee. 

"  Within  the  same  jurisdiction  the  respective  rights  of  the 
assignor  and  assignee  may  be  readily  adjusted,  and  suits  con- 
trolled. The  difficulty  arises  from  the  existence  of  suits  in 
separate  and  independent  jurisdictions.  There  is  a  class  of 
decisions,  referred  to  by  the  defendant,  particularly  affecting 
questions  of  jurisdiction  between  the  federal  and  State  courts, 
to  the  effect  that  a  subject-matter  once  brought  within  the 
jurisdiction  of  a  court  of  general  jurisdiction,  whether  by  suit 
in  personam  or  proceeding  in  rem,  or  even  by  process  of  attach- 
ment, is  in  the  custody  of  that  court,  and  cannot  be  withdrawn 
or  controlled  by  any  process  or  proceeding  of  any  other  court ; 
but  that  doctrine  is  explained  and  narrowly  limited  by  Mr.  Jus- 


ASSIGNMENT  OP  THE  POLICY.  473 

tice  Miller,  in  Buck  v.  Colbath.i  It  does  not  apply  to  this 
case,  for  reasons  already  indicated,  because  the  policy,  having 
been  pledged  and  delivered  to  another  in  the  lifetime  of  the 
intestate,  was  never  in  the  legal  possession  of  his  administrator 
in  Illinois,  and  therefore  was  never  properly'  brought  within 
the  jurisdiction  of  the  courts  in  that  State,  either  as  assets  sub- 
ject to  administration,  or  as  a  cause  of  action  which  the  admin- 
istrator there  could  maintain.  He  could  not,  by  commencing 
a  suit  there,  transfer  to  those  courts  the  determination  of  the 
rights  of  the  pledgee,  so  as  to  compel  him  to  seek  them  by 
intervening  in  such  suit.  The  pledgee  has  an  independent 
title,  accompanied  by  possession  of  the  policy,  and  by  bill  in 
equity  in  his  own  name,  or  by  suit  in  the  name  of  the  admin- 
istrator in  Massachusetts,  could  enforce  his  claim.  Neither 
the  administrator  in  Massachusetts  nor  the  administrator  in 
Illinois  would  be  allowed  to  defeat  the  prosecution  of  such  a 
suit." 

§  391.  Life  Policy  —  Assignment  by  Married  Woman  —  Rights 
of  Children.  —  The  power  of  a  married  woman  over  a  policy 
on  the  life  of  her  husband,  payable  to  her,  her  executors, 
administrators,  or  assigns,  to  her  sole  use,  in  case  of  his  death 
before  the  wife's,  but  payable  to  the  children  in  case  of  her 
decease  before  the  husband,  the  premiums  being  paid  by  her, 
has  been  frequently  before  tiie  courts ;  and  in  Eadie  v.  Slim- 
mon  2  it  was  held  that  such  a  policy  was  unassignable.  This 
was  under  the  law  of  1840,^  in  which  it  was  provided  that  if 
the  wife  survived  her  husband,  the  amount  payable  should  be 
payable  to  her  for  her  own  use,  free  from  all  claims  of  her  hus- 
band's representatives  or  of  his  creditors,  and  giving  authority 
also  to  provide  for  the  children  in  case  of  her  death.  "  The 
act,"  said  the  court,  "  looks  to  a  special  provision  for  a  state 
of  widowhood  and  for  orphan  children,  and  it  would  be  a  vio- 
lation of  its  spirit  to  hold  that  a  wife  could  sell  or  traffic  with 
her  policy  as  though  it  were  real  and  personal  property,  or  an 
ordinary  security  for  money."  In  this  case  the  wife  survived 
the  husband.     And  this  case  was  followed  in  Secor  v.  Dalton,* 

1  3  Wall.  334.  i  26  N.  Y.  9. 

'  Of  New  York.  *  Cited  in  Bliss,  Life  Insurance,  528. 


474  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

—  a  case  where  the  wife  died  before  the  husband.  And  in 
Connecticut,  in  a  case  similar  to  the  last,  and  under  a  similar 
statute,  the  same  doctrine  was  laid  down.^  And  in  answer  to 
the  suggestion  that  the  clause  in  the  policy  making  it  payable 
to  the  children  was  simply  the  indication  of  her  purpose  at  that 
time  to  give  the  sum  specified  in  the  policy  to  them  in  case  she 
deceased  before  her  husband,  and  that  it  must  be  regarded  as 
her  expressed  but  unexecuted  intention  to  give  this  sum  to  the 
children,  which  intention  she  could  abandon  at  her  pleasure, 
the  court  say :  "  The  argument  is  ingenious,  but  not  sound. 
The  intention  was  not  to  give  a  sum  of  money  to  the  children, 
but  to  make  a  life  policy  in  a  certain  event  payable  to  them. 
The  intention  was  not  only  expressed  but  executed.  The  con- 
tract was  complete,  and  the  money  when  due  was  payable  to  the 
children  without  any  further  act  on  her  part."  By  the  terms 
of  the  policy  "  it  was  payable  to  lier  only  in  case  she  survived 
her  husband  ;  and  in  case  her  husband  survived  her,  ...  to 
the  children."  Referring  to  Eadie  v.  Slimmon,^  the  court  say: 
"  The  reasoning  of  the  court  goes  so  far  as  to  hold  that  a  policy 
of  this  description,  prior  to  the  decease  of  the  husband,  is  abso- 
lutely and  under  all  circumstances  unassignable  by  the  wife. 
That  such  should  be  the  law  under  a  policy,  the  premiums  on 
which  were  paid  by  the  husband,  certainly  seems  reasonable 
and  just ;  while,  on  the  other  hand,  if  the  wife  paid  the  pre- 
miums out  of  her  separate  estate,  it  is  difficult  to  suggest  a 
reason  why  she  should  not  have  the  same  power  to  assign  her 
interest  in  the  policy  that  she  has  to  assign  any  other  chose  in 
action  belonging  to  her.  As,  however,  the  death  of  the  wife 
occurred  in  the  case  under  consideration  before  that  of  the 
husband,  and  was  the  precise  event  upon  which  the  policy  was 
made  payable  to  the  children,  no  decision  was  made  upon  either 
of  those  points."  And  both  courts  thought  the  assignee  ought 
to  be  allowed  out  of  the  proceeds  the  amount  of  the  premiums 
he  had  paid ;  as  also  in  the  case  of  Chapin  v.  Fellowes.^  And  in 
Massachusetts,  also,  under  a  substantially  similar  statute,  where 
the  wife  effected  the  insurance  and  paid  the  premiums,  and  died 

1  Conn.  Mut.  Life  Ins.  Co.  v.  Burroughs,  34  Conn.  305. 

2  Supra.  3  36  Conn.  182. 


ASSIGNMENT   OF   THE   POLICY.  475 

before  her  husband,  the  same  conclusion  has  been  reached,^  and 
for  the  same  reasons.^  In  Moehring  v.  Mitchell,  just  cited,  the 
question  was  whether  the  wife  could  dispose  of  such  a  policy  by- 
will,  and  it  was  held  that  she  could  not,  even  with  the  consent 
of  her  husband.  But  in  Kerman  v.  Howard  ^  it  was  held  that  a 
husband  who  effects  a  policy,  payable  to  his  wife  or  her  legal  rep- 
resentatives, and  pays  the  premiums  and  survives  his  wife,  may, 
after  her  decease,  dispose  of  the  policy  by  will  so  as  to  dispose 
of  the  proceeds  of  the  policy  among  the  children  of  his  former 
wife  as  against  the  children  of  his  last  wife  by  a  former  hus- 
band. The  report  does  not  show  that  there  was  any  provision 
in  the  policy  for  the  benefit  of  children  in  case  of  survivorship 
of  the  husband,  but  the  statute  was  similar  to  tliat  of  Massa- 
chusetts, except  in  the  last  clause.'*  And  in  the  same  State  a 
father  may  assign  a  policy  procured  upon  his  own  life,  at  his 
own  expense,  in  favor  of  a  minor.  Such  a  case  seems  not  to 
be  within  the  words  of  the  statute.^  In  Illinois,  though  a  pol- 
icy applied  for  and  issued  to  the  wife,  payable  to  her  and  her 
assigns,  is  not  assignable,  yet  as  it  is  under  the  statute  of  that 
State  concerning  the  property  of  married  women  her  sole  and 
separate  property,  she  may,  by  an  assignment,  pledge  the 
whole  or  any  part  of  the  proceeds,  and  the  assignment  will 
be  enforced  against  her  in  equity.^     And  in  Missouri,  if  a  hus- 

1  Knickerbocker  Life  Ins.  Co.  v.  Weitz,  99  Mass.  157.  And  see  also  Bur- 
roughs V.  State  Mut.  Life  Ass.  Co.  of  Worcester,  97  Mass.  359. 

2  Tlie  court  cite  Eadie  v.  Slimmon,  Com.  Mut.  Life  Ins.  Co.  v.  Burroughs, 
Moehring  v.  Mitchell,  1  Barb.  (N.  Y.)  Ch.  264,  and  Swan  v.  Snow,  11  Allen 
(Mass.),  224. 

3  23  Wis.  108. 

*  Tlie  statute  of  Wisconsin  is  as  follows :  "  Any  policy  of  insurance  made  by 
any  insurance  company'  on  the  life  of  any  person  e.xpressed  to  be  for  the  benefit 
of  a  married  woman,  whether  the  same  be  effected  by  sucii  married  woman,  or 
by  her  husband,  or  by  any  other  person  on  her  behalf,  shall  enure  to  her  sole 
and  separate  use  and  benefit,  and  tiiat  of  her  children,  if  any,  independently  of 
her  husband  and  of  his  creditors  and  representatives,  and  also  independently  of 
any  other  person  effecting  the  same  in  her  behalf,  his  creditors  and  representa- 
tives ;  and  in  case  of  the  death  of  the  husband  of  such  married  woman,  such  policy  and 
the  benefit  thereof  shall  not  go  to  his  executors  or  administrators,  but  shall  belong  to  such 
married  icoman,  and  shall  be  for  her  sole  use  and  benefit  and  that  of  her  children." 
—  the  part  in  Italics  being  additional  to  that  of  Massachusetts. 

5  Clark  V.  Durand.  12  Wis.  223. 

6  Pomeroy  v.  Manhattan  Life  Ins.  Co.,  40  111.  398. 


476  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

band  takes  out  a  policy  for  the  benefit  of  his  wife  and  pays 
the  premium,  and  both  afterwards  join  in  an  assignment  of  the 
policy  to  secure  a  loan,  the  assignment  will  be  upheld,  especially 
if  it  also  appear  that  the  amount  of  annual  premiums  exceeds 
the  sum  permitted  by  the  statute,  as  in  that  case  the  policy  is 
not  within  the  statute.^  In  Baker  v.  Young  ^  there  was  no 
objection  on  account  of  excessive  payment  of  premiums,  and 
the  court  held  that  such  a  policy  was  assignable  under  the 
statute.^  They  thought  that  the  clause  providing  that  the  pol- 
icy should  inure  to  the  benefit  of  the  wife  and  children  referred 
simply  to  the  manner  of  the  descent  and  distribution,  to  wit, 
that  after  the  wife  has  received  and  reduced  the  money  to  pos- 
session and  dies,  it  shall  go  to  the  children  and  not  to  the 
husband's  representatives  ;  —  an  interpretation  made  the  more 
apparent  by  the  concluding  paragraph  of  the  section  providing 
for  the  appointment  of  a  trustee  to  manage  the  interests  of  the 
married  woman  in  the  policy  and  its  proceeds,  while  nothing 
is  said  concerning  the  interests  of  the  children.  The  object  of 
the  statute  was  to  protect  the  wife,  but  not  to  restrain  her,  and 
to  leave  it  open  to  her  choice  to  make  a  voluntary  disposition 
of  it.  The  assignment  and  assent  forms  a  new  and  derivative 
contract  with  the  assignee ;  but  the  original  contract,  never- 
theless, remains  for  the  protection  of  the  original  insured,  and 
also  for  the  protection  of  the  insurers,  and  both  contracts  fail 
if  the  first  fails,  since  the  last  is  derived  from  and  dependent 
on  the  first.*  In  Tennessee,^  the  statute  provides  that  any  hus- 
band may  effect  a  life  insurance  on  his  own  life,  and  the  same 
shall  in  all  cases  inure  to  the  benefit  of  his  widow  and  heirs. 
But  the  court  held  that  an  ordinary  policy,  not  by  its  terms 
made  payable  to  the  widow  and  heirs,  was  not  within  the  mean- 
ing of  the  statute ;  and  that,  as  the  insured,  who  had  a  policy 
on  his  life  for  seven  years,  had  during  its  currency,  and  while 
he  lived  the  right  to  dispose  of  his  own  as  he  pleased,  an  assign- 

1  Charter  Oak  Life  Ins.  Co.  v.  Brant,  47  Mo.  419. 

2  47  Mo.  453. 

■*  The  statute  differs  in  no  material  respect  from  that  of  Massachusetts. 
■*  Baker  v.  Young,  supra.    See  also  Wilson  v.  Hill ;  Carpenter  v.  Prov.  Wash. 
Ins.  Co.,  16  Pet.  (U   S.)  496. 

*  Rison  V.  Wilkinson,  3  Sneed,  565. 


ASSIGNMENT  OF  THE   POLICY.  477 

meat  for  the  security  of  a  creditor  was  valid.  The  statute  of  Ten- 
nessee, it  is  to  be  observed,  provided  that  the  insurance  should 
inure  to  the  benefit  of  the  widow  and  heirs,  and  not  be  subject 
to  the  husband's  debts,  but  did  not  add,  as  is  substantially  the 
case  in  the  statutes  of  most  of  the  other  States,  "independently 
of  the  claims  of  the  husband  or  of  any  other  person  effecting 
the  policy."  And  the  court  intimated  that,  if  the  policy  had 
been  made  payable  to  the  widow  and  heirs,  the  proceeds  could 
not  have  been  diverted  from  that  disposition.^ 

§  392.  Life  Policy  —  Devise  of  Proceeds  —  Rights  of  Children. — . 
So  wbere  the  policy  was  for  the  sole  benefit  of  children,  it  was 
held  that  the  father  could  not  devise  the  proceeds  to  his  exec- 
utors in  trust  for  other  purposes.^  The  children  in  such  case 
became  vested  immediately  upon  the  delivery  of  the  policy  with 
the  entire  beneficial  interest,  and  it  is  then  beyond  the  control 
of  the  insured.  So  where  the  policy  is  issued  to  the  wife,  pay- 
able to  her,  or,  in  case  of  her  death  before  her  husband,  to  her 
children.  The  husband  cannot,  after  her  death,  surrender  the 
policy  and  take  out  a  new  one  for  his  own  benefit.^  All  the 
above-cited  cases  proceed  upon  the  ground  that  when  the  pol- 
icy is  issued  the  rights  are  vested,  and  cannot  be  devested  with- 
out the  consent  of  those  to  whom  they  are  secured. 

§  393.  Right  to  sue  and  Right  to  appropriate  Proceeds  not 
identical.  —  The  right  to  sue  under  tliese  statutes,  enacted  in 
the  interest  of  the  family  support,  is  not  to  be  confounded  with 
the  right  to  appropriate  and  use  the  proceeds.  The  assignee 
may  well  have  the  right  to  sue  in  his  own  name  and  recover 
the  amount  payable  by  the  policy,  but  he  recovers  to  hold  in 
trust  for  the  beneficiaries.  "  The  rights  of  the  child,"  say  the 
court,  in  Burroughs  v.  State  Mutual  Life  Insurance  Company,^ 
"  cannot  be  set  up  to  defeat  this  action.     No  trustee  has  ever 

'  See  also  Gould  v.  Emerson,  99  Mass.  1?)4. 

2  Ruppert  V.  Union  Mut.  Ins.  Co.,  7  Robt.  (N.  Y.  Superior  Ct.)  155.  The 
charter  provided  that  policies  might  be  issued  for  the  benefit  of  a  minor,  and 
should  inure  to  his  benefit  independently  of  the  one  whose  life  may  be  thus 
insured. 

3  Chapin  i-.  Fellowes,  36  Conn.  132 ;  Fraternal  Mut.  Life  Lis.  Co.  v.  Apple- 
gate,  7  Ohio  St.  292 ;  Gould  v.  Emerson,  99  Mass.  154. 

i  97  Mass.  859. 


478  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

been  appointed  to  hold  and  manage  the  interest  of  the  wife. 
The  policies  are  in  terms  payable  to  the  assured  and  his 
assigns.  The  assignment  to  the  plaintiff,  assented  to  by  the 
insurers,  transferred  to  him  the  legal  title  in  the  policies,  and 
the  right  to  sue  thereon.  If  the  assured  had  afterwards  died, 
leaving  no  wife  or  child  surviving,  the  assignment  would  have 
entitled  the  assignee  to  receive  the  whole  amount  of  the  policies 
to  his  own  use.  The  plaintiff,  having  the  legal  title,  may  main- 
tain this  action  at  law,  and,  if  he  recovers  judgment,  will  hold 
the  proceeds,  so  far  as  they  inure  to  the  benefit  of  the  child 
of  the  assured,  in  trust  for  him.  The  equitable  rights  of  the 
child  under  the  statute,  and  the  extent  to  which  they  may  be 
subject  to  a  claim  of  the  assignee  for  reimbursement  of  the 
sums  paid  by  him  for  premiums  and  assessments,  or  otherwise, 
cannot  now  be  determined,  but  may  be  ascertained  upon  a  bill 
of  interpleader  filed  by  the  insurance  company,  or  in  a  suit  by 
the  child  against  this  plaintiff  after  he  shall  have  recovered 
judgment  in  this  action."  ^ 

§  394.  If  a  husband  insures  his  life  for  the  benefit  of  his 
wife,  without  her  authority,  the  policy  being  made  payable  to 
her,  her  subsequent  acceptance  of  the  policy  is  such  a  rati- 
fication of  the  act  of  her  husband  as  to  bring  her  within  the 
statute  which  authorizes  a  wife  to  cause  her  husband's  life 
to  be  insured,  and  to  constitute  a  valid  contract  between  her 
and  the  insurance  company .^ 

§395.  Assignment  —  What  constitutes  —  Possession  —  Deliv- 
ery.—  Possession  of  the  policy  is  only  ^yrima  facie  evidence  of 
a  right  to  claim  the  proceeds,  and  is  open  to  the  objection  that 
there  is  an  assignment  outstanding  in  the  hands  of  another,'^ 
or  to  any  other  evidence  explanatory  of  the  possession  and 
showing  its  purpose. 

Mere  possession,  however,  is  evidence  of  title  in  the  policy 
and  the  right  to  its  proceeds.  In  the  absence  of  a  formal 
transfer  in  writing,  which  is  not  necessary,  there  are  many 

1  Tlie  general  subject  of  the  right  to  sue,  and  who  may  claim  the  loss,  will 
be  considered  hereafter,  wlien  we  come  to  treat  of  the  loss  and  its  incidents. 

2  Thompson  r.  Am.  Fire,  Life,  and  Sav.  Ins.  Co.,  46  N.  Y.  675. 

3  "Wood  V.  Phoenix  Mut.  Life  Ins.  Co.  of  Hartford,  22  La.  An.  617. 


ASSIGNMENT   OF   THE   POLICY.  479 

other  facts  and  circumstances  which  courts  will  recognize  as 
equivalent  to  au  assignment.     Delivery  is  not  essential. 

While  delivery  of  the  instrument  of  assignment  seems  to  be 
necessary  as  against  the  assignee  in  bankruptcy,^  or  at  least 
a  delivery  and  deposit  of  the  policy  before  the  bankruptcy,  for 
that  purpose,  with  notice  to  the  company,  which  may  be  after 
the  fiat,"  it  does  not  seem  to  be  necessary  in  a  case  where  a 
person  insures  his  life  and  assigns  his  policy,  and  the  assignee 
gives  notice  to  the  insurers  and  subsequently  pays  all  the  pre- 
miums. In  one  case,  though  the  assignee  had  never  received 
the  policy,  it  was  held  he  was  entitled  to  it,  even  against  one 
who  had  innocently  advanced  money  to  the  assignor  after  the 
assignment.^  So  a  letter  written  by  the  insured,  giving  notice 
of  a  wish  to  transfer  his  interest  to  a  third  person,  the  letter 
being  shown  to  the  company  and  its  contents  noted  on  their 
books,  was  held  to  be  a  good  assignment  in  equity  against  a 
subsequent  assignee  who  had  got  possession  of  the  policies.* 
Reputed  ownership,  "and  the  fact  that  the  policy  is  left  within 
"  the  order  and  disposition  "  of  the  bankrupt,  seem  to  require 
something  more  to  perfect  an  assignment  of  a  policy  as  against 
an  assigifee  in  bankruptcy  than  as  against  an  ordinary  assignee. 
But  a  mere  direction  from  the  solicitor  of  the  assignee,  though 
entered  by  the  company  on  its  books,  to  send  letters  touching 
the  policy  to  that  solicitor,  is  no  notice  to  take  tiie  policy  out 
of  the  order  and  disposition  of  the  bankrupt  as  against  his 
assignee.^  Yet  where  it  was  provided  that  if  the  policy  shonld 
be  assigned  bona  fide,  the  assignee  should  have  the  benefit  of 
it  so  far  as  his  interest  extended,  although  the  insured  should 
commit  suicide,  it  was  held  that  a  deposit  of  the  policy  as 
security  for  a  debt,  accompanied  by  a  letter  promising  to  assign 
it  upon  request,  though  there  was  no  notice  to  the  insurers, 
was  a  bona  fide  assignment  within  the  meaning  of  the  policy.^ 
Indeed,  in  such  case,  a  mere  deposit  gives  the  depositary  a 

1  Palmer  v.  Merrill,  6  Cush.  (Mass.)  282. 

2  In  re  Styam,  1  Phillips'  Ch.  105. 

3  Neale  i;.  Molineux,  2  C.  &  K.  672. 

*  Chowne  et  al.  v.  Baylis,  31  Beav.  351. 

5  West  V.  Reid,  2  Hare,  Ch.  261. 

6  Cook  V.  Black,  1  Hare,  Ch.  390. 


480  insurance:  fire,  life,  accident,  etc. 

"  bona  fide  interest "  in  the  policy  "  as  a  security  for  money."  ^ 
So  a  deposit  with  a  letter  authorizing  the  depositary  to  hold 
as  security  for  any  indebtedness  that  may  exist  between  the 
insured  and  the  assignee,  is  an  "  assignment "  which  a  court 
of  equity  will  recognize  and  enforce.^  So  if  the  policy  if 
"  legally  assigned  "  is  to  be  good  to  the  assignee,  a  deposit  as 
security  for  any  .balance  of  account  which  may  be  found  due 
as  between  the  assured  and  the  assignee  is  good.  As  in  strict- 
ness a  policy  cannot  be  legally  assigned,  the  words  here  must 
be  taken  in  the  popular  sense  as  equivalent  to  "  lawfully,"  that 
is,  effectually  and  properly  assigned,  so  that  the  courts  can 
recognize  and  enforce  the  act.^ 

§  396.  Notice  of  Assignment  —  Life.  —  Notice  of  the  assign- 
ment is  not  necessary  to  its  validity  as  between  the  assignees 
and  the  insurers  unless  required.  In  this  respect  assignments 
of  life  policies  bear  a  more  near  analogy  to  marine  than  to  fire 
policies.  When  the  contract  is  to  pay  to  personal  representa- 
tives or  assigns,  the  right  of  the  assignee  becomes  perfect  by 
force  of  the  assignment  alone,  and  by  the  transfer  he  becomes 
instantly  invested  with  the  legal  interest  in  the  policy,  of  which 
by  the  same  act  the  assignor  becomes  devested.  The  insurer 
does  not  need  notice  for  his  protection.  He  cannot  be  required 
to  pay  unless  the  policy  is  produced,  or  its  non-production  sat- 
isfactorily accounted  for ;  nor  can  he  be  required  to  pay  with- 
out proof  that  the  person  demanding  payment  is  by  law  the 
rightful  assignee  of  the  policy,  and  entitled  to  recover  the  money. 
He  is  sufficiently  protected  against  all  risks,  except  such  as 
may  arise  from  his  own  carelessness,  against  which  the  law 
gives  him  no  protection.^  But  for  his  own  protection,  where  it 
it  is  not  required,  it  may  be  prudent  for  the  assignee  to  give 
notice,  in  order  to  avoid  the  claims  of  subsequent  assignees, 
as  also  claims  for  set-off  for  advances  to  the  assignor  before 
notice.  When  notice  is  required,  notice  after  death  is  suffi- 
cient, and  probably  at  any  time  before  payment  to  the  repre- 

1  Moore  v.  Woolsey,  4  E.  &  B.  243. 

2  Jones  V.  Consolidated  Ins.  Co.,  26  Beav.  256. 

3  Dufaur  v.  Prov.  Life  Ass.  Co.,  25  Beav.  603. 

4  Mut.  Prot.  Ins.  Co.  v.  Hamilton,  6  Sneed  (Tenn,),  269. 


ASSIGNMENT   OF   THE   POLICY.  481 

sentatives  of  the  assignee.^  Still,  in  many  cases,  notice  of  the 
assignment  is  required,  and  the  assent  of  the  company  thereto, 
as  a  guard  against  the  dangers  of  speculative,  not  to  say 
gambling,  insurance.  When  these  are  required,  of  course,  the 
assignment  is  ineffectual  without  them.  And  so  it  was  held 
in  Stevens  v.  Warren,^  which  was  a  case  where  the  assured  in 
his  lifetime  assigned  his  policy  to  one  who  had  no  insurable 
interest  in  the  life  of  the  assured,  without  the  assent  of  the 
insurers,  which  by  the  terms  of  the  policy  was  requisite.  It 
is  easy  to  see  that  unless  this  check  were  provided  a  danger- 
ous species  of  gambling  and  speculation  might  be  encour- 
aged. Verbal  notice  will  be  sufficient,  unless  it  be  required 
to  be  in  writing,^  and  to  an  agent,*  unless  he  be  a  trustee,  or 
in  some  way  interested.^  No  form  of  words  is  necessary.  Any 
expression  in  words  appropriate  to  convey  the  fact,  and  used 
for  that  purpose,  will  amount  to  notice.  It  is  enough  for  the 
assignee  to  say  that  he  is  the  holder.^  But  the  words  should 
be  used  under  such  circumstj\nces  as  to  naturally  call  the 
attention  of  the  insurers  to  the  fact  that  notice  is  intended. 
A  mere  incidental  mention,  therefore,  to  a  clerk,  by  the  agent 
of  the  holder,  who  had  been  sent  to  inquire  if  the  premiums 
had  been  paid,  might  not  be  enough;'  and  information  ac- 
quired in  casual  conversation,  such  as  would  not  be  ordinarily 
treated  as  having  any  special  purpose,  would  not  be  notice,^  at 
least  as  against  the  claim  of  a  subsequent  assignee.^ 

§  397.  Assignment  —  Fraud.  —  If  the  assignment  be  procured 
by  undue  influence,  which  amounts  to  moral  duress,  as  by  ex- 
citing the  fears  of  a  wife  by  threats  that  her  husband  shall  be 
incarcerated  if  she  does  not  make  the  assignment,^'^  of  course 
it  is  void,  as  is  also  the  case  if  it  be  procured  by  fraud  ;  ^^  as 

1  New  York  Life  Ins.  Co.  v.  Flack,  3  Md.  341. 

2  101  Mass.  565. 

3  North  Brit.  Ins.  Co.  i;.  Hallett,7  Jur.  n.  s.  12G3;  Gale  i^.  Lewis,  9  Q.  B.  742. 
*  Ibid. 

5  Browne  v.  Savage,  4  Drew.  635. 

6  Ex  parte  Steight,  2  Dea.  &  Chit.  314. 

7  Edwards  v.  Scott,  2  Scott  (N.  H.),  266. 

8  Edwards  v.  Martin,  1  L.  R.  Eq.  121. 

9  Nortli  Brit.  Ins.  Co.  v.  Ilallett,  7  Jur.  n.  s.  1263. 

10  Eadie  v.  Slimmon,  26  N.  Y.  9.  "  Ante,  §  385. 

31 


482  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

where,  upon  private  information  of  the  dangerous  sickness  of 
the  insured,  the  policy  is  purchased  of  the  assignee  of  the 
insured  at  what  it  would  be  worth  if  there  was  no  such  sick- 
ness, the  assignee  being  in  ignorance  of  the  fact;^  and  so  where 
possession  is  obtained  of  a  policy  payable  to  one  third  person, 
by  false  pretences  on  the  part  of  the  person  who  effected  the 
insurance,  which  upon  his  request  is  cancelled,  and  thereupon 
another  policy  is  issued  payable  to  a  different  person  from  the 
payee  in  the  cancelled  policy .^  This  case  was  a  bill  in  equity 
by  the  payee  of  the  first  policy  against  the  company  and  the 
payee  of  the  second  policy  (who,  however,  did  not  appear, 
though  notified  of  the  suit),  to  compel  the  payment  of  the 
proceeds  of  the  second  to  her. 

§  398.  Assignment  of  Life  Policy  to  a  Party  without  Interest 
void.  —  All  the  objections  that  exist  against  issuing  a  policy 
to  one  upon  the  life  of  another,  in  whose  life  the  former  has 
no  insurable  interest,  exist  against  his  holding  such  policy  by 
mere  purchase  and  assignment  from  another.  In  either  case 
the  holder  of  such  policy  is  interested  in  the  death,  rather 
than  in  the  life,  of  the  insured.  The  policy  of  the  law  forbids 
such  speculations  based  on  the  continuance  of  human  life. 
It  will  not  uphold  a  practice  which  incites  danger  to  life,  and 
it  substantially  declares  that  no  one  shall  have  any  claim  under 
a  policy  upon  the  life  of  another,  in  whose  life  he  had  no  insur- 
able interest  at  the  time  he  acquired  the  policy,  whether  the 
policy  be  issued  to  him  directly  from  the  insurer,  or  whether 
he  acquires  the  policy  by  purchase  and  assignment  from  an- 
other. If  he  may  purchase  a  policy  on  the  life  of  another,  in 
whose  life  he  has  no  interest,  as  a  mere  speculation,  the  door 
is  open  to  the  same  practice  of  gambling,  and  the  same  temp- 
tation is  held  out  to  the  purchaser  of  the  policy  to  bring  about 
the  event  insured  against  as  if  the  policy  had  been  issued 
directly.  It  is,  in  fact,  an  attempt  to  do  indirectly  what  the  law 
will  not  permit  to  be  done  directly.^    In  this  case,  the  insured 

'  Jones  et  al.  v.  Keene,  2  Mood.  &  Rob.  348,  and  note. 
2  Lemon  v.  Phojnix  Mut.  Life  Ins.  Co.,  38  Conn.  294.     And  see  ante,  §  385. 
'■'  Franklin  Life  Ins.  Co.  v.  Hazzard,  Sup.  Ct.  Ind.,  2  Ins.  L.  J.  180,  citing  and 
approving  Stevens  v.  "Warren,  101  Mass.  5G4,  and  doubting  St.  John  v.  Am.  Mut. 


ASSIGNMENT    OF   THE   POLICY.  483 

sold  his  policy  to  one  who  was  not  his  creditor,  and  who  had 
no  insurable  interest,  and  the  company  assented  to  the  sale 
and  assignment. 

§  399.  Assignment  of  Part  ■without  Assent  invalid.  —  So  also 
an  assignment  of  part  of  the  proceeds  of  a  policy,  as,  for  in- 
stance, by  the  insured,  a  debtor,  to  secure  his  creditor,  carries 
with  it  no  obligation  on  the  part  of  the  insurer  to  pay  the  assignee 
that  part  unless  the  insurer  expressly  assent,  —  upon  the  famil- 
iar principle  that  a  debtor  cannot  be  presumed  to  consent  that 
what  he  has  agreed  to  pay  in  solido  and  at  once  to  one  person, 
he  may  be  obliged  to  pay  in  parts  to  different  individuals. 
He  will  not  be  presumed  to  give  several  parties  several  rights 
of  action  against  him  when  only  one  right  existed,  unless  he 
plainly  assent  thereto.  Mere  notice  will  not  do.  And  at  law 
the  creditor  cannot  recover  in  an  action  against  the  adminis- 
trator of  the  insured. 1  In  a  cause  in  equity,  however,  in  Illi- 
nois, where  the  policy  was  payable  to  the  wife,  and  she  had 
assigned  a  part  of  it  to  secure  a  debt  of  her  husband,  and 
after  his  death  refused  to  recognize  the  assignment,  and 
claimed  the  whole  amount,  —  on  a  bill  of  interpleader,  filed  by 
the  insurers,  it  was  held  that  the  assignment  must  be  enforced 
in  favor  of  the  creditor,  and  the  balance  of  the  proceeds  paid 
to  the  widow.2 

Life  Ins.  Co.,  13  N.  Y.  31 ;  Valton  v.  Nat.  Loan  Fund  Life  Ass.  Co.,  20  N.  Y.  32; 
and  Ashley  v.  Ashley,  3  Sim.  149,  apparently  to  the  contrary. 

1  Palmer  v.  Merrill,  6  Gush.  (Mass.)  282. 

2  Pomeroy  v.  Manhattan  Life  Lis.  Co.,  40  111.  398. 


484  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 


CHAPTER    XVIII. 

OF   THE   RISK,   ITS   DURATION    AND   EXTENT. 

§  400.  Duration  of  the  Risk — When  it  commences — "Time 
of  Insurance."  —  As  a  general  rule,  the  policy,  if  delivered,  takes 
effect  from  its  date,  unless  it  be  otherwise  stated,  as  that  it 
shall  not  be  valid  till  the  premium  be  paid,  or  some  other 
condition  be  complied  with,  and  then  upon  the  payment  of 
the  premium  or  compliance  with  the  required  condition,  or  a 
waiver  of  either,  it  covers  the  subject-matter  of  insurance 
from  the  date  of  the  policy,  unless  there  is  evidence  of  a  con- 
trary intent.^  If  the  premium  be  paid,  and  the  policy  be  not 
delivered  till  afterwards,  the  policy  takes  effect  by  relation  as 
of  its  date,  even  though  a  loss  intervenes.^  If  it  be  delivered, 
but  upon  the  express  stipulation  that  it  is  to  take  effect  on  a 
certain  day,  that  stipulation  will  control ;  ^  or,  upon  the  express 
understanding  that  it  is  not  to  take  effect  till  another  policy 
has  been  surrendered,  it  will  not  relate  back  so  as  to  cover  a 
loss  which  occurs  prior  to  the  required  surrender.^ 

In  Isaacs  v.  Royal  Insurance  Company,^  it  was  queried 
whether  a  policy  from  a  certain  day  to  a  certain  other  day 
would  cover  a  loss  on  the  first-mentioned  day  ;  but  in  Massa- 
chusetts it  has  been  held,  that  a  lease  from  the  "  first  day  of 
July "  takes  effect  on  the  second  day  of  July.^  "  From  the 
day  of  the  date,"  and  "  from  the  date,"  were  formerly  lield  to 

1  Ruse  V.  Mut.  Ben.  Life  Ins.  Co.,  23  N,  Y.  516  ;  Whitaker  v.  Farmers'  Union 
Ins.  Co.,  29  Barb.  (N.  Y.)  312;  Hallock  v.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268; 
8.  c.  affirmed,  3  ib.  645 ;  ante,  §§  57,  58,  64,  65. 

2  Lightbody  v.  N.  A.  Ins.  Co.,  23  Wend.  (N.J".)  18^  City  of  Davenport  v. 
Peoria  Mar.  and  Fire  Ins.  Co.,  17  Iowa,  276.    /C  /J\^3  ' 

'^  American  Home  Ins.  Co.  v.  Patterson,  28  Ind.  17  ;  Western  v.  Genessee  Mut. 
Ins.  Co.,  2  Ker.  (N.  Y.)  258. 

*  Atlantic  Ins.  Co.  i;.  Goodall,  35  N.  H.  328. 
•    5  39  L.  J.  Exch.  189. 

6  Atkins  V.  Sleeper,  7  Allen  (Mass.),  487. 


RISK,   ITS   DURATION   AND   EXTENT.  485 

be  distinguished  in  that,  in  the  computation  of  time,  it  was 
reckoned  from  the  day  in  the  former  case,  and  excludes  it, 
while  in  the  latter  it  was  reckoned  from  the  act  or  thing  done, 
and  includes  the  day  on  which  it  is  done.^  But  it  has  since 
been  lield  in  England  that  the  two  phrases  mean  the  same 
thing,  and  that  the  rule  of  inclusion  or  exclusion  applies  ac- 
cording to  the  intent  of  the  parties,  to  be  derived  from  the  con- 
text. In  this  country,  however,  there  is,  in  some  courts,  an 
inclination  to  adhere  to  the  distinction.^  It  is  impossible,  how- 
ever, to  reconcile  the  decisions  either  with  the  rule  of  inclu- 
sion or  exclusion.  The  circumstances  and  intent  of  the  parties 
are  to  control ;  and  such  construction  should  be  given  as  will 
operate  most  to  the  ease  of  the  party  entitled  to  favor,  and  by 
which  rights  will  be  secured  and  forfeitures  avoided.'  And 
where  the  policy  was  in  fact  a  reinsurance,  and  was  for  a  year, 
but  specifying  no  time  when  the  year  was  to  begin,  it  was  held 
that  it  began  from  the  date  of  the  prior  policy,  though  that 
was  some  months  prior  to  the  issue  of  the  latter  policy.^ 

The  time  of  insurance,  within  the  meaning  of  a  policy 
which  provides  that  it  is  not  to  take  effect  if  the  subject  of 
insurance  is  deceased  "  at  the  time  of  insurance,"  is  not 
necessarily  identical  with  the  date  of  the  policy.  By  its 
special  terms  the  policy  may  provide  that  the  insurance  shall 
run  from  a  certain  day  prior  to  its  date,  to  a  certain  day 
subsequent  thereto,  and  if  the  death  of  the  subject-matter 
of  insurance  intervene  between  the  first  date  and  the  date  of 
the  policy,  it  will  be  a  loss  covered  by  the  policy.  When  the 
policy  itself  covers  a  period  antecedent  to  its  date,  and  does 
not  specify  the  contingency  upon  which  it  shall  take  effect, 
the  date  of  the  policy,  or  of  its  actual  delivery,  becomes  of 
little  or  no  importance  in  determining  when  the  insurance 
takes  effect.^ 

1  Sir  R.  Howard's  Case,  2  Salk.  625. 

2  Atkins  V.  Sleeper,  7  Allen  (Mass.),  487;  Blake  v.  Crowninshield,  9  N.  H. 
304 ;  Cornell  v.  Moulton,  3  Denio  (N.  Y.),  12 ;  Weeks  v.  Hall,  19  Conn.  376. 

3  O'Connor  v.  Towne,  1  Texas,  107. 

4  Phila  Life  Ins.  Co.  v.  Am.  Life  Ins.  Co.,  23  Penn.  St.  65. 

5  American  Horse  Ins.  Co.  v.  Patterson,  28  lud.  17  ;  Kentucky  Mut.  Ins.  Co. 
V.  Jenks,  5  Ind.  96. 


486  INSURANCE  :   FIRE,  LIFE,   ACCIDENT,   ETC. 

§  401.  Diiration  of  the  Risk  —  When  it  terminates.  —  Insur- 
ance from  a  given  day  until  a  certain  other  given  day,  and  for 
so  long  after  as  the  insured  shall  pay  the  premium  paid  on 
the  first  day,  extends  to  and  includes  the  latter  day,  it  being 
the  evident  intention  that  the  policy  is  to  be  renewed,  as  any 
other  construction  would  leave  the  insured  without  protection 
on  each  day  of  renewal.^  A  comparatively  recent  case  in  Mas- 
sachusetts presented  a  question  of  some  complication  as  to  the 
time  covered  by  the  policy.  The  policy  was  dated  Oct.  5, 1866, 
and  contained  the  following  clauses :  "  This  policy  of  insur- 
ance is  for  the  period  of  twelve  months,  commencing  at  twelve 
o'clock  (noon)  on  the  fifth  day  of  October,  1866,  and  termi- 
nating at  twelve  o'clock  (noon)  on  the  fifth  day  of  October, 
1867,"  "  against  loss  of  life  ...  to  be  paid  within  ninety  days 
after  sufficient  proof  that  the  assured  at  any  time  after  the 
date  hereof,  and  before  the  expiration  of  this  policy,  shall 
have  sustained  personal  injury  caused  by  any  accident  within 
the  meaning  of  this  policy,  .  .  .  and  such  injuries  shall  occa- 
sion death  within  ninety  days  from  the  happening  thereof." 
On  the  eleventh  day  of  December,  1866,  at  nine  o'clock  in  the 
forenoon,  the  insured  met  with  an  accident  in  consequence  of 
which  he  died  on  the  12th  of  March,  1867,  about  nine  o'clock 
in  the  forenoon.  Upon  these  facts  the  court  (Chapman,  C.  J.) 
says :  — 

"  No  computation  of  time  will  bring  the  death  within  ninety 
days  from  the  happening  of  the  accident.  But  the  rule  of 
computation  is  stated  in  Atkins  v.  Sleeper.-  When  time  is 
computed  from  an  act  done,  the  general  rule  is  to  include  the 
day.  "When  it  is  computed  from  the  day  of  the  act  done,  the 
day  is  excluded.  The  language  of  the  instrument  requires 
that  the  computation  be  made  from  the  time  of  the  act  done, 
namely,  the  accident. 

"  But  it  is  contended  that  as  this  is  an  insurance  for  twelve 
months,  the  provision  by  which  it  is  attempted  to  exempt  the 

^  Isaacs  et  al.  v.  Royal  Ins.  Co.,  22  L.  T.  681.  The  court  take  pains  to  say, 
in  this  case,  that  they  do  not  wish  to  give  any  opinion  as  to  whetiier  the  first  day 
is  also  included. 

^  7  Allen  (Mass.),  487. 


RISK,   ITS   DURATION   AND    EXTENT.  487 

company  from  liability  for  the  death  of  the  insured,  happening 
from  a  cause  within  the  meaning  of  the  policy,  during  said 
term,  is  inconsistent  with  the  general  object  and  tenor  of  the 
policy,  and  is  void.  No  such  inconsistency  is  apparent  to  the 
court.  On  the  contrary,  the  policy  clearly  describes  the  cases 
in  which  the  loss  of  life  shall  make  the  company  responsible, 
and  limits  the  liability  to  such  cases.  It  is  further  contended 
that  if  the  provision  in  tlie  policy  that  the  injuries  shall  occa- 
sion death  within  ninety  days  can  have  any  legal  force  or 
effect,  it  must  be  construed  to  mean  such  injuries  as  shall 
occasion  death  within  ninety  days  after  the  termination  of  the 
twelvemonth.  But  as  the  ninety  days  are  expressed  to  be 
from  the  happening  of  the  accident,  this  construction  cannot 
be  accepted.  It  is  said  that  unless  the  .clause  be  void,  or  be 
construed  as  above  stated,  an  effectual  life  insurance  for  more 
than  ninety  days  was  impossible.  If  this  were  so,  it  would  be 
the  result  of  the  terms  of  the  contract  upon  which  the  action 
is  brought.  But  here  is  simply  an  insurance  against  certain 
accidents  which  may  happen  within  a  given  time,  and  result 
fatally  within  a  given  time  after  they  happen."  ^ 

§  402.  Risk  —  "What  it  includes  —  Fire.  —  tJnless  there  be  in 
the  policy  specific  limitations,  the  risk  extends  to  all  losses  by 
fire,  death,  or  accident,  or  whatever  cause  of  loss  or  injury  be 
insured  against,  however  they  may  be  occasioned.  Of  the  force 
and  effect  of  some  of  the  exceptions  and  limitations  we  have 
already  treated.^  It  has  often  been  said  that  loss  by  fire  means 
by  actual  ignition,  and  for  this  the  early  case  of  Austin  v. 
Drewe^  is  cited  as  an  authority,  which  simply  decides  that  an 
insurance  company  is  not  liable,  on  a  policy  insuring  against 
all  damage  by  fire  to  the  stock  and  utensils  of  a  sugar-house, 
for  damage  done  to  the  sugar  by  the  heat  of  the  usual  fires 
employed  for  refining,  the  fires  being  unusually  intense  by 
reason  of  negligence  in  their  management.  And  it  lias  been 
suggested  that  the  true  ground  of  the  decision  was,  that  insur- 
ers do  not  undertake  to  be  responsible  for  the  excessive  use  of 
fire  purposely  used,  whereby  the  article  to  which  the   fire  is 

1  Perry  v.  Pror.  Ins.  and  Inv.  Co.,  99  Mass.  162. 

2  Ante,  c.  9.  ^  6  Taunt.  436. 


488  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

purposely  applied  is  damaged,  whether  by  heat  or  ignition  ; 
and  that  they  would  be  no  more  liable  in  this  case  than  they 
would  where  bread  is  overbaked  or  coffee  is  overroasted.  At 
all  events,  if  the  case  of  Aiistin'v.  Drewe  decides  any  thing 
more  than  is  above  suggested,  it  has  been  denied  to  be  good 
law,  by  very  high  authority.^  And  it  can  scarcely  be  doubted 
that  in  certain  cases  injury  done  to  a  building  and  its  contents 
by  heat,  as  by  scorching  paint,  cracking  glass,  and  blistering 
pictures  and  furniture,  or  heating  and  thus  destroying  many 
articles  of  commerce,  without  actual  ignition  or  visible  burn- 
ing, is  within  the  risk  ;  though  it  is  no  doubt  true  that  where  a 
chemist,  artisan,  or  manufacturer  employs  fire  in  the  processes 
of  art  and  manufacture,  and  the  article  which  is  thus  purposely 
subjected  to  the  action  of  fire  is  damaged  in  the  process,  —  the 
fire  not  passing  its  ordinary  limits, —  such  damage  is  not  within 
the  loss  covered  by  the  policy.-  In  Sohier  v.  Norwich  Fire 
Insurance  Company ,2  which  was  a  case  where  the  fire,  originat- 
ing, from  without  a  theatre,  heated  its  walls  to  such  a  degree 
as  to  cause  it  to  take  fire  within,  the  insurers  were  held  liable. 
The  policy,  however,  provided  that  they  should  be  exempt  from 
loss  for  fire  originating  in  the  theatre,  and  the  real  question 
was  whether  the  fire  in  this  case  originated  in  the  theatre ;  and 
it  was  held  that  it  did  not.  In  Brown  v.  King's  County  Fire 
Insurance  Company,^  a  druggist  was  warming  upon  his  stove 
an  inflammable  ointment,  as  he  was  wont  to  do,  which  took 
fire  and  communicated  with  the  building  ;  and  it  was  held  that 
this  was  a  loss  covered  by  the  policy. 

§  403.  Risk  —  "  Usurped  Po^wer  "  —  "  Civil  Commotion  "  — 
"Mobs  or  Riots."  —  Destruction  by  fire  set  by  an  ordinary  mob 

•  Gushing,  J.,  in  Scripture  v.  Lowell,  10  Gush.  (Mass.)  356.  After  a  very 
able  criticism  of  the  case  of  Austin  v.  Drewe,  Gushing,  J.,  adds  :  "  It  has  been 
thought  proper  thus  to  analyze  the  case  of  Austin  v.  Drewe,  because,  having  been 
variously  reported  by  four  different  reporters,  and  presenting  itself  prominently 
in  several  of  the  text-books,  but  in  nearly  all  of  them  with  more  or  less  of  mis- 
conception, it  lias  become  the  starting-point,  in  legal  construction,  of  conflict- 
ing lines  of  argument,  leading  to  sundry  false  conclusions,  and  among  others, 
that  of  a  supposed  application  to  the  present  case."  See  also  note  of  Judge  Ben- 
nett, appended  to  the  case  in  the  first  volume  of  his  "  Fire  Insurance  Gases," 
p.  104.     Trumbull,  J.,  Gase  v.  Hartford  Ins.  Co.,  13  111.  676. 

2  Ibid. ;  Beaumont,  Ins.  37.  3  11  Allen  (Mass.),  336. 

*  31  How.  (N.  Y.)  508. 


RISK,   ITS   DURATION   AND   EXTENT.  489 

is  not  destruction  by  "  usurped  power-"  "  Usurped  power  " 
would  seem  to  mean  that  of  an  armed  invasion  or  rebellion, 
when  armies  are  on  foot  in  their  support.  And  perhaps  there 
is  a  distinction  between  an  ordinary  mob,  or  bread  riot,  and  a 
rebellious  mob,  or  one  having  political  purposes.  The  one 
would  be  treasonable,  and  might  be  properly  said  to  usurp 
power,  while  the  other  would  be  only  criminal.^  Nor  is  a 
destruction  of  the  property  by  order  of  the  municipal  authori- 
ties to  stay  a  conflagration  a  destruction  caused  by  "  usurped 
power,"  even  though  it  be  done  illegally.  It  is  only  a  destruc- 
tion by  those  usurping  the  power  of  government,  that  is  ex- 
cluded by  such  a  provision.^  "  Usurped  power"  is  "  rebellion 
conducted  by  authority,"  "  got  to  such  a  head  as  to  be  under 
some  authority."  2  And  fire  occasioned  by  the  burning  of  a 
bridge,  lawfully  ordered  by  the  military  authorities,  to  pre- 
vent the  advance  of  a  hostile  armed  force,  regularly  organ- 
ized, is  not  a  loss  "  occasioned  by  mobs  or  riots."  ^  In  Barton 
V.  Home  Insurance  Company,^  during  the  late  rebellion,  the 
national  soldiers  were  overpowered  and  compelled  to  surrender 
to  an  armed  and  organized  force  of  rebels,  by  whom  the  prop- 
erty was  burned ;  but  there  was  no  evidence  that  the  destruc- 
tion was  authorized  by  an  order  from  the  commanding  officers. 
After  referring  to  the  English  cases,  and  to  the  fact  that  the 
case  at  bar  was  one  of  novel  impression  in  this  country,  the 
court,  in  giving  judgment  for  the  defendant,  proceeds  :  — 

"  It  would  be  doing  violence  to  the  language  which  the 
parties  have  seen  fit  to  use,  and  would  be  also  a  strained  and 
unnatural  interpretation  of  their  meaning,  to  say  that  the 
insurer  would  be  liable  in  all  cases,  except  when  he  could 
show  that  the  burning  took  place  by  order  of  the  officer  imme- 
diately commanding  the  rebellious  forces.  The  language  of 
the  proviso  is,  tliat  the  company  shall  not  be  liable  for  any  loss 
or  damage  by  fire  which  may  happen  by  means  of  invasion, 

1  "Wilmot,  C.  J.,  in  Drinkwater  v.  Lon.  Ass.  Co.,  2  Wilson,  363. 

2  City  Fire  Ins.  Co.  v.  Corliss,  21  Wend.  867;  Pentz  v.  ^tna  Ins.  Co.,  9  Paige, 
Ch.  (N.  Y.)  568. 

3  Per  Lord  Mansfield,  Langdale  v.  Mason,  2  Marsh.  Ins.  792. 
*  Harris  i'.  York  Mut.  Ins.  Co.,  50  Penn.  St.  341. 

5  42  Mo.  156. 


490  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

military  or  usurped  power,  &c.  If  the  military  or  usurped 
power,  or  the  invasion,  was  the  means  that  occasioned,  or  the 
proximate  cause  of,  the  loss,  then  the  company  cannot  be  held 
liable  within  the  terms  of  the  contract.  An  army  of  invasion, 
or  engaged  in  rebellion,  is  liable  to  commit  acts  of  spoliation 
or  burning  without  any  direct  commands  from  the  superior 
officers,  and  the  insurer  certainly  never  intended  to  incur  a 
risk  by  reason  of  such  acts.  To  exonerate  the  defendant  from 
its  liability,  it  is  not  material  how,  or  in  what  way,  the  fire 
originated,  provided  it  was  within  the  range  of  any  one  or 
more  of  the  excepted  causes.  The  real  question  is,  did  the 
fire  happen  or  the  loss  occur  by  reason  of,  or  in  consequence  of, 
the  military  and  usurped  power  of  the  rebels  ?  .  .  .  and  were 
they  the  proximate  cause  of  the  burning  and  destruction  of 
the  property  ? " 

But  the  anti-Roman  Catholic  riots  of  London  in  1780, 
which  grew  out  of  hostility  to  the  laws  granting  certain  priv- 
ileges to  the  Catholics,  and  were  long-continued  and  violent 
and  tumultuous,  amounted  to  a  "  civil  commotion "  within 
the  meaning  of  a  policy  exempting  the  insurers  from  loss 
in  case  of  "  civil  commotion."  Tbis  "  is  not  an  occasional 
riot,"  said  Lord  Mansfield  to  the  jury  in  that  case  ;  "  that 
would  be  another  question.  I  do  not  give  any  opinion  what 
that  might  be.  ...  I  think  a  civil  commotion  is  this, — 
an  insurrection  of  the  people  for  general  purposes,  though  it 
may  not  amount  to  a  rebellion  where  there  is  a  usurped 
power."  ^  If  the  insurer  be  liable  for  loss  occasioned  by  a  riot, 
the  fact  of  the  riot  need  not  first  be  established  by  a  criminal 
prosecution,  nor  is  it  material  that  the  riotous  assemblage  was 
originally  gathered  for  a  lawful  purpose.^  In  this  case  there 
seems  to  have  been  an  atfray,  succeeded  by  a  riot ;  that  is,  said 
the  court,  "a  tumultuous  disturbance  of  the  peace  by  three 
persons  or  more,"  and  the  fact  that  it  was  preceded  by  an 
afiray  did  not  make  it  the  less  a  riot.  In  Spruil  v.  North  Car- 
olina Mutual  Life  Insurance  Company,^  a  runaway  slave,  whose 

1  Langdale  v.  Mason,  2  Marsh.  Ins.  792. 
■-2  Dupin  V.  Mut.  Ins.  Co.,  5  La.  An.  482. 
i  1  Jones  (N.  C),  126. 


RISK,   ITS  DURATION   AND   EXTENT.  491 

life  was  insured,  was  shot  while  resisting  the  lawfully  appointed 
patrol  who  were  pursuing  him,  and  upon  the  question  whether 
his  death  was  "  by  means  of  any  invasion,  insurrection,  riot, 
or  civil"  commotion,  or  of  any  military  or  usurped  authority, 
or  by  the  hands  of  justice,"  the  court  defined  an  insurrection 
to  be  "  a  seditious  rising  against  the  government ;  a  rebellion  ; 
a  revolt ;  "  and  a  riot  to  be  "  where  three  or  more  persons 
actually  do  an  unlawful  act,  either  with  or  without  a  common 
cause  .  .  .  the  intention  with  which  the  parties  assemble,  or  at 
least  act,  being  unlawful,"  in  the  latter  respect  differing  from 
the  judgment  of  the  Supreme  Court  of  Louisiana,  as  stated 
above.  In  the  same  case  a  commotion  was  said  to  be  "  a 
tumult ;  and  a  tumult  to  be  a  promiscuous  commotion  in  a 
multitude  ;  an  irregular  violence,  a  wild  commotion.  A  civil 
commotion,  therefore,  requires  the  wild  or  irregular  action  of 
many  persons  assembled  together."  And  to  die  by  the  hands 
of  justice  was  said  to  be  "  to  die  by  some  general  sentence  for 
the  commission  of  some  felony."  As  the  slave  met  liis  death 
in  resistance  to  lawful  authority,  the  loss  was  held  not  to  be 
within  any  of  the  exceptions. 

§404.  Risk  —  Injury  by  Water  and  Removal  —  Theft. — 'Dam- 
age resulting  from  bona  fide  efforts  to  save  the  property  from 
tlie  fire,  as  by  water,  and  breakage  by  removal,  and  by  loss  or 
theft  consequent  upon  exposure  occasioned  by  the  fire,  are 
within  the  loss  covered  by  a  policy  against  damage  by  fire.^ 
The  theft  must  be  one  of  the  consequences  of  the  fire  or 
removal,  and  if  so,  the  time  of  the  theft,  whether  at  the  time 
of  the  fire  or  afterwards,  is  immaterial.'-^  But  if  loss  by  theft 
be  expressly  excluded,  there  can  be  no  recovery,  even  though 
by  the  terms  of  the  policy  the  company  is  not  to  be  lial)le  at  all 
for  loss  unless  the  insured  "  use  all  due  diligence  in  removal 

1  Whitehurst  v.  Fayetteville  Mut.  Ins.  Co.,  6  Jones  (N.  C),  352;  Stanley  v. 
"Western  Ins.  Co.,  3  L.  R.  (Exch.)  71  ;  Thompson  v.  Montreal  Ins.  Co.,  6  Upper 
Canada  (Q.  B.),  310;  Lewis  v.  Springfield  Fire  and  Mar.  Ins.  Co.,  10  Gray 
(Mass.),  159;  Tilton  v.  Hamilton  Fire  Ins.  Co.,  1  Bosw.  (Superior  Ct.  N.  Y.) 
867  ;  Independent  Miit.  Ins.  Co.  v.  Agnew,  34  Penn.  St.  96  ;  Witherell  v.  Maine 
Ins.  Co.,  49  Me.  200  ;  Talamon  v.  Home  Ins.  Co.,  16  La.  An.  426. 

2  New.  and  Lon.  and  Liv.  Fire  and  Life  Ins.  Co.,  30  Mo.  100. 


492  insurance:  fire,  life,  accident,  etc. 

and  preservation  of  the  property."  ^  And  the  removal  should 
be  fairly  and  reasonably  necessary,  and  not  as  the  result  of  an 
unreasonable  and  unfounded  apprehension,  as  when  fire  is  at 
a  considerable  distance.  And  in  one  case  it  has  been  held 
that  damages  from  removal,  where  there  was  a  reasonable 
appreliension  of  danger,  and  where  the  fire  was  already  burn- 
ing the  fourth  building  distant  in  the  same  block,  was  not 
recoverable.^  But  the  better  doctrine  no  doubt  is,  that  whether 
the  removal  be  necessary  or  not  depends  upon  the  circum- 
stances of  each  case  ;  and  that  if  the  removal  be  under  such 
circumstances  that  had  it  not  taken  place  the  insured  would 
have  been  guilty  of  negligence,  lie  may  recover,  while  he  can- 
not recover  if  the  goods  are  wantonly  or  unnecessarily  removed, 
or  perhaps  if  prudence  did  not  require  them  to  be  removed.^ 

§405.  Risk — Smoking  —  Illegal  Practices.  —  If  smoking  be 
prohibited,  or  declared  to  be  not  allowed,  a  prohibition  by  the 
insured,  with  abstinence  on  his  own  part,  and  reasonable  and 
proper  precautions  against  it  on  the  part  of  others,  is  a  compli- 
ance with  the  requirement.*  And  the  policy  covers  goods  ille- 
gally kept  for  sale  ;  the  insurance  not  being  upon  the  business 
or  mode  of  sale,  but  upon  the  property  itself.^ 

§406.  Risk  —  Lightning.  —  Loss  by  ignition  resulting  from 
lightning  is  covered  by  a  policy  insuring  against  danger  by 
fire,  or  by  fire  from  lightning.  But  loss  by  being  torn  to 
pieces  by  lightning,  without  combustion,  is  not.^  Insurance 
against  loss  by  fire  resulting  from  lightning  is  one  thing,  and 
insurance  against  loss  by  lightning  is  quite  another ;  "^  and  a 

1  Fernandez  v.  Merchants'  Mut.  Ins.  Co.,  17  La.  An.  131 ;  Webb  v.  Prot.  Ins. 
Co.,  14  Mo.  3. 

2  Hillier  v.  Alleghany  County  Ins.  Co.,  3  Penn.  St.  407. 

3  Case  V.  Hartford  Ins.  Co.,  13  111.  676 ;  Brady  v.  N.  W.  Ins.  Co.,  11  Mich. 
425. 

*  Ins.  Co.  of  North  America  v.  McDowell,  52  111.  121 ;  Aurora  Fire  Ins.  Co. 
V.  Eddy,  55  111.  222. 

5  Niagara  Fire  Ins.  Co.  v.  De  Graff,  12  Mich.  124.     And  see  ante,  §  246. 

6  Babcock  v.  Montgomery  County  Mut.  Ins.  Co.,  6  Barb.  (N.  Y.)  637;  s.  0. 
aflBrmed,  4  Comst.  (N.  Y.)  326 ;  Kenniston  v.  Merrimack  Coimty  Mut.  Ins.  Co., 
14  N.  H.  341. 

^  Ibid. 


RISK,   ITS   DURATION   AND    EXTENT.  493 

company  authorized  to  insure  against  the  former  is  not  thereby 
authorized  to  insure  against  the  latter.^ 

§407.  Risk  —  Misconduct  —  Fraud  — Wilful  Destruction  of 
Property  insured  —  Suicide.  — Loss  by  misconduct  is  not  covered 
by  the  policy,  as  where  one  sets  fire  to  a  steamboat  by  throw- 
ing on  combustibles,  brought  to  an  improper  place  in  contra- 
vention of  law,  and  for  the.  purpose  of  getting  up  a  great  head 
of  steam  while  the  steamboat  is  racing  with  another  boat.^ 
Nor  is  loss  by  fraud,  wilful  burning,  voluntary  suicide,  or  other 
wilful  destruction  of  the  subject-matter  of  insurance,  whereby 
the  event  insured  against  is  brought  about. 

§  408.  Risk  —  Negligence.  —  Mere  carelessness  and  negli- 
glence,  however  great  in  degree,  of  the  insured,  or  his  tenants 
or  servants,  not  amounting  to  fraud,  though  the  direct  cause 
of  the  fire,  are  covered  by  the  policy.  Indeed  one  of  the  prin- 
cipal objects  of  insurance  against  fire  is  to  guard  against  the 
negligence  of  servants  and  others  ;  and,  therefore,  while  it  may 
be  said  generally  that  no  one  can  recover  compensation  for  an 
injury  which  is  the  result  of  his  own  negligence  or  want  of  care, 
the  contract  of  insurance  is  excepted  out  of  the  general  rule. 
Nor  does  it  make  any  difference  whether  the  negligence  is  that 
of  the  insured  himself  or  of  others.  The  law  looks  only  at  the 
proximate  cause  of  the  loss.^  But  negligence  in  a  matter  as 
to  which  the  insurers  expressly  stipulate  that  they  will  not 
assume  the  risk,  as  where  ashes  are  placed  by  a  boy  in  wooden 
vessels,  the  insurers  stipulating  that  they  will  not  assume  the 

1  Andrews  v.  Union  Mat.  Ins.  Co.,  37  Me.  256. 

2  Citizens'  Ins.  Co.  v.  Marsh,  5  Penn.  St.  387.  See  post,  §  411,  for  distinction 
between  misconduct  and  negligence. 

8  Cumberland  Valley  Mut.  Prot.  Co.,  58  Penn.  St.  419 ;  Shaw  v.  Robberds 
et  al.,  6  Ad.  &  El.  75 ;  Catlin  i'.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S. 
C.  Ct.),  434;  Sanford  v.  Mechanics'  Mut.  Fire  Ins.  Co.,  12  Cush.  (Mass.)  541; 
Daniels  v.  Hudson  River  Fire  Ins.  Co.,  12  Cush.  (Mass.)  416;  Micke}'  v.  Bur- 
lington Ins.  Co.,  Sup.  Ct.  Iowa,  2  Ins.  L.  J.  15 ;  Austin  v.  Drewe,  6  Taunt.  436 ; 
s.  c.  4  Campbell  (N.  P.),  561 ;  iMaryland  Fire  Ins.  Co.  v.  Whitford,  2  Law  Tran- 
script, 284  (186'J)  ;  Columbian  Ins.  Co.  v.  Lawrence,  10  Pet.  (U.  S.)  507 ;  Gates 
V.  Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  469;  Williams  v.  New  Eng- 
land Mut.  Fire  Ins.  Co.,  31  Me.  219 ;  Johnson  v.  Berkshire  Mut.  Fire  Ins.  Co., 
4  Allen  (Mass.),  388;  St.  Louis  Ins.  Co.  v.  Glasgow,  8  Mo.  713;  Waters  v. 
Merchants'  Louisville  Ins.  Co.,  11  Pet.  (U.  S.)  213. 


494  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

risk  if  ashes  are  allowed  to  remain  in  wood,  although  the  fact 
was  unknown  to  the  insured,  and  was  done  without  orders 
and  contrary  to  the  usual  practice,  will  work  a  forfeiture.^ 
Whether  tlie  fire  is  the  result  of  negligence  is  of  course  a 
question  of  fact  for  the  jury,  if  the  facts  from  which  it  is  to 
be  inferred  are  in  dispute,  and  is  so  much  a  question  of  cir- 
cumstances that  so  trifling  a  fact  as  dry  weather,  and  the  di- 
rection and  strength  of  the  wind,  are  to  be  taken  into  account 
in  determining  whether  a  fire,  occurring  by  the  dropping  of 
coals  upon  the  track,  and  thence  communicating  through  the 
dry  grass  to  the  plaintiff's  farm  and  land,  is  due  to  the  negli- 
gence of  a  railway  company .^  And  if  the  policy  requires  the 
insured,  upon  the  occurrence  of  a  fire,  to  use  all  reasonable 
means  for  the  "  protection  "  of  the  property,  this  means  that 
he  shall  take  the  requisite  steps  to  prevent  its  further  deteri- 
oration ;  but  it  does  not  require  him  to  repair  or  restore  to  the 
original  condition.^ 

§409.  Risk  —  Negligence  —  "Wilful  Exposure." — Where  an 
accident  policy  forbids  "  wilful  exposure,"  negligence  is  no 
defence.*  So  where  the  policy  provides  liability  for  "  wilful 
and  wanton  exposure."  ^  But  in  Morel  v.  Mississippi  Valley 
Life  Insurance  Company,*^  where  the  policy  said  nothing  about 
negligence,  it  was  held  that  the  insured  having  "  inadvertently  " 
put  his  elbow  out  of  the  window  of  a  railway  carriage,  whereby 
he  contributed  to  the  accident,  could  not  recover,  —  a  decision 
which  is  not  only  unsupported  by  the  citation  of  any  authority, 
but  is  counter  to  the  almost  universal  current  of  the  authori- 
ties.'^ And  no  case  in  life  insurance  has  been  found  where 
negligence  of  usual  precautions  in  the  preservation  of  health, 
or   even    the   utmost   carelessness   and   recklessness   relative 

1  City  of  Worcester  v.  Worcester  Mut.  Fire  Ins.  Co.,  9  Gray  (Mass.),  97. 

2  Webb  V.  R.  AV.  &  O.  R.  R.  Co.,  New  York  Ct.  of  App.,  Jan.  1873,  Alb. 
L.  J.,  Feb.  22,  1873. 

3  Hoffman  v.  iEtna  Fire  Ins.  Co.,  1  Robt.  (Superior  Ct.  N.  Y.)  501 ;  s.  c. 
affirmed,  32  N.  Y.  405. 

•»  Prov.  Life  Ins.  and  Inv.  Co.  v.  Martin,  32  Md.  310. 

6  Schneider  v.  Prov.  Life  Ins.  Co.,  24  Wis.  28. 

6  4  Bush  (Ky.),  535. 

"^  And  see  post,  chapter  on  Accident  Insurance. 


RISK,   ITS   DURATION   AND   EXTENT.  495 

thereto,  have  been  made  a  ground  of  defence.  Yet  no  doubt 
many  cases  of  death  have  occurred  attributable  to  such  negli- 
gence as  the  cause.^ 

§  410.  Risk  —  Gross  Negligence  —  Design.  —  Gross  negligence 
of  workmen  in  making  repairs,  it  was  said,  in  Jolly  v.  Baltimore 
Equitable  Society ,2  will  avoid  the  policy.  But  there  was  noth- 
ing in  the  case  that  required  any  decision  upon  that  point,  and 
it  is  not  probable  that  any  thing  short  of  such  negligence  as 
raises  a  presumption  of  bad  faith,  amounting  to  fraud  or  design, 
was  intended.  This,  by  all  the  autliorities,  avoids  a  policy,  as 
no  man  can  be  allowed  in  a  court  of  justice  to  profit  by  his  own 
wrong,  or  to  avail  himself  of  his  own  turpitude  as  a  ground 
of  recovery  in  a  suit.^  But  losses  by  "  gross  negligence  "  and 
"  design  "  are  sometimes  expressly  excepted  as  grounds  of  lia- 
bility. The  first  term,  as  used  in  a  condition  exempting  from 
loss  on  that  account,  it  has  been  said,"  is  the  want  of  that  dili- 
gence which  even  careless  men  (dissoluti  homines)  are  wont  to 
exercise.*  '  For  he  who  is  only  less  diligent  than  very  careful 
men  cannot  be  said  to  be  more  than  slightly  inattentive ;  he  who 
omits  ordinary  care  is  a  little  more  negligent  than  men  ordi- 
narily are  ;  and  he  who  omits  even  slight  diligence,  fails  in  the 
lowest  degree  of  prudence,  and  is  grossly  negligent.'  "  °  Loss 
by  mere  negligence  is  not  loss  "  by  design,"  which  imports 
plan,  scheme,  and  intention.^ 

§  411.  Risk  —  Negligence  amounting  to  Misconduct.  —  But 
negligence  which  amounts  to  misconduct  is  not  insured  against. 
Misconduct  is  defined  to  be  a  transgression  of  some  established 
and  definite  rule  of  action,  where  no  discretion  is  left  except 
what  necessity  may  demand,  as  contradistinguislied  from  neg- 

1  As  to  what  would  be  the  rule  where  there  are  several  apparent  causes,  of 
which  negligence  may  be  one,  see  ante,  §  301. 

-'  1  Harr.  &  Gill,  295. 

3  Henderson  v.  Western  Mar.  and  Fire  Ins.  Co.,  10  Rob.  (La.)  164;  Huckins 
V.  Peoples'  Mut.  Ins.  Co.,  11  Fost.  (N.  II.)  238;  Robinson  v.  Mercer  County 
Mut.  Fire  Ins.  Co.,  3  Dutch.  (N.  J.)  134;  Western  Farmers'  Ins.  Co.  v.  Miller, 
1  Handy  (Cincinnati  Superior  Ct.),  325.  And  see  also  authorities  cited  in  the 
preceding  section. 

*  Hein.  El.  Jur.  Ub.  8,  tit.  14,  §  787. 

5  Campbell  v.  Monmouth  Mut.  Fire  Ins.  Co.,  59  Me.  430. 

6  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  434. 


496  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

ligence,  carelessness,  and  unskilfulness,  which  are  transgres- 
sions of  some  established  but  indefinite  rule  of  action,  where 
some  discretion  is  necessarily  left  to  the  actor.  Misconduct  is 
a  violation  of  definite  law  ;  carelessness,  an  abuse  of  discretion 
under  an  indefinite  law.  Misconduct  is  a  forbidden  act ;  care- 
lessness, a  forbidden  quality  of  an  act,  and  is  necessarily  indefi- 
nite.^ Thus  where  the  captain  of  a  steamer,  in  running  a 
race  with  another  steamer,  and  for  the  purpose  of  making 
more  steam,  brings  from  the  hold  of  the  vessel  a  barrel  of  tur- 
pentine, knocks  the  head  out,  and  places  it  so  near  the  fur- 
nace that  the  fire  is  communicated  to  the  wood  upon  which 
the  turpentine  is  thrown,  and  thence  to  the  barrel,  such  man- 
ner of  use  of  turpentine  beijig  in  contravention  of  an  act  of 
Congress,  as  matter  of  law,  this  is  misconduct,  and  avoids  the 
policy.  In  Chandler  v.  Worcester  Insurance  Company ,2  Shaw, 
C.  J.,  puts  the  case  of  a  party  insured  standing  by  the  fire, 
which  was  yet  so  trifling  that  by  throwing  on  a  cup  of  water, 
which  was  at  hand,  the  fire  might  be  extinguished,  as  a  case 
of  misconduct  which  would  avoid  a  policy.  The  difference 
between  this  and  designed  destruction,  by  actually  setting  fire, 
is  certainly  hardly  appreciable  as  affecting  the  intent  of  the 
insured,  though  ostensibly  in  one  case  there  is  a  positive  act, 
while  in  the  other  there  is  no  action  at  all. 

§  412.  Risk  —  Fire  occasioned  by  falling  of  Walls  —  Proximate 
Cause.  —  Where  a  fire  had  happened,  and  the  day  after  it  was 
extinguished  the  walls  of  the  burnt  edifice,  in  consequence  of 
being  weakened  by  the  fire,  fell  upon  another  building,  crush- 
ing it  in,  the  latter  injury  was  held  to  be  covered  by  a  policy 
against  damage  by  fire.  The  fire  is  in  such  case  the  proximate 
cause,  though  not  the  actual  instrument  of  the  destruction,  just 
as  where  furniture  is  injured  by  water  used  to  quench  the  fire, 
or  a  mirror  is  broken  by  the  falling  of  materials  loosened  by 
the  flames,  in  which  cases  it  would  hardly  be  contended  that  the 
loss  was  not  by  fire.  The  Lord  President  thought  that  if  the 
gable  had  fallen  during  the  fire  and  caused  the  destruction, 

1  Lowrie,  C.  J.,  in  Citizens'  Ins.  Co.  v.  Marsh,  5  Penn.  St.  387,  overruling 
s.  c.  2  Pittsburgh  Eep.  (Crumrine)  273. 

2  3  Cush.  (Mass.)  328. 


RISK,    ITS    DURATION   AND   EXTENT.  497 

it  would  not  have  been  doubted  that  the  loss  was  covered  by 
the  policy,  and  he  could  not  see  that  the  interval  which  actu- 
ally elapsed  could  make  any  difference  in  the  principle.  The 
cause  of  the  loss  was  in  either  case  the  sarae.^  Where,  how- 
ever, the  walls  of  a  warehouse,  from  weakness  or  other  cause 
not  proceeding  from  fire,  and  without  its  agency,  fell  in  upon 
themselves,  becoming,  with  the  goods  contained  therein,  one 
mass  of  ruin,  out  of  which  fire  proceeded,  it  was  held  that  this  was 
not  a  loss  by  fire.  When  the  fire  took  place  the  suliject  insured 
had  ceased  to  be,  and  had  become  a  congeries  of  materials. 
The  cause  of  the  loss  was  the  fall,  and  not  the  fire.  The  fire 
did  not  produce  the  fall,  but  the  fall  produced  the  fire,  and  the 
destruction  was  by  the  former.  That  a  fire  sprung  up  after 
the  fall  in  the  rubbish  and  consumed  the  fallen  materials,  was 
immaterial.  The  heap  of  rubbish  was  not  insured.  The  build- 
ing alone  was  insured,  and  that  at  the  time  of  the  fire  had 
ceased  to  be,  and  that  too  by  reason  of  a  peril  not  insured 
against.  The  fire  in  this  case  was  not  the  efficient  or  proxi- 
mate cause  of  the  loss.^  But  where  one  building  became  under- 
mined and  fell,  covering  in  its  ruins  certain  chemicals  which 
took  fire,  which  fire  communicated  with  another  building,  a 
part  of  which,  with  the  goods  therein,  had  been  involved  in  the 
crash,  but  a  part  also  had  remained  standing  with  the  goods 
undisturbed,  an  action  to  recover  for  damage  by  fire  to  the 
goods  so  remaining  undisturbed  was  sustained.-^  It  was  con- 
tended by  the  defendants  in  this  case  that  after  the  fall  of  part 
of  the  building  the  goods  could  no  longer  be  said  to  be  "  con- 
tained therein,"  within  the  meaning  of  the  policy.  But  the 
court  were  not  of  that  opinion.  They  were  certainly  as  much 
contained  in  the  building  and  covered  by  the  policy  as  if  they 
had  been  moved  out  to  avoid  the  fire,  but  nevertheless  had 
been  consumed. 

§  413.  Risk  —  Spontaneous  Combustion  —  Explosion  —  Igni- 
tion —  Proximate  Cause.  —  There  can  be  no  doubt  that  fire 
originating   in   spontaneous    combustion    is    within    the   risk 

1  Johnston  v.  West  of  Scotland  Ins.  Co.,  7  Cas.  Ct.  of  Sess.  (Scotch)  52. 

2  Nave  V.  Home  Mut.  Ins.  Co.,  37  ]Mo.  429. 

3  Lewis  V.  Springfield  Fire  and  Mar.  Ins.  Co.,  10  Gray  (Mass.),  159. 

32 


498  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

against  fire.^  The  subject  of  loss  by  explosion  has  given  rise 
to  much  elaborate  and  learned  discussion,  and  recently  to 
decided  differences  of  opinion,  presented  on  both  sides  with 
marked  ability,  which  we  shall  now  proceed  to  state.  The 
burning  of  a  steamboat  by  fire,  caused  by  the  accidental 
explosion  of  gunpowder  on  board,  was  early  held  to  be  "  loss 
or  damage  by  fire,"  since  the  explosion  was  caused  by  fire.^ 
And  following  this  case  it  was  held  that,  where  a  building  was 
purposely  blown  up  by  gunpowder  to  stay  the  ravages  of  a 
conflagration,  and  crockery  ware  stored  therein,  the  crates 
themselves  having  been  burned  after  the  explosion,  was  thus 
destroyed,  fire  was  the  proximate  cause  of  the  loss.^  But  in 
neither  of  these  cases  is  there  much  discussion  upon  this 
particular  point.  Subsequently,  in  Scripture  v.  Lowell  Mutual 
Fire  Insurance  Company,*  where  upon  the  fact  that  a  cask 
of  gunpowder,  being  set  on  fire  accidentally  by  a  match,  ex- 
ploded, set  fire  to  a  bed,  charred  and  stained  some -of  the 
woodwork,  and  blew  off  the  roof  of  the  house,  the  question 
was  thus  ^stated  by  the  court :  "  By  the  ignition  of  gunpowder 
within  a  dwelling-house,  damage  is  done  to  the  house,  that 
damage  consisting  in  part  of  combustion  and  part  of  explo- 
sion. Is  the  ivhole  damage  covered  by  a  policy  insuring  against 
'  loss  or  damage  by  fire  ? '  "  And  after  a  very  able  and  learned 
examination  of  the  question  in  all  its  bearings,  the  conclusion 
arrived  at  was  that  "  when  the  effects  produced  are  the  imme- 
diate results  of  the  action  of  a  burning  substance  in  contact 
with  a  building,  it  is  immaterial  whether  these  results  mani- 
fest themselves  in  the  form  of  combustion  or  of  explosion,  or 
of  both  combined.  In  either  case  the  damage  occurring  is  by 
the  action  of  fire,  and  covered  by  the  ordinary  terms  of  a 
policy  against  fire."  "  The  question,"  says  Gushing,  J.,  who 
gave  the  opinion,  "is  a  nice  one.  Upon  careful  reflection, 
however,  we  have  come  to  tlie  conclusion  that  the  received 
opinions  on  the  subject,  and  the  adjudications  referred  to,  are 

1  Brit.  Am.  Ins.  Co.  v.  Joseph,  9  Lower  Canada  (Q.  B.),  448. 

2  Waters  v.  Merchants'  Louisville  Ins.  Co.,  11  Pet.  (U.  S.)  213. 

3  City  Fire  Ins.  Co.  v.  Corlies,  21  Wend.  (N.  Y.)  367. 
*  lOCush.  (Mass.)  356. 


RISK,   ITS   DURATION    AND    EXTENT.  499 

in  accordance  with  reason  and  principle.  It  seems  not  to  be 
denied  that  actual  combustion,  produced  by  the  ignition  of 
gunpowder,  is  within  the  present  policy.  If,  then,  a  combus- 
tible substance,  in  the  process  of  combustion,  produces  explo- 
sion also,  it  is  not  easy  to  perceive  why,  of  the  diverse  but 
concurrent  results  of  the  combustion,  the  one  should  be 
ascribed  to  fire  any  more  than  the  other.  Tlie  plain  fact  here 
is  the  application  of  fire  to  a  substance  susceptible  of  ignition, 
the  consequent  ignition  of  that  substance,  and  immediate 
damage  to  the  premises  thereby.  It  is  no  sufficient  answer  to 
say  that  some  of  the  phenomena  produced  are  in  the  form  of 
explosion.  All  the  effects,  whatever  they  may  be  in  form,  are 
the  natural  results  of  the  combustion  of  a  combustible  sub- 
stance ;  and  as  the  combustion  is  the  action  of  fire,  this  must 
be  held  to  be  the  proximate  and  legal  cause  of  all  the  damage 
done  to  the  premises  of  the  plaintiff.  .  .  . 

"  In  the  present  case,  there  is  no  room  for  question  concern- 
ing a  series  of  causes,  as  whether  primary  or  secondary,  proxi- 
mate or  remote  ;  for  the  agent  is  one  and  the  same  throughout, 
namely,  fire.  The  causa  was  burning  powder ;  the  causa  cau- 
sans  was  burning  a  match  ;  at  each  stage  of  causation  it  was 
the  action  of  fire.  Nay,  to  be  exact,  the  burning  of  the  gun- 
powder, like  the  burning  of  the  match,  was  a  succession  of 
several  complex  acts  of  burning.  Yet  fire  is  the  agent  at  each 
of  these  distinct  stages  of  causation.  Suppose  there  was  a 
barrel  of  sulphur  in  the  plaintiff's  attic,  instead  of  gunpowder  ; 
and  this  being  ignited  with  a  match,  afterwards  the  fire  had 
passed  from  the  burning  sulphur  to  the  substance  of  the  house. 
This  would  be  recognized  at  once  as  a  case  of  fire.  It  does  not 
change  the  legal  relation  of  causes  to  substitute  a  barrel  of 
burning  gunpowder  for  a  barrel  of  burning  sulphur.  The  only 
difference  in  the  elements  of  the  question  is,  that  the  gun- 
powder, when  ignited,  consumes  with  more  of  rapidity  than 
sulphur,  and  the  combustion  is  accompanied  or  followed  by 
explosion.  Still,  the  agent  is  fire,  though  it  acts  in  different 
ways  upon  the  different  successive  subjects  of  its  action,  begin 
ning  with  the  match  and  terminating  with  the  plaintiff's  house. 

"  On  the  other  hand,  cases  are  conceivable,  other  than  by 


500  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  use  of  gunpowder,  of  explosion  without  any  combustion, 
which,  nevertheless,  being  the  result  of  the  action  of  fire,  are 
still,  it  would  seem,  within  the  range  of  the  general  principle. 
Various  mineral  substances  exist,  of  value  in  commerce  and 
the  arts,  which  explode  by  the  action  of  fire,  without  either 
ignition  or  combustion.  In  general,  any  close  vessel,  of  what- 
ever material  composed,  when  filled  with  an  expansive  fluid, 
is  liable  to  explode  by  the  action  of  heat,  though  it  may  be 
that  the  vessel  and  its  contents  are  alike  incombustible.  The 
same  thing  happens,  under  certain  conditions,  to  some  forms 
of  wood,  which,  although  combustible,  may  by  the  action  of 
fire  explode  without  ignition  ;  or  which,  as  in  the  present  case, 
of  a  house,  by  having  compressed  within  it  some  burning  sub- 
stance, which  is  explosive  as  well  as  combustible,  like  gun- 
powder, may  suffer  the  double  injury-  of  combustion  in  part, 
and  in  part  of  explosion.  ...  In  the  hypothesis  that  fire  is 
to  be  regarded  as  causa  proxima  in  the  present  case,  we  can 
see  but  one  supposable  defect,  namely,  the  suggestion  that 
though  it  be  conceded  that  the  explosion  of  burning  gun- 
powder and  its  effects  are  the  action  of  fire,  yet  this  particular 
effect  on  the  building  is  not  exhibited  in  the  form  of  igneous 
action.  The  cases  above  supposed,  of  the  shrivelling  of  some 
masterpiece  of  pictorial  art,  the  cracking  or  discoloring  of 
some  rich  vase  or  gem,  the  bursting  of  a  cask  of  wine  through 
the  expansion  of  its  contents,  —  these,  it  may  be  said,  are  dis- 
tinctly cases  of  damage,  without  ignition  it  is  true,  but  by  the 
direct  and  specific  action  of  heat  as  such ;  while  it  is  denied 
that  such  is  the  fact  in  the  present  case  of  the  blowing  up  of 
a  dwelling-house  by  the  ignition  of  gunpowder.  We  do  not 
think  the  premises  of  this  argument  are  sustained  by  the 
physical  facts  which  occurred.  If  they  were  so,  then  the  near- 
est analogy  would  be  of  damage  by  smoke ;  that  is,  the  mois- 
ture thrown  off  by  burning  wood,  and  carrying  with  it  ashes, 
empyreumatic  oil,  and  other  constituent  parts  of  the  wood, 
either  in  their  natural  condition,  or  transformed  by  the  process 
of  combustion.  Now  it  is  obvious  that  mere  smoke,  without 
any  direct  action  of  heat,  may  do  great  damage  to  many  kinds 
of  merchandise,  such  as  delicate  textile  fabrics,  esculent  vege- 


RISK,   ITS   DURATION    AND    EXTENT.  501 

tables,  articles  of  taste,  and  other  numerous  objects  ;  and  if  a 
dwelling  or  a  magazine  take  fire,  and  some  parts  of  it  only  be 
consumed,  but  the  contents  of  the  apartments  to  which  the 
actual  fire  does  not  extend  are  nevertheless  damaged  by  the 
smoke  penetrating  into  and  filling  them,  can  it  be  doubted 
that  the  damage  thus  done  is  a  loss  within  the  ordinary  condi- 
tions of  a  fire  policy  ?  ^  Yet,  incontestably,  damage  by  smoke 
is  an  effect  which  is  not  in  itself  igneous  action,  though  it  be 
the  result  thereof;  while,  as  we  conceive,  the  explosion  of 
gunpowder  is  igneous  action." 

§414.  Risk  —  Explosion  —  Concussion.  —  The  court  in  the 
last  case  cited  expressly  avoided  giving  an  opinion  in  cases 
where  there  is  no  ignition  or  combustion,  and  where  the  dam- 
age is  caused  merely  by  concussion.  The  question  of  liability 
in  such  a  case  arose  in  England,^  where  the  property  was 
injured  by  the  concussion  consequent  on  the  explosion  of  a 
powder  magazine  situated  at  some  distance  from  the  property 
insured,  and  it  was  held  that  it  could  not  be  said  that  in  that 
instance  the  loss  was  "  occasioned  by  fire."  It  was  occasioned 
by  a  concussion  caused  by  fire.  And  to  the  same  effect,  upon 
similar  facts,  was  the  case  of  Caballero  v.  Home  Mutual  Insur- 
ance Company.^ 

§  415.  Risk  —  Explosion — Steam.  —  It  was  early  held  that 
under  an  ordinary  policy  against  loss  by  fire,  loss  by  explo- 
sion of  a  steam-boiler,  the  explosion  not  being  caused  by  any 
unusual  fire,  and  no  fire  supervening,  no  recovery  can  be  had. 
Such  an  explosion  could  not  be  distinguished  from  the  break- 
ing or  derangement  of  any  other  part  of  the  machinery,'^  It 
has  also  been  held  by  a  divided  opinion  that  if  the  fire  is 
caused  by  the  explosion  of  a  steam-boiler,  and  the  policy  pro- 
vides against  liability  "  for  any  loss  occasioned  by  the  explo- 
sion of  a  steam-boiler,"  the  loss  thereby  is  not  recoverable 
under  the  terms  of  the  policy.^  8o  where  the  policy  provided 
that  the  company  should  not  be  liable  for  loss  "  by  fire  which 

1  Semble,  per  Gibbs,  C.  J.,  arguendo,  in  Austin  v.  Drewe,  Holt,  N.  P.  127. 

2  Everett  r.  London  Ass.  Co.,  19  C.  B.  126.  3  15  La.  An.  217. 

*  Millaudon  v.  Orleans  Ins.  Co.,  4  La.  An.  15. 

*  St.  John  V.  Am.  Mut.  Mar.  and  Fire  Ins.  Co.,  1  Duer  (N.  Y.  Superior  Ct.), 
371 ;  s.  c.  affirmed,  1  Ker.  (N.  Y.)  516. 


502  insurance:  fire,  life,  accident,  etc. 

shall  happen  or  arise  by  any  explosion,"  nor  for  loss  "  by  ex- 
plosion of  any  kind,"  it  was  held  that  the  insurers  were  not 
liable  for  damage  by  fire  which  originated  from,  and  was 
caused  by,  the  explosion  of  a  steam-boiler  used  on  the  prem- 
ises.^ Nor,  it  has  also  been  said,  would  they  be  liable  under 
an  exemption  from  loss  "  by  fire  which  might  occur  by  means 
of  explosion,"  if  the  explosion  sets  in  operation  the  fire  which 
burns  the  insured  property,  though  the  fire  may  travel  from 
the  seat  of  explosion  through  other  buildings  continuously  to 
the  building  burned.  In  order  to  render  the  company  liable, 
a  new  force  or  power  sufficient  to  cause  the  fire  must  inter- 
vene ;  and  the  incidental  facts  of  intervening  buildings  and 
favoring  winds  are  not  the  equivalent  of  this  new  force.^  But 
in  a  very  recent  case  ^  the  question  came  again  under  discus- 
sion where  the  provision  of  the  policy  was  that  the  insurers 
should  not  be  liable  "  for  any  loss  or  damage  by  fire,  caused 
by  means  of  an  invasion,  insurrection,  riot,  civil  commotion,  or 
military  or  usurped  power  .  .  .  nor  for  any  loss  caused  by  the 
explosion  of  gunpowder,  camphene,  or  any  explosive  substance, 
or  explosion  of  any  kind,"  with  a  different  result.  The  ques- 
tion was  whether  under  this  form  of  policy  the  insurers  were 
liable  for  loss  by  fire  caused  by  explosion.*  After  adverting 
to  Hayward  v,  Liverpool  and  London  Insurance  Company,^  as 
expressly  in  words  excluding  such  liability,  and  to  St.  John  v. 
American  Mutual  Insurance  Company,*^  as  in  the  negative  by 
a  divided  opinion,  and  pointing  out  the  fact  that  the  opinions 
of  the  several  judges,  constituting  the  majority,  were  based  not 
merely  upon  different,  but  inconsistent  grounds,  thus  substan- 
tially depriving  the  decision  of  its  claim  to  be  considered  as  an. 
authority,  and  further  referring  to  Stanley  v.  Western  Insurance 
Company  ^  as  in  point  for  the  insurers,  the  court  proceeds  :  — 

1  Hayward  v.  Liv.  and  Lon.  Fire  and  Life  Ins.  Co.,  7  Bosvv.  (N.  Y.  Superior 
Ct.)  385. 

2  Ins.  Co.  V.  Tweed,  7  Wall.  (N.  Y.)  44. 

3  Commercial  Ins.  Co.  v.  Robinson,  Sup.  Ct.  of  111.,  2  Ins.  L.  J.  381. 

*  The  report  in  the  Journal  does  not  state  what  exploded  ;  nor  does  it  seem 
to  be  material. 

5  7  Bosw.  (N.  Y.  Superior  Ct.)  385.  6  1  Ker.  (N.  Y.)  516. 

1  3  Exch.  71. 


RISK,   ITS   DURATION    AND    EXTENT.  503 

"  If  this  were  a  question  as  to  an  alleged  rule  or  principle 
of  the  common  law,  with  these  authorities  cited  on  the  one  side 
and  none  upon  tlic  other,  we  might  repose  securely  upon  them, 
and  hold  them  decisive  of  the  case  before  us.  But  it  is  sim- 
ply a  question  as  to  the  interpretation  of  a  few  words  in  a 
written  instrument,  which  are  susceptible  of  two  different 
interpretations.  We  are  to  determine  which  is  the  more  rea- 
sonable construction  ;  and  if  our  judgment  is  satisfied  on  this 
point,  we  must  accept  its  conclusions,  though  differing  from 
those  of  the  courts  to  which  reference  has  been  made.  Let  us 
remark,  in  the  first  place,  that  equivocal  expressions  in  a  policy 
of  insurance,  whereby  it  is  sought  to  narrow  the  range  of  the 
obligations  these  companies  profess  to  assume,  are  to  be  inter- 
preted most  strongly  against  the  company. ^  Tlie  companies 
have  the  preparation  of  their  own  policies,  the  choice  of  lan- 
guage in  which  to  express  their  obligations,  and  they  show  a 
studious  solicitude  to  limit  their  liability.  Their  policies  are 
prolix  with  provisions  of  this  character,  and  the  public  must 
accept  them  or  go  without  insurance.  We  have  no  right  to 
censure  the  companies  for  this,  and  do  not ;  but  the  reading 
of  a  policy  furnishes  a  sufficient  reason  for  the  rule  of  inter- 
pretation formerly  laid  down  by  this  court. 

"  It  will  be  observed  that  in  a  clause  of  the  policy  preceding 
the  one  under  consideration,  the  company  stipulated  that  it 
should  not  be  liable  for  any  loss  or  damage  hy  fire,  caused  by 
means  of  an  invasion,  insurrection,  &c.  Here  exemption  is 
specially  secured  against  liability  for  losses  hy  fire  caused  by 
explosion.  The  difference  in  phraseology  between  the  two 
clauses  is  so  marked  that,  when  we  consider  their  connection 
with  each  other,  we  cannot  resist  the  conclusion  that  the  differ- 
ence was  intended. 

"  Whether  the  difference  was  intentional  or  not  cannot  be 
certainly  ascertained,  but  it  is  reasonable  to  resolve  the  doubt 
against  the  company.  The  object  of  the  company's  existence 
is  to  insure  against  fire.  That  is  what  it  holds  itself  out  to 
the  public  as  able  and  willing  to  do.  When  a  person  takes 
out  a  policy  and  pays  his  premium  he  takes  it  for  granted, 
1  Aurora  Fire  Ins.  Co.  v.  Eddy,  49  111.  106. 


504  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC. 

without  reading  his  policy,  that  he  cannot  make  the  risk  more 
hazardous  to  the  company  hy  storing  higlily  inflammable  mate- 
rials upon  his  premises.  He  knows  that  would  be  acting  in 
bad  faith  with  the  company,  and  that  the  policy  has  probably 
provided  against  it,  but  he  would  have  no  reason  to  suppose 
that  among  the  voluminous  stipulations  of  the  policy  there 
would  be  found  one  intended  to  deprive  him  of  its  benefit 
because  a  fire,  wliich  has  destroyed  his  property,  originated  in 
another  house  a  half-mile  distant,  in  the  explosion  of  a  cam- 
phene  lamp.  Most  fires  originate  in  acts  of  carelessness, 
and  it  is  chiefly  to  guard  themselves  against  the  carelessness 
of  others  that  prudent  persons  insure.  Yet  the  construction 
of  this  policy,  contended  for  by  the  company,  would  make 
the  assured  assume  the  liability  for  the  carelessness  of  others. 
He  is  thus  deprived  of  the  very  protection  he  seeks  by  his 
insurance,  if,  when  his  house  burns  up,  he  can  be  denied  the 
payment  of  his  policy  because  the  fire  was  caused  by  an  explo- 
sion upon  the  premises  of  others.  The  great  fire  at  Chicago 
is  supposed  to  have  originated  in  the  overturning  and  explo- 
sion of  a  lamp ;  but  we  are  not  aware  that  any  of  the  insur- 
ance companies  that  suffered  by  that  fire  have  sought  to 
interpose  this  defence,  although  this  clause  is  a  very  common 
one  in  insurance  policies,  and  was  probably  contained  in  many 
that  had  been  issued  on  the  property  there  destroyed.  Coun- 
sel for  the  company,  feeling  the  unreasonable  character  of  their 
interpretation  of  this  condition  in  cases  where  the  fire  comes 
from  an  explosion  on  other  premises,  speak  of  it  as  if  it  re- 
ferred only  to  explosions  on  the  premises  of  the  insured.  But 
the  policy  will  bear  no  such  construction  or  limitation.  We 
must  either  hold  that  the  clause  refers  to  loss  by  explosions 
simply,  without  reference  to  fire,  or  to  losses  by  fire  occasioned 
by  explosions  anywhere,  whether  on  or  remote  from  the  prem- 
ises. There  is  no  middle  term.  It  must  receive  one  of  these 
constructions,  or  the  other.  One  is  consistent  with  the  con- 
text, reasonable  in  itself,  and  just  to  both  parties.  The  other 
requires  the  interpolation  of  two  additional  words  in  the  policy, 
is  inconsistent  with  the  context,  and  in  a  large  degree  would 
make  fire  insurance  a  mere  mockery.     We  cannot  hesitate 


RISK,    ITS   DURATION    AND    EXTENT.  505 

which  construction  to  choose.  But,  say  the  counsel  for  the 
appellant,  this  company  does  not  profess  to  insure  against 
losses  by  explosion,  but  only  by  fire,  and  the  clause,  construed 
as  we  construe  it,  is  unmeaning,  or  at  least  useless.  But  not 
so.  The  clause  was  designed  to  apply  to  all  cases  where  the 
explosion  was  the  immediate  cause  of  the  loss. 

"  Suppose  fire  is  carelessly  applied  to  powder  or  otlier  explo- 
sive substance ;  an  explosion  follows,  which  rends  furniture 
and  building.  This  explosion  is  the  result  of  the  ignition  of 
the  explosive  material,  and  it  might  be  claimed  that  the  loss 
caused  thereby  was  a  loss  by  fire.  The  courts  might  not  so 
hold,  independently  of  the  clause  of  the  policy,  but  we  can 
well  understand,  when  we  examine  these  policies,  that  the 
insurers  may  have  introduced  this  clause  for  the  purpose  of 
leaving  no  room  for  argument  or  doubt.  Again,  suppose  a  fire 
is  speedily  subdued,  but  before  it  has  ignited  powder,  and  an 
explosion  has  taken  place  which  has  caused  much  damage,  but 
has  not  extended  the  fire ;  in  such  a  case  the  company  would 
claim  that  they  were  protected  by  this  clause  from  liability  for 
the  consequences  of  the  explosion.  It  is  not  necessary,  how- 
ever, for  us  to  show  how  the  clause  was  designed  to  operate. 
It  is  sufficient  to  say  that,  in  our  judgment,  it  cannot  receive 
the  construction  claimed  by  the  company."  ^ 

§  416.  Risk  —  Explosion  —  Gas.  —  On  the  other  hand,  it  has 
been  held  in  a  very  recent  case  in  Ohio,  that  a  policy  insuring 
against  "  loss  or  damage  by  fire,"  but  providing  that  the  com- 
pany shall  not  be  responsible  for  any  "  loss  or  damage  occa- 
sioned by  or  resulting  from  any  explosion  whatever,"  is  to  be 
construed  as  if  the  excepting  clause  read  "  loss  or  damage  by 
fire,"  and  does  not  cover  a  loss  happening  from  an  explosion 
which  takes  place  by  reason  of  a  column  of  an  explosive  mix- 
ture coming  in  contact  witli  the  flame  of  a  gas-jet,  whereby  a 
fire  was  set  in  motion  which  destroyed  the  property.^     The 

1  The  cases  of  Stanley  i'.  Western  Ins.  Co.,  3  Law  Rep.  (Exch.)  71,  usually 
regarded  as  opposed  to  the  doctrine  of  the  case  just  cited  from  Illinois,  and 
the  case  of  Harper  v.  City  Fire  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct.)  520,  are 
referred  to  in  the  next  section. 

-'  Union  Life,  Fire,  and  Mar.  Ins.  Co.  v.  Foote,  Sup.  Ct.  Ohio,  Dec.  1872,  2 
Ins.  L.  J.  190. 


506  insurance:  fire,  life,  accident,  etc. 

opinion  is  so  able  and  instructive,  that  we  give  its  more  impor- 
tant parts.     Mcllvaine,  J.  :  — 

"  By  the  terms  of  the  policy  it  appears  that  the  plaintiffs 
were  insured  against '  loss  or  damage  by  fire  to  the  amount  of 
five  thousand  dollars  on  their  stocks  of  merchandise,  consist- 
ing principally  of  liquors,  fixtures,  tools,  and  office  furniture, 
contained  in  their  brick  building,  situate  on  the  south-west 
corner  of  Congress  and  Kilgour  Streets,  Cincinnati,  Ohio,  and 
occupied  by  them  as  a  liquor  store,  with  privilege  of  rectifying 
and  manufacturing  fine  spirits  by  steam  not  generated  in  the 
building.  The  principal  defence  arose  under  one  of  the  condi- 
tions of  the  policy,  which  is  in  these  words  :  — 

"  '  VII.  This  company  is  not  liable  for  loss  or  damage  by  light- 
ning or  tornado,  unless  expressly  mentioned  or  insured  against, 
but  will  be  responsible  for  loss  or  damage  to  property  con- 
sumed by  fire  occasioned  by  lightning.  Nor  will  this  company 
be  responsible  for  any  loss  or  damage  to  property  consumed 
by  fire  happening  by  reason  of  or  occasioned  by  any  invasion, 
insurrection,  riot,  or  civil  commotion,  of  any  military  or 
usurped  power,  nor  where  the  loss  is  occasioned  or  superin- 
duced by  fraud,  dishonesty,  or  criminal  conduct  of  the  insured, 
nor  to  any  loss  or  damage  occasioned  by  or  resulting  from  any 
explosion  whatever,  whether  of  steam,  gunpowder,  camphene, 
coal-oil,  gas,  nitro-glycerine,  or  any  explosive  article  or  sub- 
stance, unless  expressly  insured  against,  and  special  premium 
paid  therefor.'' 

"  The  testimony  shows  that  at  the  time  of  taking  out  the 
policy,  and  until  the  time  of  the  fire,  the  plaintiffs  were  engaged 
in  the  business  of  rectifying  whiskey  and  manufacturing  fine 
spirits  by  the  use  of  steam,  in  the  building  occupied  by  them 
as  a  liquor  store,  and  in  which  the  insured  stock  of  merchan- 
dise, consisting  principally  of  liquors,  &c.,  was  kept.  The  size 
of  the  building  was  sixty  by  one  hundred  and  eighty  feet,  and 
was  four  stories  high.  There  was  communication  between  the 
stories  through  open  stairways  and  hatches.  The  business  of 
rectifying  was  carried  on  in  the  basement  story,  where  the  stills 
— large  metallic  vessels —  were  located.  The  upper  stories  were 
chiefly  used  for  storage  of  liquors  and  cooperage.     The  process 


RISK,  ITS    DURATION   AND   EXTENT.  607 

of  rectifying  was  conducted  as  follows :  The  raw  spirits  or  liquor 
was  conveyed  by  means  of  pipes  called  leaders  from  the  tubs 
situate  in  the  upper  stories  to  the  stills  below ;  when  the  stills 
were  thus  charged,  the  liquor  therein  was  converted  into  vapor 
by  means  of  steam  which  passed  through  the  stills  in  copper 
pipes  called  worms  ;  the  vapor  tlius  evolved  was  conducted  by 
other  pipes  to  a  condenser,  where  it  was  reduced  to  a  liquid 
state.  The  vapor  evolved  in  the  process  of  rectification  is  an 
inflammable  substance.  It  readily  mixes  with  the  atmosphere, 
and  when  so  mixed  in  certain  proportions  is  explosive,  and 
when  such  mixture  is  brought  into  contact  with  flame  it 
explodes.  On  the  morning  of  the  fire  a  large  still  was  being 
charged  through  a  leader  about  two  inches  in  diameter,  which 
passes  into  its  still,  through  a  vacttum  valve  (an  aperture  in  the 
still  near  its  top),  the  diameter  of  which  was  about  four  inches. 
At  the  same  time  steam  was  passing  through  the  worm,  con- 
verting the  liquor  in  the  still  into  vapor,  which  escaped  through 
the  vacuum  valve  into  the  still-room,  and  thence  no  doubt  into 
the  other  parts  of  the  building.  The  process  of  thus  discharg- 
ing the  still,  accompanied  with  the  discharge  of  vapor,  had 
continued  for  some  time,  —  perhaps  an  hour  preceding  the  fire. 
During  tlie  progress  of  this  process,  two  jets  of  gas  were  burn- 
ing in  the  still-room,  one  at  a  distance  of  three  or  four  feet  from 
the  vacuum  valve,  and  the  other  in  another  part  of  the  room. 
There  was  no  other  fire  or  flame  in  the  room  or  in  the  build- 
ing at  the  time. 

"  Such  being  the  circumstances,  an  explosion  took  place  in 
the  still-room.  A  sudden  and  violent  combustion  of  the  vapor, 
accompanied  with  a  noise,  described  by  one  witness  as  being 
like  the  crack  of  a  gun  ;  by  another,  as  if  a  bundle  of  iron  had 
been  thrown  on  the  pavement ;  by  another,  as  a  crash,  and  by 
another,  as  a  gush  of  fire,  and  at  the  same  instant  the  flame 
was  driven  through  a  doorway  into  another  building,  whereby 
a  witness  was  badly  burned.  Immediately  after  the  explosion 
a  flame  was  discovered  escaping  from  the  still  through  the 
vacuum  valve,  and  at  the  same  time  the  building  was  discov- 
ered to  be  on  fire  throughout  the  several  stories.  From  these 
facts  and  circumstances,  we  think  it  was  clearly  shown  that  the 


508  insurance:  fire,  life,  accident,  etc. 

fire,  by  which  the  building  and  stock  of  merchandise  insured 
were  consumed,  was  occasioned  by  and  resulted  from  an  explo- 
sion of  spirit  vapor  mixed  with  atmosphere,  and  that  the 
explosion  was  caused  by  the  mixture  coming  in  contact  with 
the  burning  gas-jet. 

"  1.  The  first  question  which  we  notice  particularly  is  this: 
Was  the  explosion,  which  in  fact  occurred,  such,  in  degree  of 
violence,  as  was  contemplated  by  the  parties  to  the  policy  ? 

"  The  word  '  explosion  '  is  variously  used  in  ordinary  speech, 
and  is  not  one  tliat  admits  of  exact  definition.  Its  general 
characteristics  may  be  described,  but  the  exact  facts  which  con- 
stitute what  we  call  by  that  name  are  not  susceptible  of  such 
statement  as  will  always  distinguish  the  occurrences.  It  must 
be  conceded  that  every  combustion  of  an  explosive  substance, 
whereby  other  property  is  ignited  and  consumed,  would  not  be 
an  explosion  within  the  ordinary  meaning  of  the  term.  It  is 
not  used  as  the  synonym  of  combustion.  An  explosion  may 
be  described  generally  as  a  sudden  and  rapid  combustion,  caus- 
ing violent  expansion  of  the  air,  and  accompanied  by  a  report. 
But  the  rapidity  of  the  combustion,  the  violence  of  the  expan- 
sion, and  the  vehemence  of  the  report,  vary  in  intensity  as 
often  as  the  occurrences  multiply.  Hence,  an  explosion  is  an 
idea  of  degrees,  and  the  true  meaning  of  the  word,  in  each 
particular  case,  must  be  settled,  not  by  any  fixed  standard  or 
accurate  measurement,  but  by  the  common  experience  and 
notions  of  men  in  matters  of  that  sort.  In  tliis  case,  although 
the  building  was  not  rent  asunder,  or  the  property  therein 
broken  to  pieces,  there  was  a  sudden  flash  of  flame,  a  rush  of 
air,  and  a  report  like  the  '  crack  of  a  gun,'  which  certainly 
brings  the  occurrence  within  the  common  meaning  of  the  word 
as  used  in  many  instances.  '  Any  explosion  whatever  '  is  the 
phrase  used  in  the  condition  to  the  policy,  and  it  is  qualified 
by  the  context  only  to  the  extent  that  it  must  be  an  '  explo- 
sion '  of  some  '  explosive  substance,  and  of  sufficient  force  as 
to  result  in  loss  or  damage  to  the  property  insured.'  And  these 
characteristics  we  have  found  to  exist  in  the  occurrence  that 
resulted  in  the  loss  of  the  insured  property. 

"  2.  It  is  claimed  that  the  fire  which  destroyed  the  property 


RISK,   ITS   DURATION   AND   EXTENT.  509 

insured  did  not  result  from  the  explosion,  but,  on  the  con- 
trary, that  the  explosion  was  incident  to  and  caused  by  the 
fire,  whicli,  if  there  had  been  no  explosion,  would  have  accom- 
plished the  whole  loss  and  damage ;  or,  at  least,  that  such  infer- 
ence may  be  drawn  from  the  facts  in  the  case  as  fairly  and 
legitimately  as  contrary  inferences. 

"  The  proof  unquestionably  shows  that  the  origin  of  the  fire 
and  the  explosion  was  simultaneous.  It  may  be  true,  in  a 
strictly  scientific  sense,  that  all  explosions  caused  by  combus- 
tion are  preceded  by  a  fire.  The  scientist  may  demonstrate, 
in  a  case  where  gunpowder  is  destroyed  by  fire,  or  in  any  case 
where  the  explosion  is  caused  by  or  accompanies  combustion, 
that  ignition  and  combustion  precedes  the  explosion  ;  but  the 
common  mind  has  no  conception  of  such  combustion,  as  a  fact 
independent  of  the  explosion,  where  they  concur  in  such  rapid 
succession  that  no  appreciable  space  of  time  intervenes.  The 
terms  of  this  policy  must  be  taken  in  their  ordinary  sense  ;  and 
we  are  satisfied  that  the  proofs  show,  according  to  the  ordinary 
sense  and  understanding  of  men  in  reference  to  such  matters, 
that  the  explosion  occasioned  the  fire  which  destroyed  the  prop- 
erty insured ;  or,  in  other  words,  that  the  loss  resulted  from  an 
explosion,  within  the  true  intent  and  meaning  of  this  policy. 

"  It  is  true  that  the  explosion  was  caused  by  a  burning  gas- 
jet,  but  that  was  not  such  fire,  as  contemplated  by  the  parties, 
as  the  peril  insured  against.  The  gas-jet,  though  burning,  was 
not  a  destructive  force,  against  the  immediate  effects  of  which 
the  policy  was  intended  as  a  protection.  Although  it  was  a 
possible  means  of  putting  such  destructive  force  in  motion,  it 
was  no  more  the  peril  insured  against  than  a  friction-match  in 
the  pocket  of  an  incendiary.  The  conclusions  of  fact  to  which 
we  thus  arrive  are  mere  inferences  from  other  facts,  —  facts, 
however,  about  which  there  was  no  conflict  in  the  testimony, — 
yet  they  are  so  manifestly  true  that  we  think  it  was  an  error 
of  law,  under  our  statute,  to  reverse  the  judgment  rendered 
thereon  at  the  special  term  of  the  Superior  Court,  upon  the 
strength  of  contrary  inferences  drawn  from  the  same  facts  by 
the  reviewing  court. 

"  3.  The  next  question  arises  upon  the  terms  of  the  policy, 


510  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

and  is  one  of  construction  purely.  Was  it  intended  by  the 
provisions  of  tlie  seventh  condition  to  exempt  from  the  risks 
assumed  by  tlie  policy  losses  by  fire  occasioned  by  an  explo- 
sion ? 

"  It  is  claimed  that  the  clause  exempting  losses  by  explosion 
taken  alone,  or  construed  in  connection  with  other  clauses  in 
the  condition,  does  not  sliow  such  intention.  It  is  true  that  the 
words  '  by  fire,'  or  their  equivalent,  are  omitted  in  this  clause, 
though  expressed  in  some  of  the  former  clauses ;  the  founda- 
tion point,  however,  in  construing  this  condition,  is  found  in 
the  general  undertaking  of  the  policy.  It  will  be  observed 
that  the  underwriter  undertook  to  insure  against  loss  and  dam- 
age by  fire  only,  but,  nevertheless,  against  loss  and  damage  by 
fire  generally  ;  and  the  maxim,  causa  proxima  non  remota  spec- 
tatur  applies.  Now  we  think,  without  doubting,  that  tiie  pur- 
pose of  inserting  this  condition  was  to  relax  the  rigor  of  tliis 
maxim,  and  exempt  from  the  general  risk  of  the  policy  certain 
losses,  which  would  otherwise  fall  within  its  scope  and  mean- 
ing. The  first  clause  of  the  condition  provides  that  '  this  com- 
pany is  not  liable  for  loss  or  damage  by  lightning  or  tornado, 
unless  expressly  mentioned  and  insured  against.'  If  this  were 
the  whole  of  the  clause,  and  it  were  not  understood  that  the 
loss  and  damage  referred  to  were  such  as  might  result  from 
fire  occasioned  hy  lightning  or  tornado,  it  would  be  utterly  mean- 
ingless and  nugatory,  for  the  reason  that  the  underwriter  had 
not  undertaken  to  insure  against  lightning  or  tornado.  So  far 
the  construction  is  plain  enough  ;  but  a  difficulty  arises  from 
the  conclusion  of  the  clause,  to  wit,  '  but  will  be  responsible 
for  loss  or  damage  to  property  consumed  by  fire  occasioned  by 
lightning.'  The  exception  to  the  rule  of  exemption  from  loss 
by  lightning  appears  to  be  as  broad  as  the  rule  itself.  But  I 
apprehend  that  a  case  might  arise  in  which  effect  and  operation 
could  be  given  to  all  the  terms  of  this  clause,  including  tliose 
which  are  iinpUed  as  well  as  those  expressed.  At  all  events, 
it  is  perfectly  clear  that  loss  and  damage  by  lightning  and  tor- 
nado are  not  within  the  expressed  risks  of  the  policy,  unless 
a  fire  supervenes  ;  nor  is  there  any  thing  in  the  policy  from 
which  such  risks  can  be  implied. 


RISK,  ITS   DURATION   AND   EXTENT.  511 

"  The  condition  continues :  '  Nor  will  the  company  be  respon- 
sible for  any  loss  or  damage  to  property  consumed  by  fire 
happening  by  reason  of  or  occasioned  by  any  invasion,  insur- 
rection, riot,  or  civil  commotion,  or  any  military  or  usurped 
power.'  The  exemptions  here  provided  for  are  expressly  lim- 
ited to  losses  within  the  terms  of  the  general  risk  of  the  policy. 
But  if  such  limitation  had  not  been  expressed,  it  would  have 
been  implied. 

"  The  next  clause  is  as  follows  :  '  Nor  where  the  loss  is  occa- 
sioned or  superinduced  by  the  fraud,  dishonesty,  or  criminal 
conduct  of  the  insured.'  Tliere  is  no  pretext  for  holding  that 
the  loss  here  contemplated  is  other  than  loss  by  fire,  although 
no  sucii  qualification  is  expressed.  Then  follows  the  clause  in 
question,  wliich,  to  all  intents  and  purposes,  is  framed  like  the 
preceding  one  :  '  Nor  to  any  loss  or  damage  occasioned  by  or 
resulting  from  any  explosion  whatever,  whether  of  steam,  gun- 
powder, camphcnc,  coal-oil,  gas,  nitro-glycerine,  or  any  explo- 
sive article  or  substance,  unless  expressly  insured  against  and 
special  premium  paid  therefor.' 

"  Unless  there  is  something  in  the  subject-matter  of  this 
clause  that  indicates  that  the  words  '  by  fire  '  were  omitted  for 
the  purpose  of  showing  a  design  and  intention  to  adhere  to  and 
continue  the  general  risk  in  case  an  explosion  should  result  in 
a  fire,  we  think  that  they  or  their  equivalents  should  be  supplied 
by  implication  or  construction.  Is  such  purpose  indicated  by 
any  fair  use  of  the  terms  employed  ?  That  a  loss,  or  any  other 
combustion,  results  from  an  explosion,  where  the  explosion 
itself  is  caused  by  a  destructive  fire  already  in  progress,  comes 
within  the  general  risk  of  a  policy  against  fire  only,  is  a  doc- 
trine not  only  reasonable  in  itself,  but  is  sustained  by  au- 
thority.^  And  it  is  quite  clear  that  a  loss  by  fire,  which  is 
occasioned  by  an  explosion,  is  within  the  like  risk.  Now,  the 
express  terms  of  this  clause  are  '  any  loss  or  damage  occasioned 
by  or  resulting  from  any  explosion  whatever.'  These  terms 
are  certainly  comprehensive  enough  to  include  both  descrip- 
tions of  loss,  —  wliether  loss  by  the  explosive  force,  or  loss  by 

1  Waters  v.  La.  Mer.  Ins.  Co.,  11  Pet.  255;  Scripture  v.  Low.  Mut.  Fire  Ins. 
Co.,  10  Cusii.  357 ;  Millaudon  v.  N.  O.  lus.  Co.,  4  La.  An.  15. 


512  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

superinduced  combustion.  And  that  such  is  their  legal  effect 
has  been  directly  decided  in  the  case  of  Stanley  v.  Western 
Insurance  Company.^  It  is  not  necessary  at  this  time  to  either 
approve  or  disapprove  to  the  whole  extent  the  doctrine  in  Stan- 
ley's case,  as  in  this  case  no  damage  was  sustained  from  the 
explosion  without  the  intervention  of  a  fire,  nor,  indeed,  was 
the  explosion  caused  by  a  fire  within  the  meaning  of  the  pol- 
icy.^ But  we  can  find  no  good  reason  for  doubting  that  loss 
and  damage  by  fire,  resulting  from  an  explosion,  was  intended 
to  be  exempted  by  this  condition  from  the  general  risk  of  the 
policy,  and  are  of  opinion,  therefore,  that  this  clause,  properly 
construed,  should  read,  '  nor  any  loss  or  damage  by  fire  occa- 
sioned by  or  resulting  from  any  explosion  whatever.' 

"  4.  It  is  claimed  by  defendants  in  error  that  the  peril  by 
which  the  property  insured  was  destroyed  was  within  the 
exception  to  the  seventh  condition  :  that  is,  it  was  '  expressly 
insured  against,  and  special  premium  paid  therefor ; '  or,  in 
other  words,  was  excepted  out  of  the  exception. 

"  The  reasoning  by  which  this  proposition  is  sought  to  be 
maintained  is  thus  stated  :  — 

"  The  body  of  the  policy  covered  loss  by  fire  on  liquors,  &c., 
with  the  privilege  of  rectifying  and  manufacturing  ,fine  spirits 
by  steam  not  generated  in  the  building.  The  property  insured 
was  whiskey,  as  well  in  the  process  of  rectification  and  manu- 
facture as  manufactured  whiskey  in  the  still,  as  well  as  spirits 
in  the  barrel,  —  the  whiskey  vapor  itself,  while  passing  through 
the  columns  to  the  cooler,  or  wherever  else  it  might  make  its 
way. 

"  If  it  was  in  this  form  an  explosive  substance  or  article,  such 

1  Law  Reports,  1868  ;  3  Exch.  71. 

2  In  Stanley's  case,  the  policy  exempted  the  insurers  from  liability  for  loss 
arising  from  explosion,  except  explosion  by  gas.  The  insured  premises  were 
used  in  the  business  of  extracting  oil,  during  which  process  a  vapor  was  evolved, 
which,  being  mixed  with  a  certain  quantity  of  atmospheiic  air,  became  explo- 
sive. This  vapor  escaping  came  in  contact  with  the  flame  of  the  lamps,  and  an 
explosion  ensued,  succeeded  by  a  fire.  The  court  held  that  the  gas  intended  by 
the  policy  was  ordinary  illuminating  gas,  and  that  the  insurers  were  not  liable 
for  loss  by  concussion  or  from  fire  occasioned  by  the  explosion,  but  were  lia- 
ble for  loss,  if  there  was  any,  by  reason  of  the  original  fire,  or  any  subsequent 
extension  of  that  fire  unconnected  with  the  explosion. 


RISK,    ITS   DURATION   AND    EXTENT.  513 

as  is  intended  by  the  language  of  the  condition,  or  if  in  the 
process  of  manufacture  allowed  by  the  policy  it  was  likely  to 
become  such  by  escape  and  mingling  with  the  air  in  the  build- 
ing, then  the  insurance  was  upon  it,  as  an  agent  known  to  be 
explosive  under  certain  circumstances  likely  to  happen,  and 
with  the  express  assent  of  the  company  to  the  carrying  on  of 
that  process,  in  the  course  of  which  its  explosive  nature  would 
naturally  and  probably  be  developed. 

"  The  principle  sought  by  this  argument  to  be  applied  is 
announced  in  Harper  v.  New  York  City  Insurance  Company  ; 
the  condition  exempted  the  company  from  liability /or  loss  occa- 
sioned by  campTiene.  The  fire  was  occasioned  by  a  workman's 
throwing  a  lighted  match  into  a  pan  upon  the  floor  containing 
camphene.  The  risk  was  upon  a  printing  stock,  privileged  for 
a  printing-office,  camphene  not  being  expressly  enumerated. 
But  it  was  shown  that  that  article  was  a  usual  part  of  such  a 
stock,  and  its  use  was  therefore  authorized.  For  this  reason 
alone,  because  it  was  implicitly  insured,  it  was  held  that  the 
exception  did  not  apply. 

"  The  following  extract  from  the  opinion  expresses  its  doc- 
trine :  — 

" '  A  policy  can  be  so  framed  as  to  allow  the  presence  of  a 
dangerous  article,  and  even  so  as  to  insure  its  value,  while  at 
the  same  time  it  might  exempt  the  insurer  from  loss  if  occa- 
sioned by  the  presence  or  use  of  the  article.  But  I  think  it 
would  need  very  great  precision  of  language  to  express  such 
an  intention.  Where  camphene  or  any  hazardous  fluid  is 
insured,  and  its  use  is  plainly  admitted,  the  dangers  arising 
from  that  source  are  so  obviously  within  the  risk  undertaken, 
that  effect  should  be  given  to  the  policy  accordingly,  unless  a 
different  intention  is  very  plainly  declared.' 

''  In  answer  to  this  claim,  we  say :  — 

"  1.  That  tlie  spirit  vapor,  liaving  escaped  from  its  confine- 
ment and  passed  into  the  still-room,  where  it  became  mixed 
with  atmosphere  so  as  to  form  an  explosive  substance,  under 
circumstances  that  precluded  all  possibility  of  reclaiming  and 
utilizing  it,  was  no  longer  a  part  of  the  stock  of  merchandise 
insured,  and  was  not  under  the  protection  of  the  policy. 

33 


514  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

"  2.  If,  from  the  nature  of  the  property  insured,  tlie  parties, 
at  the  time  the  risk  was  taken,  might  reasonably  have  antici- 
pated the  peril  by  which  it  was  afterward  destroyed,  it  is  rea- 
sonable to  suppose  that  such  peril  was  in  contemplation  at  the 
time,  and  that  they  contracted  in  reference  to  it.  Hence,  if 
the  general  risk  of  the  policy  was  expressed  in  terms  broad 
enougli  to  include  the  peril,  it  must  be  presumed  that  they 
intended  to  do  so  ;  and,  on  the  other  hand,  if  an  exception  to 
the  risk  was  made  in  terms  which  fairly  and  plainly  took  such 
particular  peril  out  of  the  general  risk,  it  must  be  presumed 
that  they  intended  to  exempt  such  particular  peril  from  the 
risk.  Again,  if  it  be  claimed  that  there  was  an  exception  to 
such  exemption,  whereby  the  particular  peril  was  saved  from 
the  exemption  and  left  under  the  general  risk,  it  is  reasonable 
that  the  terms  of  exception  should  be  at  least  as  explicit  as 
the  terms  of  exemption.  How  is  it  in  this  case  ?  The  risk 
was  against  all  loss  by  fire. 

"  The  exception  from  the  risk  was  '  any  loss  or  damage  occa- 
sioned by  an  explosion  of  steam,  gunpowder,  &c.'  The  excep- 
tion to  this  exemption  was,  '  unless  expressly  insured  against, 
and  special  premium  paid  therefor.'  Therefore  it  only  remains 
to  be  said,  that  no  loss  or  damage  occasioned  by  an  explosion  of 
any  of  these  substances  named  was  expressly  insured  against, 
nor  was  any  special  premium  paid  for  any  such  special  risk." 

§  417.  Risk  —  Collision  —  Proximate  Cause.  —  A  case  of  con- 
siderable delicacy  has  recently  been  before  the  United  States 
Circuit  Court  for  Connecticut,  —  the  case  of  the  Norwich  and 
New  York  Transportation  Company  v.  The  Western  Massa- 
chusetts Insurance  Company ,i  —  in  which  the  question  was, 
whether  where  a  steamer  collided  with  a  sailing  vessel,  whereby 
the  steamer  was  so  much  disabled  that  she  sank  till  the  water 
rose  to  her  furnaces  and  forced  the  fire  out  upon  her  wood- 
work, which  continued  to  burn  till  her  upper  works  were  con- 
sumed, when  she  sank  and  became  a  total  loss,  —  whether  this 
was  a  loss  by  fire.  And  it  was  held  that  this  depended  upon 
the  fact,  submitted  to  the  jury,  whether  but  for  the  interven- 
tion of  the  fire  she  would  have  filled  and  gone  to  the  bottom. 

1  34  Conn.  561. 


RISK,   ITS   DURATION   AND    EXTENT.  515 

If  she  would,  then  it  was  not  a  loss  by  fire ;  but  if,  on  the 
other  liand,  slie  would  only  have  filled  and  partially  sank,  had 
not  the  fire  intervened,  but  yet  remained  in  such  a  condition 
that  she  might  have  been  towed  to  a  place  of  safety  and 
repaired,  then  it  was  a  loss  by  fire.  The  fire  was  the  proxi- 
mate cause  of  the  loss. 

The  same  facts  in  another  case  ^  came  before  the  court,  and 
went,  on  appeal,  to  the  Supreme  Court.  The  case  was  tried 
without  the  intervention  of  a  jury,  and  the  court  below  found 
as  follows :  — 

"  While  on  one  of  her  regular  trips  from  Norwich  to  New 
York,  on  Long  Island  Sound,  the  steamer  collided  with  a 
schooner,  the  latter  striking  her  on  her  port  side,  and  cutting 
into  her  hull  below  the  water  line,  in  consequence  of  which 
she  immediately  and  rapidly  began  to  fill  with  water.  Within 
ten  or  fifteen  minutes  after  the  collision,  the  water  reached  the 
floor  of  the  furnace,  and  the  steam  thereby  generated  blew  out 
the  fire,  which  communicated  with  the  woodwork  of  the  boat. 
Her  upper  works  and  her  combustible  freight  were  soon  envel- 
oped in  flames,  and  they  continued  to  burn  half  or  three  quar- 
ters of  an  hour,  when  she  gradually  sank  in  twenty  fathoms 
of  water,  keeling  over.  The  steamer  was  so  constructed  that 
her  main  deck  was  completely  housed  in  from  stem  to  stern, 
up  to  her  promenade,  or  hurricane  deck  above.  Her  freight 
was  stowed  on  the  main  deck,  and  her  cabin  and  state-rooms 
were  on  the  hurricane  deck.  From  the  effects  of  the  collision 
alone  she  would  not  have  sunk  below  her  promenade  deck,  but 
would  have  remained  there  suspended  in  the  water,  and  would 
have  been  towed  to  a  place  of  safety,  where  she,  her  engines, 
tackle,  and  furniture  could  have  been  repaired  and  restored 
to  their  condition  prior  to  the  collision  for  the  sum  of  fifteen 
thousand  dollars,  the  expense  of  towage  included.  The  sink- 
ing of  the  steamer  below  her  promenade  deck  was  the  result 
of  the  action  of  the  fire  in  burning  otf  her  light  upper  works 
and  housing,  tlius  liberating  her  freight,  allowing  much  of  it 
to  drift  away,  whereby  her  floating  capacity  was  greatly  re- 
duced, so  that  she  sunk  to  the  bottom,  and  all  the  damage 

1  Howard  Fire  Ins.  Co.  v.  Norwich  &  N.  Y.  Transp.  Co.,  12  Wall.  (U.  S.)  194. 


516  insurance:  fire,  life,  accident,  etc. 

which  she  suffered  beyond  the  fifteen  thousand  dollars  above 
named  as  chargeable  to  the  collision  (amounting  to  seventy- 
three  thousand  dollars),  including  tiie  cost  of  raising  the  boat, 
was  the  natural  and  necessary  result  of  the  fire,  and  of  the 
fire  only. 

"  It  is  now  urged  in  behalf  of  the  plaintiffs  in  error  that 
these  findings  establish  the  sinking  of  the  steamer,  wlierein 
consisted  principally  the  loss,  or  that  part  of  it  in  excess  of 
fifteen  thousand  dollars  chargeable  to  the  collision,  was  the 
result  of  two  concurrent  causes,  one  the  fire,  and  the  other 
the  water  in  the  steamer's  hold,  let  in  by  the  breach  made  by 
the  collision.  As  the  influx  of  the  water  was  the  direct  and 
necessary  consequence  of  the  collision,  it  is  argued  that  the 
collision  was  the  predominating,  and,  therefore,  the  proximate 
cause  of  the  loss.  The  argument  overlooks  the  fact,  distinctly 
found,  that  the  damage  resulting  from  the  sinking  of  the  ves- 
sel was  the  natural  and  necessary  result  of  tlie  fire  only.  If 
it  be  said  that  this  was  but  an  inference  from  facts  previously 
found,  it  was  not  for  that  reason  necessarily  a  mere  legal  con- 
clusion. 

"  But  we  need  not  rely  upon  this.  Apart  from  that  finding, 
the  other  findings,  unquestionably  of  facts,  show  that  neither 
the  collision,  nor  the  presence  of  water  in  the  steamer's  hold, 
was  the  predominating,  efficient  cause  of  her  going  to  the  bot- 
tom. That  result  required  the  agency  of  the  fire.  It  is  found 
that  the  water  would  not  have  caused  the  vessel  to  sink  below 
her  promenade  deck,  had  not  some  other  cause  of  sinking 
supervened.  It  would  have  expended  its  force  at  that  point. 
The  effect  of  the  fire  was  necessary  to  give  it  additional  effi- 
ciency. 

"  The  fire  was,  therefore,  the  efficient,  predominating  cause, 
as  well  as  nearest  in  time  to  the  catastrophe,  which  not  only 
directly  contributed  to  all  the  damage  done,  after  the  steamer 
had  sunk  to  her  promenade  deck,  but  enlarged  the  destruc- 
tive power  of  the  water,  and  rendered  certain  the  submer- 
gence of  the  vessel.  This  plainly  appears,  if  we  suppose  that 
the  fire  had  occurred  on  the  day  after  the  collision,  and  had 
originated  from  some  other  cause   than    the  collision  itself. 


RISK,  ITS   DURATION    AND    EXTENT.  517 

The  effects  of  tlie  prior  disaster  would  then  have  been  com- 
plete. 

"  The  steamer  would  have  been  full  of  water,  sunk  to  her 
promenade  deck,  and,  remaining  thus  suspended,  would  have 
been  towed  to  a  place  of  safety  and  saved,  in  that  condition,  to 
her  owners,  except  for  the  new  injury.  But  the  fire  occurring 
on  the  next  day,  destroying  the  upper  works  and  the  housing, 
thus  liberating  the  light  freight  and  greatly  reducing  the  float- 
ing capacity  of  the  steamer,  would  have  caused  her  to  sink 
to  the  bottom  as  she  did.  In  the  case  supposed,  the  water 
would  have  been  as  truly  a  concurrent  and  efficient  cause  of 
the  steamer's  sinking,  as  it  was  in  the  case  now  in  hand.  It 
would  have  operated  in  precisely  the  same  manner,  remaining 
dormant  until  given  new  activity.  But  could  there  have  been 
any  hesitation  in  that  case,  in  determining  which  was  the  proxi- 
mate, the  efficient,  predominating  cause  of  the  sinking  of  the 
vessel  ?  And  can  it  be  doubted  that  the  underwriters  against 
loss  by  fire  would  be  held  responsible  for  such  a  loss  ? 

"  Wherein  does  the  case  supposed  differ  in  principle  from 
the  present,  when  the  facts  found  are  considered  ?  True,  the 
fire  in  this  case  was  caused  by  the  collision,  but  the  policy 
insured  against  fire  caused  by  collision.  True,  the  fire  imme- 
diately followed  the  filling  of  the  steamer  with  water,  or  com- 
menced while  she  was  filling,  but  the  effects  of  the  fire  are 
conclusively  distinguished  from  the  breach  in  the  steamer's 
hull,  and  the  filling  of  her  hold  with  water. 

"  The  damages  caused  by  the  several  agencies  have  been 
discriminated,  and  its  proper  share  assigned  to  each.  It  is  an 
established  fact  that  the  damaging  effect  of  the  water,  inde- 
pendent of  the  fire,  would  not  have  reached  beyond  sinking 
of  the  steamer  to  its  upper  deck,  when  she  would  have  been 
saved  from  further  injury. 

"  There  is,  undoubtedly,  difficulty  in  many  cases  attending 
the  application  of  the  maxim,  '  proxima  causa,  non  remota 
spectatur,'  but  none  when  the  causes  suciJced  each  other  in 
order  of  time.  In  such  cases  the  rule  is  plain.  When  one  of 
several  successive  causes  is  sufficient  to  produce  the  effect,  for 
example,  to  cause  a  loss,  the  law  will  never  regard  an  ante- 


518  insurance:  fire,  life,  accident,  etc. 

cedent  cause  of  that  cause,  or  the  '  causa  causans.'  ^  In  such 
a  case  there  is  no  doubt  which  cause  is  the  proximate  one 
within  tlie  meaning  of  the  maxim.  But  when  there  is  no 
order  of  succession  in  time,  when  there  are  two  concurrent 
causes  of  a  loss,  the  predominating,  efficient  one  must  be 
regarded  as  the  proximate  when  the  damage  done  by  each 
cannot  be  distinguished." 

§418.  Risk  —  Explosion  —  Proximate  Cause.  —  An  interest- 
ing marine  case  was  recently  before  the  New  York  Commis- 
sion of  Appeals,^  in  which  arose  the  question  whether  a 
steamship  which  was  insured  under  a  policy  which  excepted 
loss  by  the  bursting  of  boilers,  but  covered  all  losses  "  occur- 
ring subsequent  to  and  in  consequence  of  such  bursting," 
and  the  loss  of  which  was  occasioned  by  such  a  violent  explo- 
sion as  to  sink  her  in  five  or  ten  minutes,  was  protected  by  the 
policy.  And  it  was  held  that  she  was  not,  on  the  ground  that 
upon  the  explosion  the  vessel  became  valueless,  and  the  loss 
total  and  immediate,  and  not  subsequent  to  the  cause  that 
occasioned  it.^  We  have  already  seen*  that  where  a  building 
falls  in  ruins,  and  the  ruins  take  fire  from  combustion  of  cliem- 
icals  wliich  were  amongst  the  stock,  no  recovery  can  be  had, 
the  destruction  being  by  the  fall  and  not  by  the  fire. 

§  419.  Risk  — Intemperance  —  "Wound  —  Proximate  Cause-  — 
Intemperance,  doubtless,  in  a  general  sense,  shortens  life  ;  but 
it  is  not,  therefore,  a  cause  of  death  witliin  the  meaning  of  a 
policy  made  void  if  the  applicant  should  die  by  reason  of  intem- 
perance from  the  use  of  intoxicating  liquor.  Tlie  consequences 
of  such  a  construction  would  be  that  an  insurance  company 
which  had  insured  the  life  of  one  known  to  be  intemperate, 
and  had  charged  a  higher  rate  of  premium  on  that  very  ac- 
count, could  exonerate  itself  from  liability  by  showing  that  the 
life  of  the  assured  had  been  shortened  by  intemperance.  A 
sound  principle  does  not  lead  to  consequences  so  unjust  and 

1  Gen.  Mut.  Ins.  Co.  v.  Sherwood,  14  How.  366. 

2  Evans  v.  Columbian  Ins.  Co.,  44  N.  Y.  146. 

3  Hunt,  C,  dissents  in  an  opinion  of  great  force  and  acuteness,  to  which  we 
refer,  as  containing  some  excellent  illustrations  of  the  distinction  between  proxi- 
mate, mediate,  and  remote  causes. 

*  Nave  V.  Home  Ins.  Co.,  37  Mo.,  ante,  §  412. 


RISK,  ITS   DURATION    AND    EXTENT.  519 

unreasonable.  A  proximate  cause  of  an  effect  is  that  which 
immediately  precedes  and  produces  it,  as  distiiiguisiied  from 
the  remote,  mediate,  or  predisposing  cause.  When  several 
causes  contribute  to  death  as  a  result,  it  may  be  difificult  to 
determine  which  was  the  remote  and  which  the  immediate 
cause,  yet  this  difficulty  does  not  remove  the  necessity  of  such 
determination.^  The  same  case  came  before  the  court  again,^ 
when  it  appeared  that  the  insured  in  a  fit  of  delirium  tremens 
escaped  from  tiiose  having  him  in  charge,  ran  out  into  the 
streets,  and  was  exposed  in  scanty  clothing  to  tlie  inclemency 
of  the  weather,  which  exposure  contributed,  with  intemperance, 
to  bring  on  congestion  of  the  hmgs,  of  which  he  died.  And 
the  court  held  that  these  facts  would  support  a  defence  on  the 
ground  of  intemperance  under  a  clause  exempting  the  insurers 
from  liability  if  the  insured  should  die  "by  reason  of  intem- 
perance from  the  use  of  intoxicating  liquor."  Whether  the 
congestion  was  caused  by  the  exposure  or  intemperance,  they 
were  both  the  direct  consequences  of  his  intemperate  use  of 
intoxicating  liquor.  And  where  the  insured  was  wounded,  and 
the  wound,  not  causing  his  death,  caused  him  to  fall  into  the 
water,  whereby  he  was  drowned,  it  was  held  to  be  a  death  by 
accident.     And  on  appeal  the  court  say:  — 

"  The  part  of  the  charge  to  the  effect  that  if  the  wound  led 
to  the  cause  of  the  death  then  it  would  be  an  accidental  death, 
could  have  been  understood  only  in  the  sense  of  the  wound 
being  produced  by  an  accident,  but  tiiat  this,  not  causing 
death,  did  cause  him  to  fall  into  the  water  where  he  died  from 
drowning,  then  the  death  was  accidental ;  so  understood  it  was 
entirely  correct." ' 

§  420.  Risk  —  Property  covered  by  the  Policy.  —  If  it  be 
doubtful  what  goods  are  covered  by  the  policy,  the  doubt  will 
be  resolved  against  the  insurers.*  A  policy  on  "  wearing 
apparel,  furniture,  and  stock  of  a  grocery,"  docs  not  cover 
"  linen  and  sheets  "  smuggled  and  intended  for  sale ;  and  a 

1  Miller  v.  Mut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216. 

2  34  Iowa,  222. 

3  Mallory  v.  Traveller  Ins.  Co.,  47  N.  Y.  52. 

*  Franklin  Fire  Ins.  Co.  v.  UpdegraflF,  43  Penn.  St.  350 ;  Clark  v.  Firemen's 
Ins.  Co.,  18  La.  431. 


520  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

watch,  being  a  memorandum  article,  is  not  included  in  wear- 
ing apparel ;  ^  nor  is  a  stock  of  linen  drapery  goods  included 
in  "  furniture,  linen,  wearing  apparel,  and  plate."  ^  "  Stock 
in  trade,"  as  applicable  to  mechanical  pursuits,  is  to  have  a 
more  extended  application  than  as  applied  to  a  merciiant's 
stock  in  trade.  It  includes,  in  the  former  case,  the  fixtures 
and  implements  of  business.'^  Furniture  and  movables  are  not 
"  fixtures."  ^  "  Jewelry  and  clothing,"  being  stock  in  trade, 
will  not  cover  musical  instruments,  surgical  instruments,  guns, 
pistols,  and  books  ;  °  but  "  stock  of  watches,  watch  trimmings, 
&c.,"  includes  witliin  its  comprehension  plate,  silver  ware, 
and  the  tools  of  trade,  and  such  other  articles  as  form  part 
of  similar  stocks  in  the  locality  where  the  insurance  is  ef- 
fected.^ "  House  "  or  "  building  "  embraces  every  thing  ap- 
purtenant and  necessary  to  the  main  building,  and  used'  and 
connected  with  it.'''  "  Sliipyard  "  embraces  such  places  as  are 
ordinarily  used  as  part  of  the  yard,  though  within  the  street.^ 
And  "  on  the  line  of  the  road  "  includes  all  branches  used  by 
the  railroad.^  But  an  "  unfinished  house  "  does  not  include 
materials  prepared  for  its  completion,  and  deposited  in  an 
adjoining  one  which  was  also  insured. ^"^  Nor  does  insurance 
on  a  "  bark  now  being  built "  include  materials  prepared  to 
put  into  her,  lying  about  the  yard.^^  Such  materials  are  not 
covered  by  the  policy  until  they  become  part  of  the  vessel. ^^ 
But  "  stock  of  lumber  "  will  include  pieces  partly  prepared  to 
put  into  the  vessel. ^^     "  Steam  saw-mill  "  includes  machinery 

1  Clary  v.  Prot.  Ins.  Co.,  Wright  (Ohio),  227. 

2  Watcliorn  v.  Langfprd,  3  Camp.  (N.  P.)  422. 

3  Moadinger  v.  iMech.  Fire  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  372. 
*  Holmes  v.  Charlestown  Mut.  Ins.  Co.,  10  Met.  (Mass.)  211. 

5  Eafael  v.  Nashville  Mar.  and  Fire  Ins.  Co.,  7  La.  An.  244. 

6  Crosby  v.  Franklin  Ins.  Co.,  5  Gray  (Mass.),  504. 

^  Workman  v.  Ins.  Co.,  2  La.  507  ;  Blake  v.  Exch.  Mut.  Ins.  Co.,  12  Gray 
(Mass.),  265;  White  v.  Mut.  Fire  Ins.  Co.,  8  Gray  (Mass.),  566. 

8  Webb  V.  Nat.  Fire  Ins.  Co.,  2  Sandf.  (Superior  Ct.  N.  Y.)  497. 

9  Fitchburg  R.  R.  Co.  v.  Ch.  Mut.  Ins.  Co.,  7  Gray  (Mass.),  64. 

10  Ellmaker  v.  Franklin  Fire  Ins.  Co.,  5  Pcnn.  St.  183. 

11  ]\Lason  v.  Franklin  Ins.  Co.,  12  G.  &  J.  (Md.)  468. 

12  Hood  V.  Manhattan  Fire  Ins.  Co.,  1  Ker.  (N.  Y.)  532,  reversing  s.  c.  2  Duer 
(Superior  Ct.  N.  Y.),  191. 

13  Webb  V.  Nat.  Fire  Ins.  Co.,  2  Sandf.  (Superior  Ct.  N.  Y.)  497. 


RISK,  ITS   DURATION    AND   EXTENT.  521 

necessary  to  its  operation.^  And  so  does  "starch  factory," ^ 
"  Merchandise "  does  not  cover  articles  kept  wholly  or  par- 
tially for  nse.^ 

§421.  Risk  —  Property  included  —  Goods  in  Trust — The 
words  "  held  in  trust,"  applied  to  goods  insured,  mean  goods 
with  which  the  assured  is  intrusted  ;  not  goods  held  in  trust 
in  tlie  strict  technical  sense,  so  held  that  there  is  only  an 
equitable  obligation  in  the  assured,  enforceable  by  subpcena  in 
chancery,  but  goods  with  which  they  are  intrusted  in  the  ordi- 
nary sense  of  the  word.^  And  where  a  general  policy  upon 
goods  in  trust  was  taken  out,  and  it  was  represented  by  the 
applicant  that  he  desired  insurance  upon  such  goods  as  he 
should  receive  from  time  to  time  to  secure  him  for  advances,  it 
was  held  that  the  policy  covered  only  such  goods  as  at  the  time 
of  the  loss  he  had  made  advances  upon.^  Whether  the  goods 
insured  are  held  in  trust  is  sometimes  a  question  of  not  a  little 
difficulty.  The  following  case  is  of  importance  upon  this 
point,  and  well  illustrates  the  distinction  between  a  sale  and  a 
bailment:  — 

The  respondents,  who  were  millers,  received  wheat  from 
different  farmers.  The  wheat,  on  receipt,  was,  with  the  con- 
sent of  the  farmers,  mixed  with  other  wheat,  and  became  part 
of  the  millers'  current  stock.  The  millers  could  at  any  time 
grind  or  sell  the  wheat  so  received.  The  farmers  could  at  any 
time  claim  the  price  of  the  wheat  delivered  by  each,  according 
to  the  market  price  for  wheat  of  like  quality,  at  the  time  of 
payment  claimed.  There  was  also  some  evidence  that  the 
farmers  had  the  option  of  claiming  an  equal  quantity  of  wheat 
of  like  quality,  instead  of  the  value  in  money.  The  millers 
often  made  advances  to  the  farmers  on  the  wheat  received 
from  them.  The  farmers,  after  a  certain  time,  paid  a  storage- 
charge  to  the  millers. 

The  respondents  insured  the  current  stock  of  wheat  in 
their  mill  with  the  appellants.     In  the  proposal  for  insurance 

1  Bigler  v.  N.  Y.  Central  Ins.  Co.,  20  Barb.  (N.  Y.)  635. 
'  Peoria  Mar.  and  Fire  Ins.  Co.,  v.  Lewis,  18  III.  553. 
3  Burgess  v.  Alliance  Ins.  Co.,  10  Allen  (Mass.),  221. 
•«  Hough  et  al.  v.  Peoples'  Ins.  Co.,  36  Md.  398. 
5  Parks  V.  Gen.  Mut.  Ass.  Co.,  5  Mich.  34. 


522  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  respondents  answered  tlie  question  whether  the  insurance 
was  '"  for  self  or  in  trust,  and  if  in  trust,  on  account  of  whom  ?  " 
in  these  words,  —  "  for  selves." 

A  condition  of  the  policy  was,  that  goods  held  in  trust 
must  be  insured  as  such,  otherwise  the  policy  would  not  cover 
them.  The  mill  and  stock  were  destroyed  by  fire.  To  an 
action  on  the  policy,  the  appellants  pleaded  that  the  statement 
in  the  proposal  was  a  misrepresentation,  the  stock  having  been 
held  by  the  respondents  "  in  trust  for  other  persons."  On 
these  facts  it  was  held  (affirming  the  judgment  of  the  Supreme 
Court  of  South  Australia)  that  the  description  of  the  subject 
of  insurance  was  correct,  for  that  this  was  not  a  case  of  pos- 
session given  subject  to  a  trust,  but  of  property  transferred  for 
value  upon  special  terms  of  settlement. 

A  bailment  on  trust  implies  that  there  is  reserved  to  the 
bailor  the  right  to  claim  a  redelivery  of  the  property  deposited 
in  bailment ;  but  wherever  there  is  a  delivery  of  property  on 
a  contract  for  an  equivalent  in  money,  or  some  other  valuable 
commodity,  and  not  for  a  return  of  the  identical  subject-matter 
in  its  original  or  an  altered  form,  this  is  a  transfer  of  property 
for  value,  —  a  sale,  not  a  bailment.^ 

And  insurance  on  "  all  the  articles  making  up  the  stock 
of  a  pork-house,  and  all  within  the  building  and  pertinent 
thereto,"  covers  every  thing  properly  belonging  to  the  stock 
of  a  pork-house,  without  regard  to  individual  ownership,  al- 
though the  policy  states  that  goods  on  commission  are  to  be 
insured  as  such.^ 

1  South  Australian  Ins,  Co.  v.  Randell,  22  L.  T.  n.  s.  843. 

2  ^tna  Ins,  Co,  v.  Jackson,  16  B,  Mon.  (Ky.)  250. 


LOSS   AND    ITS    ADJUSTMENT,   AND   TO   WHOM   PAYABLE.        523 


CHAPTER    XIX. 

OP   THE   LOSS    AND   ITS   ADJUSTMENT,    AND    TO    WHOM    PAYABLE. 

§  422.  Amount  of  Loss  recoverable  —  Life.  —  Under  the  USUal 
contract  of  life  insurance,  the  loss  being  total  and  the  policy 
valued,  the  question  of  the  amount  payable  is  not  open  to 
debate,  the  amount  being  fixed  by  the  contract.  And  the 
amount  to  be  paid  in  case  of  loss  may  be  any  sum  which  the 
parties  may  agree  upon,  as  the  value  of  a  life  may  be  fixed  at 
any  sum,  unless,  perhaps,  it  be  so  large  and  so  disproportional 
to  any  possible  interest  as  to  raise  the  presumption  that  the 
transaction  is  not  in  good  faith,  but  in  reality  is  a  gambling 
speculation.  When  the  insurance  is  upon  one's  own  life,  as 
the  future  earnings  may  be  indefinitely  large,  the  insurance 
may  be  to  an  unlimited  amount,  except  as  above  stated. 
Though  where  the  insurance  is  by  a  creditor  on  the  life  of  a 
debtor,  the  amount  should  doubtless  coincide  substantially 
with  the  amount  of  the  indebtedness.^ 

§  423.  Amount  of  Loss  recoverable  —  Fire.  —  The  general 
rule  of  damages  in  fire  insurance,  the  policy  not  being  a  valued 
one,  is  indemnification  of  the  insured  if  the  loss  be  less  than, 
or  only  equal  to,  the  amount  of  insurance  specified  in  the  pol- 
icy, without  reference  to  the  relation  of  the  amount  insured 
to  the  whole  value  of  the  property  insured  ;  and  in  this  loss  is 
included  all  the  loss  immediately  caused  by  the  fire,^  so  that 
the  insured  may  be  paid  for  whatever  he  had  before  the  fire 
and  was  destroyed  thereby.  Remote  and  consequential  dam- 
ages, however,  such  as  are  caused  by  an  interruption  of  busi- 
ness, as  the  loss  of  custom  to  an  inn,^  or  the  loss  of  use  of  a 

1  See  Mitchell  v.  Union  Life  Ins.  Co.,  4-5  Me.  104. 

2  Underbill  v.  Agiiwam  Mat.  Ins.  Co.,  6  Cush.  (Mass.)  440  ;  Peddie  v.  Quebec 
Fire  Ins.  Co.,  1  Stuart  (Lower  Canada),  172. 

8  Wrijibt  &  Pole,  In  re,  1  Ad.  &  El.  621 ;  s.  c.  3  Nev.  &  Man.  819,  under  the 
name  of  Sun  Fire  Office  v.  Wright. 


524  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

grist-mill,  or  tlie  profits  of  its  business,  or  the  expenses  of 
keeping  his  employes  while  rebuilding,  tliough  in  consequence 
of  tlie  fire  no  return  can  be  had  for  the  wages,  are  not  recover- 
able as  damages. 1  And  this  was  held  upon  general  principles 
following  the  authority  of  Wright  "and  Pole.  But  in  both 
cases  there  was  a  clause  which  permitted  the  insurers  to  make 
good  the  loss  by  repairing  if  they  should  so  choose,  wliich  in 
the  opinion  of  the  court  conclusively  showed  that  nothing 
more  than  the  expense  of  repairing  could  be  recovered. 
Neither  is  the  loss  of  prospective  rent  recoverable  as  damages 
by  fire.^  But  all  these  several  subjects  may  be  specifically 
insured  wlien,  of  course,  their  loss  becomes  an  element  of 
damage.^  The  expense  of  repairing  or  rebuilding,  it  has  been 
said,  however,  is  not  the  measure  of  damages,  since  that  would 
give  the  insured  more  than  he  would  be  entitled  to,  as  having 
new  instead  of  old.  And  as  there  is  not  in  fire  insurance, 
as  in  marine,  a  rule  of  allowing  one-third  for  the  difference 
between  new  and  old,  nor  any  rule  of  damages,  it  is  for  the 
jury  to  determine  how  much  money  will  make  good  to  the 
insured  his  loss.'*  And  this  is  recoverable  if  within  the  amount 
insured,  although  the  value  of  the  property  insured  is  much 
greater  than  the  loss.  The  proportion  of  the  loss  to  the  whole 
amount  insured  is  not  in  fire,  as  in  marine,  insurance  an  ele- 
ment in  the  calculation  of  the  amount  to  be  paid.^  If  the 
insured  is  '•  to  contribute  a  certain  proportion  of  the  expense 
of  rebuilding,"  the  proportion  is  of  the  value  to  the  estate, 
not  the  cost  of  rebuilding.^  The  fact  that  the  article  to  be 
replaced  is  patented,  is  not  to  enhance  its  value  above  the  cost 
of  replacing.'^  The  cost  of  the  new,  less  the  difference  between 
that  and  the  value  of  the  old  at  the  time  it  was  destroyed,  was 

1  Menzies  v.  North  Brit.  Ins.  Co.,  9  Ct.  Sess.  Cas.  (Scotch)  694;  Niblo.v. 
N.  A.  Fire  Ins.  Co.,  1  Sandf.  (Superior  Ct.  N.  Y.)  551. 

2  Leonarda  v.  Phcenix  Ass.  Co.,  2  Rob.  (La.)  131. 
'  See  all  the  above  authorities. 

*  Brinley  v.  Nat.  Ins.  Co.,  11  Met.  (Mass.)  195. 

5  Miss.  Mut.  Ins.  Co.  v.  Ingram,  34  Miss.  215 ;  Liscom  v.  Boston  Mut.  Ins. 
Co.,  9  Met.  (Mass.)  205. 

6  Comraouwealth  Ins.  Co.  i;.  Sennett,  37  Penn.  St.  205. 

7  Ibid. 


LOSS   AND   ITS    ADJUSTMENT,  AND   TO   WHOM    PAYABLE.        525 

said  to  be  the  rule  in  Yance  v.  Foster.^  In  Morrell  v.  Irving 
Fire  Insurance  Company ,2  it  is  said  that  the  exercise  of  the 
option  to  rebuild  converts  the  insurance  contract  into  a  con- 
tract to  rebuild,  and  in  a  suit  for  damages  for  the  imperfect 
performance  of  the  new  contract,  the  amount  of  insurance  is 
no  criterion  of  damages.  And  in  such  case  an  action  on  the 
policy  cannot  be  maintained  to  recover  the  loss.^ 

§  424.  Loss  —  Amount  recoverable  —  Lessee  —  Mortgagor  — 
Impost  and  Excise  Duties  —  Mortgagee  —  Goods  in  Trust  — 
Partner.  ■ —  Where  a  building  which  stood  on  leased  land  was 
destroyed,  and  thq  lease  expired  within  a  few  days,  so  that  the 
building  must  be  removed  or  forfeited,  or  a  new  lease  entered 
into,  it  was  held  that  the  intrinsic  value  of  the  building  was 
the  amount  recoverable,  without  reference  to  the  special  cir- 
cumstances.* So  a  mortgagor  whose  equity  has  been  seized 
on  execution,  recovers  according  to  the  value  of  the  property 
lost,  without  reference  to  this  circumstance.^  But  where  a 
leasehold  interest  is  insured,  the  value  of  the  unexpired  lease  is 
the  measure  of  damages.^  Goods  in  the  custom-house  are  to  be 
estimated  at  their  market  value,  without  reference  to  the  fact 
that  the  duties  may  or  may  not  have  been  paid."  And  it  has 
been  held  that  a  depression  in  value  caused  by  special  circum- 
stances, which  may  be  temporary  only,  is  not  to  be  taken  into 
account.^  But  a  later  case  in  Lower  Canada  would  seem  to 
be  to  the  contrary.^  But  where  distilled  liquors  ready  for 
market,  but  upon  which  the  internal  revenue  tax  was  not  paid, 
were  destroyed,  it  was  held  that  as  the  duty  had  not  been 
paid,  and  the  destruction  left  the  owner  without  any  personal 
liability  to  the  government  for  the  tax,  though  while  the  prop- 
erty was  in  existence  there  was  a  lien  upon  it  in  favor  of  the 

1  2  Crawford  &  Dix,  Nisi  Prius  (Irish),  118.  2  33  n.  Y.  429. 

3  Beals  V.  Home  Ins.  Co.,  36  N.  Y.  522,  affirming  s.  c.  36  Barb.  (N.  Y.)  614. 
And  see  post,  §  432. 

4  Laurent  v.  Chatham  Fire  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  41. 

5  Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  (Mass.)  40. 

e  Niblo  V.  N.  A.  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  551. 

7  Wolf  V.  Howard  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  124  ;  s.  c.  affirmed, 
3  Seld.  (N.  Y.)  583. 

8  McCraig  v.  Quaker  City  Ins.  Co.,  18  Upper  Canada  (Q.  B.),  130. 

9  Grant  v.  yEtna  Ins.  Co.,  11  Lower  Canada,  128. 


526  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

government,  the  insured  could  only  recover  the  value  of  the 
property  destroyed,  less  the  tax.^  A  mortgagee  in'suring  his 
own  interest  recovers  according  to  his  interest  at  the  time 
when  he  commences  his  suit,^  or  perhaps  more  accurately  at 
the  time  of  the  loss.  That  after  tiie  loss  the  mortgagor  re- 
places the  property  in  as  good  condition  as  it  was  before,  or 
the  mortgagee,  by  selling  other  securities  which  he  holds, 
reduces  his  debt,  however  it  may  affect  the  equities  between 
him  and  the  mortgagor,  does  not  affect  the  terms  of  the  con- 
tract between  the  mortgagee  and  the  insurers.  The  contin- 
gency having  arrived  upon  which  the  loss  wa^  payable,  it  must 
be  paid  according  to  the  status  of  the  interest  at  the  time 
when  the  contingency  happened.^  To  indemnify  the  mortgagee 
for  all  loss  to  property  means  to  the  amount  of  his  interest;* 
but  to  make  good  to  the  assured  all  loss  to  property,  gives  the 
right  to  recover  the  full  amount  of  loss.^  So,  in  case  where 
an  insured  vendor  has  received  part  of  his  purchase-money 
before  the  loss,^  and  the  insurers  have  no  claim  either  against 
the  vendee,  or  rights  against  the  property  sold."  And  that  the 
property  still  held  by  the  mortgagee  is  ample  security  for  the 
debt  is  of  no  avail  to  the  insurers.^  And  a  commission  mer- 
chant insuring  goods,  his  own  as  well  as  in  trust  or  on 
commission,  the  insurers  agreeing  to  pay  the  "  actual  value  " 
or  "  all  damage,"  may  recover  the  full  amount  of  loss,^  but 
not  unless  they  are  so  insured,  if  the  policy  require  it.^'^     So 

1  Security  Ins.  Co.  v.  Farrell,  Sup.  Ct.  111.,  2  Ins.  L.  J.  302. 

2  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff,  2  Dutch.  (N.  J.)  511. 

3  Foster  v.  Eq.  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  216;  Carpenter  v.  Wash- 
ington Ins.  Co.,  16  Pet.  (U.  S.)  495.  Contra,  Matthewson  v.  Western  Ins.  Co., 
10  Lower  Canada,  8. 

1  Sharswood,  J.,  in  Thornton  v.  Enterprise  Ins.  Co.,  Sup.  Ct.  Penn.,  Legal 
Int.,  p.  170,  June  14,  1872. 

5  Ins.  Co.  V.  UpdegraflT,  21  Penn.  St.  513. 

6  Ins.  Co.  V.  Updegraff,  21  Penn.  St.  513 ;  Boston  and  Salem  Ice  Co.  v.  Koyal 
Ins.  Co.,  12  Allen  (Mass.),  38. 

7  Ibid. 

8  Kernochan  v.  New  York  Bowery  Ins.  Co.,  5  Duer  (N.  Y.  Superior  Ct.),  1; 
s.  c.  affirmed,  17  N.  Y.  428  ;  Rex  v.  Ins.  Co.,  2  Phila.  Rep.  (Penn.)  857. 

9  De  Forest  v.  Fulton  Fire  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  84;  Lee  v. 
Howard  Fire  Ins.  Co.,  11  Cush.  (Mass.)  324. 

1°  Briclita  v.  New  York  Lafayette  Ins.  Co.,  2  ib.  374 ;  Keeley  v.  Ins.  Co.,  1 
Phila.  (Penn.)  175. 


{ 


LOSS   AND    ITS    ADJUSTMENT,  AND   TO    WHOM    PAYABLE.        527 

may  a  warehouseman  insuring  goods  "  in  trust "  recover  the 
whole  amount  of  loss  on  goods  on  storage.^  A  person  having 
goods  in  his  possession  as  consignee,  or  on  commission,  may- 
insure  them  in  his  own  name,  and  in  tlie  event  of  loss  recover 
the  full  amount  of  the  insurance,  and,  after  satisfying  his  own 
claim,  hold  tlie  balance  as  trustee  for  the  owner.^ 

And  the  Court  of  Appeals  of  New  York  have  recently  held  ^ 
that,  under  a  policy  which  insures  goods  "  sold  but  not  re- 
moved," the  insured  may  recover  for  the  benefit  of  the  real 
owners,  although  the  goods  after  the  policy  is  issued  are  sold 
and  delivered,  and  the  title  and  right  of  possession  have 
passed,  if  the  location  of  the  property  has  not  been  changed. 
Such  a  policy  must  intend  that  the  risk  taken  should  cover 
and  adhere  to  the  same  property,  after  it  had  left  the  owner- 
ship of  the  insured  named  therein,  and  follow  it  while  in  the 
ownership  of  the  vendee  of  the  original  owner,  so  long  as  it 
is  not  removed.  And  it  is  said  that  the  law  does  not  forbid 
tiiat  a  policy  should  be  so  framed  as  that  the  insurance  shall 
be  inseparably  attached  to  the  property  covered  thereby,  so 
that  successive  owners,  during  the  continuance  of  the  risk, 
shall  become  in  turn  the  parties  really  insured.^  The  sur- 
vivor of  a  partnership  dissolved  by  the  death  of  one  of  the 
firm,  can  recover  only  the  balance  of  the  goods  that  belonged 
to  the  firm  at  the  time  of  dissolution,  and  were  in  his  hands 
as  survivor  at  the  time  of  the  loss.  Goods  bought  after  the 
dissolution  are  not  covered  by  the  policy,  unless  by  special 
agreement.^ 

§425.  Loss  —  Limitation  by  special  Provision. —  By  special 
provision  of  the  policy  or  charter  the  amount  of  loss  for  which 

•  Waters  v.  Monarch  Fire  and  Life  Ins.  Co.,  5  E.  &  B.  870  ;  Hough  v.  People's 
Ins.  Co.,  36  Md.  398 ;  London  Kail  way  Co.  v.  Glyn,  1  E.  &  E.  652 ;  Siter  v. 
Morrs,  13  Penn.  St.  218. 

-  Hough  et  al.  v.  People's  Ins.  Co.,  36  Md.  398. 
'  Waring  v.  Indemnity  Fire  Ins.  Co.,  45  N.  Y.  606. 

*  Property  held  "  in  trust,"  within  the  meaning  of  a  policy  of  insurance, 
unless  specially  defined,  as  was  the  case  in  Ayres  v.  Hartford  Ins.  Co.,  17  Iowa, 
176,  includes  every  thing  in  which  the  insured  has  only  a  qualified  interest  with 
the  possession,  while  the  ownership  is  in  another.  Turner  v.  Stetts,  28  Ala.  420; 
Stillwell  V.  Staples,  19  N.  Y.  401. 

5  Wood  V.  Rutland  Ins.  Co.,  31  Vt.  (2  Shaw)  552. 


528  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  insurers  are  to  be  responsible  may  be,  and  often  is,  limited 
to  a  certain  percentage  or  proportion  of  the  value  of  the  prop- 
erty insured.  But  in  such  case,  if  the  policy  be  a  valued  one, 
that  is,  if  the  value  of  the  property  insured  be  fixed  in  the 
policy,  that  value  will  be  conclusive. ^  Restriction  is  also 
sometimes  made  to  a  certain  proportion  of  the  value  of  the 
property  at  the  time  of  the  loss.^  In  such  a  case  the  value  at 
the  time  of  loss  is  open  to  inquiry  though  the  policy  be  a  valued 
one.  The  value  at  the  time  of  insurance  may  be  more  or  less 
than  at  the  fire.^  And  where  tlie  insurers  were  to  pay  "  all 
loss  or  damage,"  not  exceeding  the  sum  insured,  "  the  said 
loss  or  damage  to  be  estimated  according  to  the  true  and 
actual  value  of  the  property  at  the  time  the  same  shall  hap- 
pen, and  to  be  paid  at  the  rate  of  two-thirds  of  its  actual  cash 
value,"  it  was  held  that  the  two  clauses,  construed  together, 
meant  that  the  insurers  should  pay  two-thirds  of  the  actual 
value  of  the  property  on  hand  at  the  time  of  the  fire,  not 
exceeding  the  sum  insured.'^  But  when  total  losses  were  to  be 
paid  to  the  amount  of  two-thirds,  and  partial  losses  in  full,  and 
out  of  a  stock  of  $3,929  only  about  $70  was  saved,  the  court 
held  that  this  insignificant  salvage  could  not  be  considered 
as  making  the  case  one  of  partial  loss,  whereby  the  insured 
would  be  entitled  to  recover  much  more  on  partial  than  on 
total  loss.  Literally  construed,  the  court  said  such  must  be 
the  result.  But  such  could  not  have  been  the  intent  of  the 
parties.^  And  under  a  restriction  of  recovery  to  two-thirds 
the  value  of  the  property  a  mortgagee  may  recover  the  full 
value  of  his  interest  if  it  does  not  exceed  two-tliirds  of  the 
value  of  the  property  insured. ^     The  fact  that  the  property  is 

1  Borden  v.  Hingham  Mut.  Fire  Ins.  Co.,  18  Pick.  (Mass.)  523  ;  Fuller  u.  Bos- 
ton Mut.  Fire  Ins.  Co.,  -1  Met.  (Mass.)  206  ;  Holmes  v.  Cliarlestown  Mut.  Ins.  Co., 
10  Met.  (Mass.)  211 ;  Phillips  v.  Merrimack  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  350. 

2  Brinley  v.  National  Ins.  Co.,  11  Met.  (Mass.)  195  ;  Huckins  v.  Peoples'  Mut. 
Fire  Ins.  Co.,  11  Fost.  (N.  H.)  238. 

2  Ibid. ;  Post  v.  Hampshire  Mut.  Fire  Ins.  Co.,  12  Met.  (Mass.)  555  ;  Egan  v. 
Mut.  Ins.  Co.,  5Denio  (N.  Y.),  326;  Atwood  v.  Union  Mut.  Ins.  Co.,  8  Fost. 
(N.  H.)  234. 

*  Ashland  Mut.  Fire  Ins.  Co.  v.  Housinger,  10  Ohio  St.  10. 

5  Singleton  v.  Boone  County  Ins.  Co.,  45  Mo.  250. 

6  Sanders  v.  Hillsborough  Ins.  Co.,  44  N.  H.  238. 


LOSS    AND    ITS    ADJUSTMENT,    AND    TO    WHOM    PAYABLE.        529 

overvalued,  so  that  the  insurers  become  liable  for  more  than 
is  permissible  by  their  by-laws,  will  not  excuse  the  company. 
The  violation  of  the  charter  is  no  defence  against  the  insure^, 
there  being  no  fraud. ^ 

§  426.  Loss  —  Rebuilding  —  Transfer  of  Claim  for  Damages. — 
As  this  rebuilding  is  but  one  mode  of  payment  of  the  loss,  the 
acceptance  of  an  order  to  pay  the  loss  to  a  person  other  than 
the  assured  does  not  deprive  the  insurers  of  their  right  to 
make  the  election.  The  acceptance  is  but  an  assignment  of 
the  claim  of  the  insured,  without  in  any  way  affecting  the 
mode  of  payment.  It  is  but  a  substitution  of  the  assignee  for 
the  assured,  and  giving  him  the  right  to  demand  what  the 
assured  might  have  demanded.^  And  if  the  insurance  be  for 
a  specific  amount  for  a  given  period,  and  the  cost  of  once 
repairing  be  less  than  the  amount  insured,  the  policy  will 
remain  good  for  the  unexpended  balance  during  the  period 
covered  by  the  policy.^  And  it  seems  that  but  for  the  express 
limitation  of  the  amount  for  which  the  insurers  might  become 
liable,  tliey  would  have  to  replace  as  often  as  the  property 
should  be  destroyed  during  the  period  of  insurance.*  If  goods 
ai-e  replaced,  the  insured  is  to  be  made  good  for  his  loss,  and 
only  that,  and  any  arrangement  between  the  parties  for  an 
extension  of  the  time  within  which  to  replace  or  repair  would 
control  the  original  contract  in  this  particular.^ 

§  427.  Loss  —  Apportionment —  Several  Parcels.  —  An  agree- 
ment is  sometimes  inserted  in  the  policy ,°  and  will  sometimes 
be  inferred  from  the  circumstances  of  the  case,  for  an  appor- 
tionment of  the  loss  and  expenses  of  removal  and  protection 
of  the  goods  during  a  fire  ;  and  in  the  absence  of  an  express 
agreement,  the  proportion  to  be  borne  by  each  will  be  accord- 
ing to  his  interest.  If,  for  example,  the  property  is  insured 
for  one-half  its  value,  each  will  bear  one-half  of  such  expense  ; 
if  for  three-quarters,  then  the  insurer  pays  three-fourths  and 

1  Williams  i;.  N.  E.  Mut.  Ins.  Co.,  31  Me.  219 ;  Cumb.  Val.  Mut.  Prot.  Co.  v. 
Schell,  2y  Penn.  St.  31. 

2  Tolman  v.  ilanufacturers'  Ins.  Co.,  1  Cush.  (Mass.)  73. 

3  Trull  V.  Ro.xbury  Mut.  Ins.  Co.,  3  Cush.  (Mass.)  2G3.  ■*  Ibid. 

5  Franklin  Fire  Ins.  Co.  v.  Hamil,  5  Md.  170. 

6  Peoria  Fire  and  Mar.  Ins.  Co.  v.  Wilson,  5  Minn.  53. 

34 


530  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

the  insured  one-foiirtli.^  But  insurance  in  a  gross  sum  on 
property  situated  in  different  and  distinct  buildings  covers  all 
that  may  be  destroyed  in  either  building,  to  the  amount  of  the 
insurance.-  Where  A.  had  deposited  a  large  amount  of  cotton 
on  storage  with  a  warehouse  company,  and  had  effected,  among 
others,  an  insurance  against  fire  on  two  particular  lots,  —  at 
one  time  on  fifteen  bales,  and  at  another  on  thirteen  bales,  — 
and  the  warehouse  containing  the  cotton  of  A.,  with  that  of 
others,  was  destroyed  by  fire,  and  a  portion  of  the  cotton  was 
saved  and  sold  at  auction,  by  instruction  of  a  committee  of  the 
insurance  companies  interested,  the  net  proceeds  of  which  sale 
were  distributed,  under  the  direction  of  the  committee,  among 
the  assured  ;  in  an  action  by  A.  to  recover  on  his  two  policies, 
it  was  held  that,  in  ascertaining  tlie  amount  of  loss  or  damage 
which  the  plaintiff  sliould  recover,  the  jury  ought  to  deduct 
such  sum  as  they  might-  find  From  the  evidence  was  the  pro- 
portion due  to  twenty-eight  bales  in  the  distribution  of  the 
proceeds  of  sale  of  the  cotton  saved.^ 

§  428.  Loss  —  Interest  —  Mode  of  Payment  —  Evidence.  —  If 
there  be  no  provision  in  the  policy  regulating  the  payment  of 
the  loss,  interest  will  be  reckoned  from  the  date  of  the  loss,  or 
at  least  from  the  time  of  proof.  But  if  a  time  is  fixed  for  the 
payment,  then  interest  will  run  from  the  time  so  fixed,  unless, 
by  trustee  process  or  otherwise,  the  insurers  be  prevented  from 
paying  at  that  time.*  Payment  of  loss  in  gold,  if  agreed  upon, 
is  compulsory  ;  but  this  does  not  carry  with  it  an  obligation  to 
pay  dividends  of  profits.^  Where  the  insurance  was  on  corn 
shipped  from  Chicago  to  Montreal,  and  the  loss  was  payable 
to  the  Bank  of  Montreal,  in  funds  current  in  the  city  of  New 
York,  it  was  held  that  in  estimating  the  amount  of  the  liability 
of  the  insurers,  the  premium  in  gold  should  not  be  allowed  in 
favor  of  the  insurers.^     Tlie  fact  that  the  loss  is  in  a  foreign 

1  Willis  V.  Boston  Ins.  Co.,  G  Pick.  (Mass.)  172. 

2  Nicolet  V.  Ins.  Co.,  3  La.  371  ;  Kix  v.  Mut.  Ins.  Co.,  20  N.  H.  198. 

3  Hongh  V.  People's  Ins.  Co.,  3G  Md.  398. 

*  Nevins  v.  Rockingham  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  22;  Oriental  Bank  v. 
Fremont  Ins.  Co.,  4  Met.  (Mass.)  1. 

°  Luling  V.  Atlantic  Mut.  Ins.  Co.,  50  Barb.  520. 
6  Lamar  Ins.  Co.  v.  McGlashan,  54  111.  513. 


LOSS   AND   ITS   ADJUSTMENT,    AND   TO    WHOM    PAYABLE.       531 

country  does  not  add  the  expense  of  transmission  of  the 
amount  due  to  the  amount  of  the  loss.^  The  market  value  at 
the  time  of  the  loss,  and  when  the  property  is  but  partially 
destroyed  and  only  damaged,  the  difference  between  the  value 
of  the  property  as  it  is  and  as  it  was,  ascertained  by  a  sale  at 
auction,  with  notice  to  the  parties  interested,  are  data  upon 
which  to  find  the  value.^  And  there  is  no  right  of  abandon- 
ment, as  in  marine  insurance.^  And  it  seems  that  the  differ- 
ence between  a  wholesale  and  a  retail  niiarket  value  may  be 
taken  into  account* 

§  429.  Damages  ^vhere  Life  Company  improperly  refuse  to  re- 
new.—  If  a  life  insurance  company  improperly  refuse  to  accept 
the  premiums,  under  a  plea  that  the  policy  is  void,  an  action 
may  be  maintained  against  them  for  damages ;  and  it  seems 
that  the  rule  of  damages  would  not  be  confined  to  the  amount 
of  the  premiums  paid  with  interest.  If  the  person  whose  life 
is  insured,  though  alive,  should  be  laboring  under  a  disease 
that  must  speedily  result  in  death,  the  insurers  ought  not  to  be 
permitted  to  escape  the  payment  of  the  amount  for  which  the 
life  was  insured  by  putting  an  end  to  the  contract.^ 

§430.  Loss  —  Payment  —  Rebuilding.  —  As  one  means  of 
protecting  themselves  against  extravagant  claims  for  losses, 
insurance  companies  frequently  reserve  the  right  to  rebuild  a 
building,  or  to  replace  the  property  destroyed,  as  one  mode  of 
arriving  at  the  amount  of  loss  which  shall  be  paid.  This  right, 
however,  is  not  one  which  inheres  in  the  nature  of  the  con- 
tract, and  can  only  exist  where  tiiere  is  a  special  stipulation 
therefor,  and  then  is  optional.^  If  no  time  be  fixed  before 
which  an  election  shall  be  made,  it  must  be  made  within  a 
reasonable  time.  And  if  it  be  provided  that  the  company  shall 
have  a  right  to  rebuild  or  replace  within  a  reasonable  time, 

1  Burgess  v.  Alliance  Ins.  Co.,  10  Allen  (Mass.),  221. 

2  Hoffman  v.  West.  Mar.  and  Fire  Ins.  Co.,  1  La.  An.  216;  Henderson  v. 
Same,  10  Kob.  (La.)  164. 

»  Ibid. 

*  Hoffman  v.  ^tna  Ins.  Co.,  1  Robt.  (N.  Y.  Superior  Ct.)  501. 

5  McKee  v.  Phoenix  Ins.  Co.,  28  Mo.  (7  Jones)  383. 

6  Wallace  v.  Ins.  Co.,  4  La.  289;  Commonwealth  Ins.  Co.  v.  Sennett,  37  Penn. 
St.  205. 


532  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

and  where  they  elected  so  to  do  the  insured  should  give  security 
to  pay  one-third  of  the  cost,  and  that  "  the  insured  shall  have 
no  right  of  action  unless  the  insurers  neglect  for  thirty  days 
after  the  giving  such  security  to  proceed  to  rebuild,"  &c.,  the 
right  of  action  is  only  suspended  during  the  time  within  which 
the  company  has  a  right  to  rebuild  ;  and  if  the  rebuilding,  duly 
commenced,  has  not  been  finished  in  a  "  reasonable  time,"  an 
action  may  be  brought,  —  tiie  question  of  reasonable  time  be- 
ing for  the  jnry.^  An  election  to  repair,  after  fruitless  negotia- 
tions to  settle,  and  a  month  after  the  proofs  of  loss  had  been 
furnished,  was  held  to  have  been  within  reasonable  time.^ 

§  481.  Loss  —  Rebuilding  in  Part — Damages.  —  In  Brinley  V. 
National  Insurance  Company ,3  the  insurance  company,  under 
tlie  right  to  rebuild,  had  erected  a  new  building  upon  a  some- 
what different  plan  from  the  old  one,  which  had  been  totally 
destroyed.  And  the  question  arose,  on  a  suit  to  recover  for 
the  loss,  what  was  the  rule  of  damages  ?  whether  the  insurers, 
as  the  plaintiff  contended,  should  pay  the  actual  cost  of  restora- 
tion, or  whether,  as  the  defendant  contended,  they  should  be  al- 
lowed a  deduction  on  account  of  the  additional  value  of  the  new 
building.     And  hereupon  the  court  (Wilde,  J.)  observed :  — 

"  At  the  trial  the  defendants  contended  that  as  a  new  store 
of  similar  dimension  and  plan  as  the  old  one,  a  deduction  ought 
to  be  made  from  the  estimated  cost  of  a  new  store,  for  the  dif- 
ference in  value  between  the  old  store  and  the  new  one  ;  analo- 
gous to  the  deduction  of  new  for  old  in  the  adjustment  of  losses 
on  marine  policies.  This  claim  of  deduction  was  not  sustained 
by  the  judge  at  the  trial,  and  we  are  not  aware  of  any  authority 
or  principle  by  which  it  can  be  supported.  The  rule  in  adjust- 
ing marine  losses  is  arbitrary,  and  operates  in  some  cases  un- 
justly, giving  to  the  insured  more  or  less  than  a  full  indemnity, 
to  which  he  is  entitled  by  the  policy,  and  to  no  more.  The  rule 
originated  from  the  usages  among  merchants  and  underwriters, 
probably  from  the  great  difficulty  of  ascertaining  the  actual 

1  Haskins  v.  Hamilton  Mut.  Ins.  Co.,  5  Gray  (Mass.),  432.  But  see  atite, 
§423. 

2  Sutherland  v.  Soc.  of  Sun  Fire  Office,  14  Ct.  of  Sess.  Cas.  n.  s.  (Scotcl)) 
775. 

3  11  Met.  (Mass.)  195. 


LOSS    AND    ITS    ADJUSTxMENT,    AND    TO    WHOM    PAYABLE.        533 

loss,  without  first  repairing  the  damage  done,  or  estimating 
the  cost  of  repairs.  The  rule  is  applicable  only  to  cases  of  a 
partial  or  a  constructive  total  loss.  It  depends  on  usage,  sanc- 
tioned by  judicial  decisions;  and  in  some  cases  this  rule  of  esti- 
mating the  loss  is  expressly  provided  for  by  the  terms  of  the 
policy.  Such  has  been  the  stipulation  in  the  marine  policies 
in  Boston  for  many  years.  But  the  rule  has  never  been 
adapted  to  policies  of  insurance  and  other  property  against 
fire.  The  question  tlien  is,  what  is  the  rule  of  damages,  if  any 
there  be,  in  cases  like  the  present  ?  The  plaintifif's  counsel 
contends  that  the  actual  loss  is  to  be  ascertained  by  the 
expense  of  restoring  the  property  without  any  deduction  for 
the  difference  of  value  between  the  new  and  old  materials; 
and  so  the  rule  is  laid  down  by  Professor  Greenleaf.^  But  the 
only  adjudicated  case  he  cites,  which  has  any  distinct  bear- 
ing on  tlie  question,  is  that  of  Yance  v.  Foster,^  in  which  Mr. 
Baron  Pennefather  laid  down  a  very  different  rule.  He  says, 
as  is  reported  in  3  Stevens,'^  that  '  the  jury  are  to  say  what 
state  of  repair  the  machinery  was  in,  what  it  would  cost  to 
replace  it  by  new  machinery,  and  how  much  better  (if  at 
all)  the  mill,'  in  which  the  machinery  was  placed,  '  would  be 
with  the  new  machinery,  than  it  was  at  the  time  of  the  fire ; 
and  the  diflference  is  to  be  deducted  from  the  entire  expense  of 
placing  there  such  new  machinery.'  This  rule,  in  all  cases 
where  the  cost  of  repairs  is  one  of  the  elements  by  which  the 
jury  are  to  estimate  the  actual  loss,  seems  to  be  founded  on 
the  principles  of  justice,  as  it  will  give  to  the  assured  a  full 
indemnity  and  no  more,  to  which  he  is  entitled  by  the  con- 
tract. But  by  the  rule  contended  for  by  the  plaintiff's  coun- 
sel, the  assured  in  most  cases  would  recover  more  than  an 
indemnity  ;  and  much  more  when  the  building  insured  is 
dilapidated  and  much  out  of  repair.  Such  rule  is  not  sup- 
ported by  any  principle  of  justice,  nor  by  the  authority  of  any 
adjudged  case.  It  is  founded  on  an  erroneous  construction 
of  tiie  contract.  It  supposes  that  the  insurers  are  bound  to 
repair  the  building,  or  to  pay  the  expenses  of  the  repairs. 
But  no  such  obligation  is  imposed  on  them  by  the  policy. 

1  2  Greenl.  on  Ev.  §  407.  2  i  Irish  Circuit  Cases,  5L 

3  Is.  P.  208i. 


534  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

They  have  the  privilege  to  make  the  requisite  repairs,  if  they 
see  fit,  to  protect  themselves  against  the  recovery  of  excessive 
damages,  or  for  any  other  reason.  But  if  tliey  elect  not  to 
make  the  repairs,  they  are  liable  only  to  pay  a  fair  indemnity 
for  the  loss.  But  whatever  may  be  the  rule  when  the  building 
insured  is  partially  injured  by  the  peril  insured  against,  it  has 
no  application  to  cases  like  the  present,  where  the  building  is 
totally  destroyed  and  is  to  be  replaced  by  a  new  one.  The  rule 
of  damages  in  cases  on  marine  policies  would  not  apply  to  a 
case  where  the  ship  had  been  totally  destroyed.  In  the  pres- 
ent case,  the  building  was  destroyed  by  fire,  and  a  new  build- 
ing was  erected  upon  a  different  plan  ;  so  that  the  cost  of  a 
new  building  could  not  be  certainly  ascertained.  If  the  rule 
laid  down  in  Yance  v.  Foster  were  applied,  the  jury  must 
ascertain,  by  the  estimates  and  opinions  of  witnesses,  the 
amount  of  the  expense  of  a  new  building,  and  they  must  esti- 
mate the  value  of  the  old  building,  in  order  to  ascertain  the 
difference,  if  any  there  be,  between  the  new  and  the  old.  We 
can  perceive  no  use  in  requiring  this  double  estimate  ;  for 
where  the  plaintiff  is  only  entitled  to  recover  the  amount  of 
the  value  of  the  building  destroyed,  the  estimate  of  the  cost 
of  a  new  building  is  useless." 

§  432.  Loss  —  Rebuilding  —  Refusal  to  permit.  —  If  before  the 
time  expires  within  which  the  insurers  may  elect  to  rebuild 
or  replace,  the  insured  proceeds  to  remove  the  goods,  so  that 
the  insured  cannot  determine  the  amount  to  be  replaced,  or  to 
rebuild  the  building  so  that  the  insurers  cannot  rebuild  with- 
out undoing  what  has  been  done,  or  avaihng  themselves  of 
what  has  been  done,  a  court  of  equity  will  not  interfere  to 
restrain  the  insured.  The  fact  of  removal  might  be  an  impor- 
tant question  in  determining  the  question  of  damages,  and  might 
authorize  them  to  find  bad  faith  on  the  part  of  the  insured 
as  to  the  amount  of  his  claim.  And  as  in  the  other  case  the 
contract  of  insurance  has  substantially  been  converted  into  a 
building  contract,  the  rule  of  damages  under  such  contract 
will  obtain.^     If  the  election  be  not  made,  indemnity  for  the 

1  New  York  Fire  Ins.  Co.  v.  Delavan,  8  Paige  (N.  Y.),  418;  Beals  v.  Home 
Ins.  Co.,  36  N.  Y.  522. 


LOSS   AND   ITS    ADJUSTMENT,    AND   TO    WHOM    PAYABLE.        535 

loss,  and  not  the  cost  to  replace,  is  the  test  of  damages.^  If, 
on  the  other  hand,  the  insurance  company  elect  to  rebuild, 
and  are  proceeding  to  do  it  in  an  improper  manner,  a  court  of 
equity  will  not  interfere  to  compel  them  to  do  it  as  they  ought, 
but  will  leave  the  insured  to  his  suit  at  law  for  damages,  as 
if  he  had  contracted  with  any  third  person.^ 

§  433.  Loss  —  Partial  rebuilding  —  Interference  of  public  Au- 
thorities.—  If  the  insurers  intending  to  perform  their  duty  in 
good  faith  make  repairs  of  substantial  benefit,  though  not  to  the 
amount  of  the  loss,  in  the  estimate  of  damages  tliey  are  to  be 
charged  with  the  difference  between  the  value  of  the  building 
as  repaired,  and  what  it  would  have  been  if  it  had  been  fully 
repaired.-^  And  such,  it  has  been  held  in  New  York,  would  be 
the  rule  of  damages  where  the  insurers  having  commenced  to 
rebuild  desisted  before  the  work  was  complete."^  If  after  rein- 
statement the  work  proves  to  have  been  imperfectly  done,  the 
insured  will  have  his  action  against  the  insurers  for  not  liav- 
ing  duly  reinstated  the  property.^  And  if  after  he  has  com- 
menced to  rebuild  he  is  interfered  with  by  the  public  authorities 
and  prevented  from  completing  his  work,  or  the  building  is 
ordered  to  be  taken  down  as  dangerous,  even  though  its  dan- 
gerous character  was  not  attributable  to  the  fire,  the  loss  will 
be  his.  Nor  will  he  be  excused  from  paying  the  insured  the 
entire  amount  of  his  loss,  according  to  the  agreement  to  re- 
build or  pay.^  So,  if  the  consent  of  the  public  authorities  to 
the  rebuilding  be  required,  and  refused."  But  if  the  insured 
refuse  permission  to  rebuild,  he  loses  his  right  of  action.^ 
§  434.  Loss  —  Contribution.  —  We  have  already  seen  that  in 

1  Com.  Ins.  Co.  v.  Sennett,  37  Penn.  St.  205. 

2  Home  Ins.  Co.  v.  Thompson,  1  Upper  Canada  Err.  &  App.  247. 

3  Parker  v.  Eagle  Ins.  Co.,  9  Gray  (Mass.),  152. 

*  Morrell  v.  Irving  Fire  Ins.  Co.,  33  N.  Y.  429.  In  tliis  case  there  were  two 
policies  by  different  companies,  both  containing  the  provision  about  the  right 
to  rebuild.  It  was  held  that  both  might  be  sued  jointly  or  severally.  And  if 
one  only  was  sued  and  compelled  to  pay,  tliis  one  would  have  an  action  over 
against  the  other  for  contribution. 

5  Times  Fire  Ins.  Co.  v.  Hawke,  5  H.  &  N.  (Exch.)  935. 

6  Brown  v.  Royal  Ins.  Co.,  1  E.  &  E.  (Q.  B.)  853. 
■?  Brady  v.  North  Western  Ins.  Co.,  11  Mich.  425. 
8  Beals  V.  Home  Ins.  Co.,  36  Barb.  (N.  Y.)  611. 


536  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

cases  of  double  insurance,  that  is,  where  several  policies  in 
different  offices  insure  the  same  party  upon  the  same  subject- 
matter  against  the  same  risk,  as  there  can  be  but  one  loss  and 
one  indemnity,  the  several  offices,  as  between  themselves,  must 
contribute  proportionably  to  the  loss,  though  each  is  liable  to 
the  insured  for  the  entire  loss,  unless  there  is  a  special  agree- 
ment that  each  shall  be  liable  only  for  its  proportional  part. 
The  several  insurers  are  regarded  as  if  they  were  one,^  each 
standing  as  co-surety  with  the  other,  according  to  the  amount 
which  he  undertakes,  just  as  if  all  had  underwritten  the  same 
policy.  To  avoid  circuity  of  action  the  p?'o  rata  limitation  was 
introduced.^  And  if  an  office  having  in  its  policy  the  pro- 
vision for  the  proportional  liability  pay  more  than  its  share, 
it  can  have  no  remedy  for  contribution  against  the  other 
offices,  since  its  own  negligence  can  give  it  no  right  of  action 
against  others.^  It  may,  however,  have  a  remedy  against  the 
assured.* 

§  435.  Loss  —  Contribution  —  Double  Insurance  —  Identity  of 
Risk.  —  In  the  case  of  Howard  Insurance  Company  v.  Scrib- 
ner,°  it  was  held  that  double  insurance  occurred  only  when 
the  subsequent  insurance  was  upon  the  same  precise  property 
as  that  covered  by  the  first ;  and  that  insurance  in  one  policy 
on  fixtures  for  $1,000  and  on  stock  for  !^3,000,  and  in  another 
policy  for  -$5,000  on  stock  and  fixtures  as  one  parcel,  was  not 
a  double  insurance.  As  a  consequence,  the  rule  of  apportion- 
ment in  case  of  other  insurance  did  not  apply,  and  recovery 
might  be  had  on  the  first  policy  without  regard  to  the  second. 
But  this  doctrine  has  been  repudiated  in  a  very  recent  case,^ 
and  the  rule  in  Blake  v.  Exchange  Mutual  Insurance  Com- 
pany," at  least  as  applicable  to  a  case  of  total  loss,  adopted. 
In  considering  the  case  the  court  said  :  — 

1  Ante,  §  13.  See  also,  in  addition  to  the  authorities  therein  cited,  Harris  v. 
Prot.  Ins.  Co.,  Wright  (Ohio),  548;  Hough  v.  People's  Ins.  Co.,  36  Md.  398; 
Mechanics'  Fire  Ins.  Co.  v.  Nichols,  1  Harr.  (N.  J.)  410. 

2  Howard  Ins.  Co.  v.  Scribner,  5  Hill  (N.  Y.),  298. 
8  Lucas  V.  Jefferson  Ins.  Co.,  6  Cowen  (N.  Y.),  635. 
*  Fitzsimmons  v.  City  Fire  Ins.  Co.,  18  Wis.  234. 

6  5  Hill  (N.  Y.),  298. 

6  Ogden  V.  East  River  Ins.  Co.,  N.  Y.  Ct.  of  App.,  Dec.  1872,  2  Ins.  L.  J.  135. 

^  12  Gray  (Mass.),  205. 


LOSS    AND    ITS    ADJUSTMENT,   AND    TO   WHOM   PAYABLE.       537 

"The  clause  now  usual  in  policies  of  insurance  which  pro- 
vides for  an  apportionment  of  the  loss,  in  case  of  other  insur- 
ance on  the  property,  is  a  part  of  the  contract,  and  must 
receive  a  reasonable  construction.  We  have  no  right  to  en- 
graft upon  it  the  rules  governing  suits  for  contribution  among 
insurers,  or  to  restrict  its  operation  to  cases  where  such  suits 
» could  be  maintained,  but  must  look  at  the  language  of  the 
clause  itself,  and  construe  it  as  we  would  any  other  stipula- 
tion between  the  insurer  and  the  insured. 

"  We  cannot  adopt  the  view  taken  of  this  clause  in  the  case 
of  Howard  Insurance  Company  v.  Scribner,^  where  it  was 
held,  in  analogy  to  the  rule  in  actions  for  contribution,  that 
where  a  specific  parcel  of  property  is  insured  by  one  policy, 
and  the  same  property  is  covered  by  another  policy,  which 
also  includes  other  property,  the  latter  policy  is  to  be  thrown 
wholly  out  of  view,  and  does  not  constitute  other  insurance 
within  the  meaning  of  the  clause ;  in  either  case,  the  whole 
sum  insured  by  the  more  comprehensive  policy  is  to  be  consid- 
ered as  so  much  additional  insurance  upon  the  parcel  sepa- 
rately insured. 

"  Where  several  parcels  of  property  are  insured  together  for 
an  entire  sum,  it  is  impossible  to  say,  as  to  either  of  the  par- 
cels, that  there  is  no  insurance  upon  it,  neither  is  it  reasonable 
to  assume  that  any  of  the  parcels  is  insured  for  more  than  its 
value  when  the  wiiole  sum  insured  is  less  than  the  aggregate 
value  of  all  the  parcels  covered  by  the  policy.  The  difficulty 
lies  in  determining  what  part  of  the  whole  sum  insured  is  to 
be  deemed  applicable  to  either  parcel,  when  the  policy  itself 
makes  no  separation. 

"  If  the  entire  property  is  destroyed,  as  in  this  case,  the 
rule  laid  down  in  2  Phillips  on  Insurance,^  and  in  Blake  v. 
Exchange  Mutual  Insurance  Company ,3  carries  out  the  intent 
of  the  clause,  and  works  entire  equity  between  the  insurers 
and  the  insured,  as  well  as  between  the  several  insurers. 
That  rule  is,  in  substance,  that  for  the  purpose  of  apportioning 
the  loss,  in  case  of  over  insurance,  where  several  parcels  are 

1  5  Hill,  298.  2  Page  36,  No.  1263  a. 

3  12  Gray,  265. 


538  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

insured  together  by  one  policy  for  an  entire  sum,  and  one  of  the 
parcels  is  insured  separately  by  another  policy,  the  sum  insured 
by  the  first-mentioned  policy  is  to  be  distributed  among  the 
several  parcels  in  the  proportion  which  the  sum  insured  by 
the  policy  bears  to  the  total  value  of  all  the  parcels.  Thus, 
in  round  numbers,  the  sum  insured  in  this  case  by  the  policies 
other  than  the  defendants'  on  the  property  as  an  entirety,  was , 
$47,000.  The  total  value  of  the  property  covered  by  these 
policies  was  ^88,000.  In  case  of  a  total  loss,  each  parcel 
should  be  deemed  insured  thereby  for  ||  of  its  value.  The 
parcel  separately  insured  by  the  defendant  was  worth  $16,000, 
and  was  insured  by  the  defendant  for  83,000,  which  was  equal 
to  y^g  of  its  value.  It  is  manifest  that  there  was  no  over  insur- 
ance, and  that  consequently  there  is  no  occasion  for  any  appor- 
tionment." 

And  substantially  this  rule  has  been  followed  in  Ken- 
tucky ^  and  in  Missouri.^  In  another  case  in  Massachusetts, 
a  policy  was  taken  for  $3,000,  "  additional  to  $9,000  insured 
in  other  offices,  and  $8,000  to  be  insured  in  other  offices." 
There  was  in  fact  at  the  time  of  loss  but  $11,000  additional 
insurance.  It  was  held  that  the  insurers  must  pay  in  pro- 
portion to  the  amount  of  actual,  and  not  of  contemplated, 
insurance.^ 

§  436.  Loss  —  Contribution  —  Floating  Policy  —  Specific  In- 
surance. —  But  under  a  general  or  floating  policy,  intended 
to  cover  property  which  cannot  well  be  covered  by  specific 
insurance,  from  the  circumstance  that  it  is  changing  in  quan- 
tity or  location,  as  when  the  policy,  as  a  "  condition  of  aver- 
age," provides  that  if  the  merchandise  should  at  the  time  of 
any  fire  be  insured  by  any  specific  insurance,  then  the  policy 
should  not  extend  to  cover  such  merchandise,  excepting  only 
so  far  as  relates  to  any  excess  of  value  beyond  the  amount  of 
the  specific  insurance,  which  excess,  however,  the  policy  will 
protect,  no  claim  can  be  made  under  the  floating  policy,  if  the 

1  Cronine  v.  Ken.  and  Lon.  Mut.  Ins.  Co.,  15  B.  Mon.  (Ky.)  4-32. 

2  Angelrodt  v.  Delaware  Ins.  Co.,  31  Mo.  593. 

3  Richmondville  v.  Home  Mut.  Ins.  Co.,  14  Gray  (Mass.),  450.  See  also 
Haley  v.  Dorchester  Mut.  Ins.  Co.,  1  Allen  (Mass.),  636. 


LOSS   AND    ITS    ADJUSTMENT,    AND    TO    WHOM    PAYABLE.       539 

specific  insurance  exceeds  the  amount  of  the  value  of  the 
goods  insured  by  it  and  destroyed.^ 

In  the  following  case  certain  policies  were  held  to  be  spe- 
cific :  Between  the  5th  of  February,  1870,  and  the  loth  of 
July,  1870,  both  days  inclusive,  tlie  appellants  deposited  on 
storage  in   a  certain  warehouse,  occupied  by  the  Baltimore 
■Warehouse  Company,   sundry  lots  of  cotton   in   bales.     For 
each  lot  deposited  the  appellants  received  from  the  warehouse 
company  a  receipt,  warrant,  or  certificate,  which  specified  the 
number  of  bales,  and  the  date  of  the  deposit,  and  also  the 
mark  on  tlie  bales, — the  letters  X.  Q.  being  marked  on  each 
bale  so  deposited.    These  receipts  or  certificates  were  all  num- 
bered.    On  the  20th  of  June,  1870,  the  appellants  deposited 
fifteen  bales  and  took  a  receipt  therefor,  numbered  1221,  and 
on  the  following  day  a  policy  of  insurance  was  taken  out  to 
cover  the  particular  number  of  bales  thus  deposited.     On  the 
27th  of  June  the  appellants  deposited  thirteen  bales,  and  took 
a  like  receipt  therefor,  numbered  1238,  and  on  the  same  day 
effected  an  insurance  for  the  particular  number  of  bales  thus 
deposited.     On  the  face  of  each  policy  the  loss,  if  any,  was 
made  payable  to  the  warehouse  company  ;  and  the  policies  and 
receipts  were  delivered  to  the  warehouse  company  to  secure 
advances  made  by  it.     On  the  policy  on  the  fifteen  bales  there 
was  indorsed  in   pencil  in  figures  the  number  1221,  corre- 
sponding with  the  number  of   the  warehouse  receipt  given 
therefor ;  and  on  the  policy  on  the  thirteen  bales  there  was 
indorsed,  also  in  pencil,  1238,  corresponding  with  the  number 
of  the  receipt  for  the  cotton.     At  the  time  of  each  deposit  the 
depositor  reserved  a  sample  of  the  particular  lot  deposited. 
The  warehouse  company  held  at  the  same  time  a  general  policy 
on  goods  held  by  them  in  trust.    On  these  facts  it  was  held  that 
the  policies  were  specific  and  not  general ;  that  each  covered, 
and  was  intended  to  cover,  the  specific  number  of  bales  in  each 
deposit,  and  the  insurance  on  which  was  effected  at  the  time 
of  the  deposit,  —  the  policy  of  the  21st  of  June,  1870,  covering 
only  the  fifteen  bales  deposited  on  the  day  previous,  and  the 

1  Fairchild  v.  Liv.  and  Lon.  Fire  and  Life  Ins.  Co.,  N.  Y.  Com.  of  App.,  Sept. 
1872,  2  Ins.  L.  J.  112. 


540  insurance:  fire,  life,  accident,  etc. 

policy  of  the   27th  of  June  the  thirteen  bales  deposited  on 
that  day.^ 

§  437.  Loss  —  Contribution  —  Double  Insurance  —  Identity 
of  Risk.  —  A  warehouse  company  which  received  goods  on 
storage,  and  gave  receipts  therefor,  effected  insurance  in  one 
company  for  $10,000,  against  loss  by  fire  for  a  year,  "  on  mer- 
chandise generally  held  by  them  or  in  trust,"  contained  in  a 
particular  warehouse.  They  also  took  out  a  policy  from  another 
company  for  $20,000,  "  on  merchandise,  their  own,  or  held  by 
them  in  trust,  or  in  which  they  held  an  interest  or  liability." 
The  plaintiff,  on  the  20th  and  27th  days  of  June  respectively 
of  the  year  covered  by  the  above  policies,  deposited  cotton  with 
the  warehouse  company,  and  took  receipts  ;  and  in  each  case 
took  out  policies  from  the  defendants  upon  the  respective  lots 
of  cotton  deposited.  Under  these  policies  issued  to  the  plain- 
tiff, the  loss,  if  any,  was  made  payable  to  the  warehouse  com- 
pany, with  whom  the  plaintiff  had  other  large  amounts  of 
cotton  stored.  In  the  policies  to  tlie  plaintiff,  as  well  as  in 
those  to  the  warehouse  company,  it  was  stipulated  that  in  case 
of  loss  the  assured  should  not  be  entitled  to  recover  on  such 
policy  any  greater  proportion  of  the  loss  or  damage  sustained 
to  the  subject  insured,  than  the  amount  thereby  insured.  July 
18,  1870,  and  during  the  currency  of  all  the  policies,  the  ware- 
house was  burned,  and  some  of  the  bales  of  cotton  destroyed, 
and  otliers  only  damaged.  Upon  these  facts  it  was  held  that 
the  plaintiff's  policies  being  made  payable  to  the  warehouse 
company  inured  to  the  benefit  of  the  company,  and  were  to  be 
considered  as  in  favor  of  the  same  assured  on  the  same  inter- 
est, in  the  same  subject,  and  against  the  same  risks  as  the  poli- 
cies which  were  issued  directly  to  the  company  ;  that  with  tlie 
latter  policies  they  constitued  a  double  insurance,  and  the  com- 
panies therefore  issuing  the  policies  were  bound  to  contribute 
their  respective  proportions  of  the  loss.'-^  But  a  mortgagee 
who  insures  his  interest  subject  to  the  usual  provision  for  an 
apportionment  of  the  amount  to  be  paid  in  case  of  loss,  is  not 
to  have  the  amount  recoverable  by  him  reduced  by  the  fact 

1  Hough  V.  People's  Ins.  Co.,  3G  Md.  398. 
■^  Ibid. 


LOSS    AND    ITS    ADJUSTMENT,    AND    TO    WHOM    PAYABLE.        541 

that  a  subsequent  mortgagee  has  insured  his  interest  in  an- 
other company.     The  interests  are  separate  and  distinct. ^ 

§  438.  Loss  —  Contribution  —  Restricted  Liability.  —  Insurers 
who  restrict  their  liability  to  a  certain  proportion  of  the  loss, 
will  have  the  benefit  of  the  restriction  in  case  they  are  called 
upon  for  contribution.  Thus  where  the  restriction  is  to  two- 
thirds  of  the  value  of  the  property,  and  there  is  other  insur- 
ance, and  the  whole  loss  is  more  than  the  two-thirds,  the  first 
insurers  will  be  liable  only  for  such  a  proportion  of  the  loss, 
within  the  two-thirds,  as  the  amount  of  their  insurance  bears 
to  the  amount  of  the  second  insurance.^  If  the  first  insur- 
ance be  three-fourths  on  $2,000,  and  other  insurance  exist  to 
the  amount  of  $3,000,  in  case  of  loss  the  first  insurers  will 
be  liable  only  for  two-fifths  of  three-fourths  of  the  value  of  the 
property  at  the  time  of  the  loss.^  The  provisions  of  the  policy  in 
the  case  ^ust  cited  were,  that  "  when  property  is  insured  by  this 
company  solely,  three-fourths  only  of  the  value  will  be  taken, 
and  in  case  of  loss  the  company  will  be  liable  to  pay  only 
three-fourths  of  the  value  at  the  time  of  the  loss,"  and  that 
"  in  case  of  loss  or  damage  of  property  upon  which  double 
insurance  exists,  the  company  shall  be  liable  to  pay  only  such 
proportion  thereof  as  the  sum  insured  by  this  company  bears 
to  the  whole  amount  insured  thereon,  —  such  amount  not  to 
exceed  three-fourths  of  the  actual  value  at  the  time  of  the 
loss  ; "  and  their  effect  was  thus  stated  by  Bigelow,  J. :  — 

"The  defendants  did  not  assume  a  liability  in  case  of  the 
existence  of  other  insurance  on  the  property,  to  be  ascertained 
solely  by  calculating  the  proportion  which  the  sum  insured  by 
them  bore  to  the  whole  amount  insured  on  the  property.  The 
basis  of  calculation  was  in  all  cases  to  be  the  value  of  the 
property  insured,  after  deducting  one-fourth  of  such  value. 
Of  this  sum  the  defendants  were  to  pay  such  proportion  as 
the  sum  insured  by  the  policy  issued  by  them  should  bear  to 
the  whole  sum  insured  by  all  the  policies  existing  on  the  prop- 
erty at  the  time  of  the  loss.  In  other  words,  the  defendants 
were  to  be  liable  only  for  their  proportion  of  three-fourths  of 

1  Fox  V.  Plicenix  Ins.  Co.,  52  Me.  333. 

2  Goodall  V.  N.  E.  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  169. 

^  Haley  v.  Dorchester  Mut.  Fire  Ins.  Co.,  12  Gray  (Mass.),  543. 


542  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

the  value  of  the  property  insured  ;  and  this  proportion  was  to 
be  ascertained  by  calculating  the  ratio  which  the  sum  insured 
in  the  policy  declared  on  bore  to  the  whole  sum  insured  by  all 
the  policies  existing  on  the  property.  Thus,  if  the  whole  prop- 
erty at  the  time  of  tiie  loss  amounted  to  ten  thousand  dollars, 
the  sum  on  whicli  the  liability  of  tiie  defendants  must  be  reck- 
oned would  be  three-fourths  of  ten  thousand,  or  seven  thou- 
sand five  hundred  dollars;  and  of  this  last  sura  the  defendants 
would  be  held  to  pay  only  the  proportion  which  the  amount 
insured  by  them,  viz.,  two  thousand  dollars,  bore  to  the  whole 
sum  insured,  viz.,  five  thousand;  or  two-fifths  of  seven  thou- 
sand five  hundred  dollars,  which  would  be  three  thousand 
dollars.  But  as  this  last  sum  exceeds  the  whole  amount 
insured  by  the  defendants,  it  would  be  cut  down  to  that 
amount,  and  the  plaintiff  could  recover  only  two  thousand 
dollars."  • 

§  439.  Loss  —  Contribution  —  Reinsurance  —  Void  Policy.  — 
If  a  policy  of  reinsurance  provide  that  "  in  case  there  were 
other  insurance,  prior  or  subsequent,  the  reinsured  should  be 
entitled  to  recover  only  a  proportionate  part ; "  the  other 
insurance  spoken  of  refers  to  other  reinsurance,  and  unless 
this  exist  the  reinsurer  can  claim  no  proportionate  reduc- 
tion.^  And  so,  if  for  any  cause  the  other  policies  be  in- 
valid, tliere  can  be  no  contribution,  as  there  is  no  other 
insurance.^ 

§  440.  Loss  —  Life  Insurance  —  Contribution  —  Double  Insur- 
ance. —  Generally,  in  life  insurance,  the  questions  of  double 
insurance  do  not  arise,  as  there  is  no  fixed  value  to  the  life, 
and  the  person  in  each  case  is  to  pay  a  fixed  sum,  without 
regard  to  other  insurance.  But  where  the  insurable  interest 
has  an  ascertainable  value  the  question  may  arise,  as  where 
two  policies  are  taken  out  in  different  offices,  by  a  creditor,  on 
the  life  of  a  debtor,  and  for  the  same  debt.  Then  only  the 
value  of  the  interest  can  be  recovered,  and  the  amount  recov- 
ered on  the  first  policy  is  to  be  deducted  from  the  amount 
payable  on  the  second.^ 

1  Mut.  Safety  Ins.  Co.  v.  Hone,  2  Comst.  (N.  Y.)  235. 

2  Hygum  I'.  JEtna  Ins.  Co.,  11  Iowa,  21. 

3  Hebdon  v.  West,  3  Best  &  Smith,  580;  s.  c.  E.  C.  L.  11.3,  917. 


LOSS   AND   ITS   ADJUSTMENT,   AND   TO    WHOM    PAYABLE.        543 

§  441,  Loss  —  Alternative  Damages.  —  Under  a  policy  of 
insurance  in  the  sum  of  two  thousand  dollars  against  loss 
of  life  from  accidental  injuries,  occasioning  death  within 
ninety  days  from  the  accident,  and  in  the  sum  of  ten  dollars 
a  week,  for  a  period  not  exceeding  twenty-six  weeks,  against 
personal  injury  "  for  any  single  accident  by  which  the  insured 
shall  sustain  any  personal  injury  which  shall  not  be  fatal,"  the 
weekly  sum  is  due  for  injury  by  an  accident  which  does  not 
occasion  death  within  ninety  days,  although  it  ultimately  proves 
fatal.  The  two  provisions  are  to  be  construed  together,  and  the 
intent  is  that  if  an  injury  happens,  within  the  meaning  of  the 
policy,  it  is  insured  against,  as  coming  under  one  class  or 
the  other.  If  it  were  otherwise  construed,  an  injury  which 
should  not  prove  fatal  within  ninety  days  would  furnish  no 
ground  of  action  till  it  should  be  made  to  appear  that  it  would 
never  prove  fatal,  —  a  construction  which  would  render  the 
insurance  nugatory  in  such  cases. ^ 

§  442.  Loss  —  Payment  by  Mistake  —  Recovery  back.  —  The 
holder  of  a  life  policy,  on  proof  of  the  death  of  the  insured, 
recovered  the  amount  payable  in  such  an  event.  It  was  sub- 
sequently ascertained,  however,  that  the  insured  was  not  dead  ; 
and  thereupon  the  insurers  brought  suit  to  recover  back  the 
money  so  paid,  as  obtained  by  misrepresentation  :  and  it  was 
held  that  it  appearing  there  was  no  want  of  good  faith  on  the 
part  of  the  holder  of  the  policy,  the  insurers  might  recover 
upon  condition,  and  only  upon  condition,  of  redelivery  of  the 
policy  as.  a  subsisting  and  valid  contract.^ 

§443.  Loss  —  Fraudulent  Overvaluation.  —  Fraudulent  over- 
valuation of  goods  destroyed  is  a  complete  defence  to  the  claim 
for  indemnity,  but  a  mistaken  or  exaggerated  overvaluation, 
not  fraudulent,  does  not  deprive  the  insured  of  the  right  to 
recover  an  amount  equal  to  the  actual  loss.'^ 

§  444.  Loss  —  Evidence  of  Payment.  —  Where  the  policy  has 
been  lost,  and  the  court  decrees  the  payment  of  the  loss,  the 
insurance  company  has  no  right  to  demand  a  bond  of  indem- 

1  Perry  v.  Prov.  Ins.  Co.,  103  Mass.  242. 

2  North  Brit.  Ins.  Co.  v.  Stewart,  9  Ct.  of  Sess.  Cas.  3d  series,  534. 

3  Chapman  v.  Pote,  22  L.  T.  300.     At  Nisi  Prius,  Cockburn,  C.  J. 


544  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

nity  before  payment.    The  decree  of  the  court  is  the  company's 
sufficient  protection.^ 

§445.  Loss  —  Nominal  and  real  Claimants.  —  The  nominal 
and  real  claimants  are  frequently  not  the  same.  Owing  to  the 
form  of  the  contract  it  often  happens  that  one  party  is  to  bring 
suit  to  recover  the  loss,  while  after  recovery  it  is  to  be  paid 
over  to  others.  The  questions  often  therefore  arise,  Who  is 
to  sue  ?  and  who  is  to  receive  ultimately  the  amount  recovered  ? 
The  name  of  the  insured  may  not  be  stated  in  the  policy,  as 
it  need  not  be.  And  if  the  person  for  whose  benefit  the  policy 
is  made  does  not  therein  appear,  or  if  the  designation  is  appli- 
cable to  several  persons,  or  if  the  description  of  the  insured 
is  imperfect  or  ambiguous,  so  that  it  cannot  be  understood 
without  explanation, —  extrinsic  evidence  may  be  resorted  to, 
to  show  for  whom  the  insurance  was  intended  ;  and  those  will 
be  included  within  the  benefits  of  the  policy  who  shall  appear 
to  have  been  within  the  intention  of  the  parties.  An  insur- 
ance, for  example,  is  effected  upon  "  the  estate  of  Daniel 
Ross,"  and  it  not  being  apparent  who  were  intended  to  be 
included  within  that  designation,  evidence  is  admissible  to 
show  that  both  parties  understood  that  the  insurance  was  for 
the  benefit  of  tiie  widow  and  heirs  of  Ross.  That  the  personal 
estate  is  represented  by  the  administrator,  and  therefore  the 
administrator  was  the  person  designated,  is  too  strict  a  con- 
struction. The  expression  is  rather  used  to  designate  the 
whole  estate  left  by  the  deceased  and  held  by  those  who  have 
the  legal  title.^ 

§  446.  The  general  rule  applicable  to  personal  contracts  is 
that,  if  assigned,  the  action  for  a  breach  must  be  brought  in 
the  name  of  the  assignor,  except  where  the  defendant  has 
promised  the  assignee  to  respond  to  him.  But  a  consent  to 
the  assignment  is  generally  held  to  be  the  equivalent  of  this 
promisc.3     And  so,  if  the  policy  is  made  "  payable,  in  case  of 

1  England  v.  Tredegar,  Law  Reports,  Eq.  Cases,  1,  344. 

'  Clinton  v.  Hope  Ins.  Co.,  45  N.  Y.  454 ;  Matthews  v.  Queen  City  Ins.  Co., 
2  Cincinnati  Superior  Court  Reporter,  109. 

3  Kingsley  v.  Xew  England  Mut.  Ins.  Co.,  8  Cush.  (Mass.)  393;  Philips  v. 
Merrimack  Mut.  Fire  Lis.  Co.,  10  Cush.  (Mass.)  350.  Contra,  Jessel  v.  Williams- 
burgh  Ins.  Co.,  3  Hill  (N.  Y.),  88. 


LOSS   AND   ITS   ADJUSTMENT,   AND   TO   WHOM   PAYABLE.        545 

loss,"  to  a  third  party. ^  So  on  life  policies  the  suit  may  be 
brought  in  the  name  of  the  beneficiary  ;  and  this  is  so  notwith- 
standing the  party  who  effects  the  insurance  is  styled  a  trus- 
tee, it  appearing  that  he  is  merely  an  agent.^ 

§  447.  Loss — "Who  may  claim.  —  And  upon  an  order,  indorsed 
on  the  policy,  to  pay  in  case  of  loss  to  a  third  party,  accepted 
by  the  company,  or  assented  to  by  them,  the  payee  may  main- 
tain an  action  in  his  own  name,  on  setting  out  the  facts  in  his 
declaration.^  Such  an  assent,  however,  means  only  that  the 
insurers  will  discharge  the  obligations  of  the  contract  to  the 
assignee  instead  of  the  assignor,  and  if  they,  by  the  terms  of 
the  contract,  had  a  right  to  replace  the  property,  an  assent  to 
an  order  to  "  pay  the  loss  "  means  only  that  they  shall  dis- 
charge the  contract  as  agreed,  and  does  not  operate  to  change 
the  terms  of  the  contract  so  as  to  cut  them  off  from  the  right 
to  replace,  and  compel  them  to  pay  the  money  to  the  assignee. 
To  pay  is  to  discharge  an  obligation  by  a  performance  accord- 
ing to  its  terms  or  requirements.  If  the  obligation  be  for 
money,  the  payment  is  made  in  money  ;  if  for  merchandise  or 
labor,  a  delivery  of  merchandise  or  performance  of  the  labor 
is  payment ;  or  if  for  the  erection  of  a  building,  performance 
according  to  the  terms  of  the  contract.*  In  New  Hampshire, 
however,  in  mutual  companies,  the  action  must  be  brought  in  the 
name  of  the  assignor,  although  the  assignment  is  assented  to, 
and  the  policy  is  made  payable  in  case  of  loss  to  a  third  party, 
unless  by  giving  a  new  premium  note  the  assignee  becomes 
substituted  for  the  insured,  and  a  member  of  the  company, 
when  the  action  must  be  brought  in  the  name  of  the  latter.° 

1  Motley  V.  Manufacturers'  Ins.  Co.,  29  Me.  337  ;  Ripley  v.  iEtna  Fire  Ins. 
Co.,  29  Barb.  (N.  Y.)  552 ;  Frink  v.  Hampden  Ins.  Co.,  1  Abb.  (N.  Y.)  Pr.  Cas. 
N.  s.  343 ;  Ennis  v.  Harmony  Fire  Ins.  Co.,  3  Bosw.  (N.  Y".  Superior  Ct.)  516. 

2  Hillyard  v.  Mut.  Ben.  Life  Ins.  Co.,  Sup.  Ct.  N.  J.  1872,  2  Ins.  L.  J.  137. 

3  Barrett  v.  Union  Mut.  Fire  Ins.  Co.,  7  Cush.  (Mass.)  175  ;  Lowell  i'.  Middle- 
sex Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  127;  Loring  v.  Manufacturers'  Ins.  Co., 
8  Gray  (Mass.),  28. 

■*  Tolman  v.  Manufacturers'  Ins.  Co.,  1  Cush.  (Mass.)  73. 

5  Nevins  v.  Rockingham  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  22;  Folsom  v. 
Belknap  County  Mut.  Fire  Ins.  Co.,  10  Fost.  (N.  H.)  231;  Rollins  v.  Columbia 
Fire  Ins.  Co.,  5  Fost.  (N.  H.)  200;  Blanchard  v.  Atlantic  Mut.  Fire  Ins.  Co.,  38 
N.  H.  9. 

35 


5-16  insurance:  fire,  life,  accident,  etc. 

And  in  New  York.^  And  he  may  sue,  in  New  Jersey,  even  on 
a  parol  agreement  to  pay  the  premium,  the  assignee  being  the 
mortgagee.^  And  in  Maine.^  And  perhaps  in  Pennsylvania."* 
But  as  such  consent  gives  to  the  assignee  no  legal  interest  in 
the  property,  which  remains  still  in  the  assignor,  the  latter  may 
bring  an  action  in  his  own  name,  without  alleging  any  author- 
ity from  the  assignee.^  The  assent,  after  action  brought,  will 
be  sufficient,  though  in  that  case  the  plaintiff  will  be  entitled 
to  no  costs. ^ 

§  448.  Loss  —  Nominal  and  real  Claimants  —  Agent — Broker. — 
If  the  policy  be  issued  in  the  name  of  an  agent  of  several  par- 
ties, the  suit  may  be  in  the  name  of  the  agent.'^  So,  if  issued 
to  a  broker  "  for  whom  it  may  concern."  ^  Where  the  policy 
is  assigned  as  collateral  security,  with  the  consent  of  the  com- 
pany, but  the  assignee  has  no  interest  in  the  property,  both 
cannot  join,  and  the  assignee  must  sue.^  But  a  parol  agree- 
ment by  the  company  to  recognize  the  rights  of  another  under 
the  policy,  and  to  affirm  its  validity  as  to  any  particular  prop- 
erty or  interest,  will  give  to  that  party  a  right  of  action  on  the 
policy  in  his  own  name.^*^  And  there  are  many  cases  where  a 
resort  to  equity  will  be  necessary.  As  where  A,,  the  insured, 
sells  to  B.,  who  takes  in  a  partner,  C,  the  insurers  consenting 
that  the  policy  shall  remain  in  part  to  C.  and  in  part  to  B.  and 
C,  the  policy  never  having  been  assigned,  nor  any  interest 
therein,  to  C.^^  An  administrator  has  no  interest  in  real  es- 
tate insured,  and  cannot  sue  to  recover  for  a  loss  occurring 
after  his  appointment.^^     In  Iowa,  the  real  party  in  interest 

1  Mann  2;.  Herkimer  County  Mut.  Ins.  Co.,  4  Hill  (N.  Y.),  187. 

2  Flannagan  v.  Camden  Mut.  Ins.  Co.,  1  Dutch.  (N.  J.)  506. 

3  Stimpson  v.  Monmouth  Mut.  Fire  Ins.  Co.,  47  Me.  379. 

4  Lycoming  County  Mut.  Ins.  Co.  v.  Schreffler,  44  Penn.  St.  269. 

5  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136. 

6  Jackson  v.  Farmers'  Mut.  Fire  Ins.  Co.,  5  Gray  (Mass.),  52. 

1  Barnes  v.  Mut.  Fire  Ins.  Co.,  45  N.  H.  21 ;  Goodall  v.  New  England  Mut. 
Fire  Ins.  Co.,  5  Post.  (N.  H.)  22. 

8  Prot.  Ins.  Co.  v.  Wilson,  6  Ohio  St.  553. 

9  Peabody  v.  Wash.  County  Mut.  Ins.  Co.,  20  Barb.  (N.  Y.)  339 ;  Frink  v. 
Hampden  Ins.  Co.,  31  How.  (N.  Y.)  30. 

It"  Wood  V.  Rutland  Mut.  Fire  Ins.  Co.,  31  Vt.  552. 

11  Bodle  V.  Chenango  County  Mut.  Ins.  Co.,  1  Comst.  (N.  Y.)  53. 

12  Beach  v.  Bowery  Fire  Ins.  Co.,  8  Abb.  Pr.  (N.  Y.)  261. 


LOSS   AND   ITS   ADJUSTMENT,    AND   TO   WHOM    PAYABLE.        547 

must  bring  the  action  ;  and  although  an  assignment  be  pro- 
hibited, by  special  provision  of  the  Code,  the  assignee  may  sue, 
subject  to  all  rights  of  set-off  and  defence,  legal  or  equitable, 
which  might  have  been  made  against  the  assignor,^ 

§  449.  Loss  —  Mortgagor  and  Mortgagee  —  Debtor  and  Cred- 
itor. —  Where  a  mortgagee  insures  his  own  interest,  without 
any  agreement  between  him  and  the  mortgagor,  the  latter  has 
no  claim  to  have  any  portion  of  the  loss  recovered  applied  to 
the  discharge  of  his  debt.  But  otherwise  if  the  mortgagee 
effects  the  insurance  at  the  request  and  cost,  and  for  the 
benefit  of,  the  mortgagor.^  Where  the  mortgagor  insures, 
payable  to  the  mortgagee  in  case  of  loss,  the  mortgagor  can- 
not sue  alone  unless  the  mortgagee  has  been  paid,  which  he 
must  allege.  If  not  paid,  both  may  join.^  Where  a  creditor, 
with  the  knowledge  and  consent  of  the  debtor,  in  account  with 
the  latter,  charges  him  with  the  premiums  paid  for  insurance 
on  the  debtor's  life,  he  will  be  held  to  account  for  any  surplus, 
over  an  amount  necessary  to  pay  the  debt,  received  from  the 
insurers.  But  not  unless  the  facts  show  an  agreement  that 
the  creditor  is  to  insure,  and  the  debtor  pay  the  premium.* 
And  yet  if  the  debtor  pays  off  the  debt  during  his  life,  he  will 
not  be  entitled  to  demand  from  his  creditor  a  policy  purchased 
and  to  be  kept  up  at  his  expense  as  a  security  for  his  cred- 
itor,^—  a  conclusion  to  which  the  Vice-Chancellor  (Stuart) 
said,  in  the  later  case,  he  came  to  with  dissatisfaction  and 
reluctance,  because  he  felt  himself  bound  by  the  earlier  case. 

§  450.  Loss  —  Vendor  and  Vendee  —  Lessor  and  Lessee.  — 
The  assignee  of  a  vendor's  interest,  in  a  contract  for  the  sale 
of  real  estate,  which  contract  provides  for  an  insurance  by  the 
vendee  for  the  benefit  of  the  vendor,  is  equitably  entitled  to  tl>e 
moneys  due  upon  an  insurance  effected  by  such  vendee  in  his 
own  name  ;  and  where  the  insurer  has  notice  of  such  assign- 

1  Mershon  v.  National  Ins.  Co.,  34  Iowa,  87. 

2  Concord  Mut.  Fire  Ins.  Co.  v.  Woodbury,  45  Me.  447. 

3  Ennis  v.  Harmony  Fire  Ins.  Co.,  3  Bosw.  (N.  Y.  Superior  Ct.)  516. 

*  Bruce  v.  Gardner,  22  Law  Times,  n.  s.  692 ;  per  Lord  Chancellor  Hath- 
erly,  overruling  Vice-Chancellor  James,  in  same  case,  20  L.  T.  n.  s.  1002. 

5  Gotleib  V.  Cranch,  4  De  G.,  M.  &  G.  440 ;  Knox  v.  Turner,  21  Law  Timea, 
N.  s.  701. 


548  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

ment,  he  is  liable  to  such  assignee,  to  the  extent  of  his  interest, 
although  he  has,  after  such  notice,  actually  paid  the  loss  to  the 
vendee.  And  the  fact  that  the  policy  is  by  its  terms  unassign- 
able, without  the  consent  of  the  office,  is  immaterial,  since  the 
liability  is  not  founded  upon  an  assignment  of  the  policy,  but 
upon  the  equitable  lien  of  the  vendor's  assignee,  the  insurer 
being,  after  notice,  a  trustee  of  the  fund  for  the  assignor's 
benefit.^  Where  a  tenant  agrees  to  insure  for  the  benefit  of 
his  landlord,  the  latter  deducting  one-half  of  the  premium  from 
the  rent  as  it  accrued,  it  was  held  that  the  landlord  was  enti- 
tled to  the  whole  of  the  insurance  money .^ 

§  451.  Loss  —  Insurance  by  Wife  on  her  own  Life  for  Benefit 
of  Husband.  —  The  proceeds  of  policies  taken  out  by  a  wife,  on 
which  the  premiums  were  paid  by  her  out  of  her  funds,  on  her 
own  life,  and  for  his  benefit,  before  his  bankruptcy,  do  not,  on 
her  decease,  inure  to  the  benefit  of  the  bankrupt's  estate.^ 

§  452.  Loss  —  Feme  sole  under  Contract  of  Marriage.  —  In 
Chisholm  v.  National  Capital  Life  Insurance  Company,*  the 
plaintiff,  who  was  the  betrothed  of  one  Clark,  and  for  whom  he 
had  taken  out  a  policy  on  his  life,  payable  to  her,  was  allowed 
to  recover.  The  insurable  interest  at  the  inception  of  the  con- 
tract was  sufficient,  if  any  were  necessary,  of  which  the  court 
intimated  a  doubt,  in*the  absence  of  evidence  tending  to  show 
the  contract  was  a  wagering  one,  or  against  public  policy.  The 
plaintiff  had  an  interest  in  the  life  of  Clark,  as  a  valid  contract 
of  marriage  was  subsisting  between  them.  Had  he  lived  and 
violated  the  contract,  she  would  have  had  her  action  for  dam- 
ages ;  had  he  observed  and  kept  the  contract,  then  as  his  wife 
she  would  have  been  entitled  to  support.^ 

§  453.  Insurers  —  Subrogation  —  Remedy  over  of  Insurer.  — 
The  insurer  does  not,  at  common  law,  acquire  by  the  payment 

1  Cromwell  v.  Brooklyn  Fire  Ins.  Co.,  44  N.  Y.  (Com.  of  App.)  42. 

2  Duke  of  Hamilton's  Trs.  v.  Flemmmg,  9  Cas.  in  Ct.  of  Sess.,  3d  series 
(Scotch),  329. 

'  Murrin,  Petr.  In  the  Matter  of  Owen  et  al.,  in  bankruptcy,  U.  S.  C.  Ct., 
Eastern  District  of  Mo.,  Mar.  1873.     Coram,  Treat,  J.,  2  Ins.  L.  J.  524. 

*  Supreme  Ct.  Mo.,  2  Ins.  L.  J.  461. 

5  This  case  properly  belongs  to  the  chapter  on  Insurable  Interest,  but  did  not 
come  to  the  knowledge  of  the  author  till  that  chapter  was  printed. 


LOSS   AND   ITS   ADJUSTMENT,    AND   TO    WHOM   PAYABLE.        549 

of  a  loss  a  right  in  his  own  name  to  recover  damages  against 
the  party  by  whose  negligence  and  fraud  the  loss  is  caused.^ 
One  who  wilfully  sets  fire  to  a  building,  or  negligently  destroys 
a  life,  and  thus  give  rise  to  claims  against  the  insurers  for 
losses  which  they,  have  been  obliged  to  pay,  is  not  liable  over 
to  the  insurers  for  the  loss  thus  occasioned,  unless  there  be  in 
some  way  privity  of  contract  between  him  and  the  insurers, 
or  there  is  due  from  him  towards  them  some  special  duty.  If 
no  special  right  of  theirs  as  against  him,  and  no  duty  towards 
them  is  violated,  they  have  no  claim.  The  injury  is  too  remote 
and  indirect  to  constitute  an  injury  in  a  legal  sense.  The  man 
who  kills  another,  violates  the  rights  of  the  deceased  and  his 
general  duty  to  society ;  but  his  misconduct  affords  to  the 
creditor  of  the  deceased  no  legal  ground  of  action. ^  lu  the 
case  just  cited  from  Connecticut,  where  an  insurance  com- 
pany had  paid  a  loss  for  a  death  caused  by  the  negligence  of 
the  railroad  company,  the  court  dismissed  the  action  on  two 
grounds  :  first,  on  the  ground  that  at  common  law  a  party  is 
,  not  liable  civiliter  for  the  destruction  of  human  life,  and  sec- 
ond, on  the  special  ground  that  there  is  no  such  relationship 
between  the  parties  as  to  lay  a  foundation  for  such  an  action. 
So  much  of  the  opinion  as  is  devoted  to  this  latter  ground  we 
give  entire,  in  the"  words  of  Storrs,  J. :  ^  — 

"  The  defendants,  a  railroad  company,  are  charged  with  hav- 
ing negligently  occasioned  the  death  of  one  Dr.  Beach,  by  which 
event  the  plaintiffs,  a  life  insurance  company,  have  been  com- 
pelled to  pay  to  his  representatives  the  amount  of  an  insurance 
effected  upon  his  life,  of  which  amount  a  recovery  is  sought  in 
this  action.  A  plea  in  bar  sets  forth  a  payment  to  the  admin- 
istratrix of  the  deceased  of  the  damages  for  which  the  defend- 
ant's negligence  had  rendered  them  legally  liable,  and  also  a 
discharge  by  her.  This  plea  and  the  demurrer  thereto  require 
no  examination,  as  they  are  immaterial  in  the  view  which  we 
take  of  the  declaration. 

1  London  Ass.  Co.  v.  Sainsbury,  3  Doug.  245. 

2  Rockingham  ]\Iut.  Fire  Ins.  Co.  v.  Bosher,  39  Me.  253 ;  Conn.  Mut.  Life 
Ins.  Co.  V.  New  York  &  New  Haven  E.  R.  Co.,  25  Conn.  265  ;  Anthony  v.  Slaid, 
11  Met.  (Mass.)  290. 

'  The  whole  opinion  is  very  able  and  interesting,  and  well  worthy  of  perusal. 


550  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

"  It  is  clear,  from  the  declaration,  that  a  pecuniary  injury 
has  been  sustained  by  the  plaintiffs  in  consequence  of  the 
unlawful  conduct  of  the  defendants.  If  the  injury  thus  set 
forth  be  actionable,  or  an  injury  in  a  legal  sense,  there  must  be 
a  recovery.  But  we  are  of  the  opinion  that  the  wrong  com- 
plained of  is  not  the  proper  subject  of  a  suit  at  law,  both  for 
reasons  appertaining  to  the  peculiar  nature  of  the  injury  and 
to  the  manner  in  which  its  consequences  are  brought  home  to 
the  party  claiming  redress. 

"  The  other  branch  of  our  inquiry,  relating  to  the  manner 
in  which  the  injury  complained  of  was  brought  home  to  the 
party  claiming  to  have  suffered  by  it,  concerns  principles  of 
great  practical  interest,  and  novel  in  their  present  application. 
The  plaintiffs  sustain  no  relation  to  the  authors  of  the  wrong 
other  than  that  of  mere  contractors  with  the  party  injured,  and 
their  contract  liability  is  the  medium  through  which  the  injury 
is  brought  home  to  them.  They  justly  say  that  their  loss  is 
in  fact  distinctly  traceable  and  solely  due  to  the  misconduct 
of  the  defendants  ;  that  the  death  of  Dr.  Beach,  caused  by  the 
defendants,  in  a  legal  sense  determined  the  only  contingency 
out  of  which  their  liability  grew,  and  brought  upon  them  the 
consequences  of  that  liability  which,  through  the  defendant's 
unlawful  acts,  had  now  become  fixed.  Still  the  question 
remains,  notwithstanding  this  precise  exhibition  of  cause  and 
effect,  whether  these  consequences,  of  which  the  deceased  was 
primarily  the  subject,  and  which  affected  the  plaintiffs  only 
because  they  had  put  themselves  into  the  position  of  con- 
tractors with  him,  were  in  a  legal  view  brouglit  home  to  the 
plaintiffs,  directly  or  indirectly.  The  completeness  of  the  proof 
of  connection  between  the  acts  of  the  defendants  and  the  loss 
of  the  plaintiffs  does  not  vary,  although  it  may  tend  to  con- 
fuse the  aspects  of  the  case.  The  single  question  is  whether 
a  plaintiff  can  successfully  claim  a  legal  injury  to  himself  from 
another,  because  the  latter  has  injured  a  tliird  person  in  such 
a  manner  that  the  plaintiffs'  contract  liabilities  are  thereby 
affected.  An  individual  slanders  a  merchant  and  ruins  his 
business  ;  is  the  wrong-doer  liable  to  all  the  persons,  who,  in 
consequence  of  their  relations  by  contract  to  the  bankrupt,  can 


LOSS   AND   ITS    ADJUSTMENT,    AND    TO   WHOM   PAYABLE.        551 

be  clearly  shown  to  have  been  damnified  by  the  bankruptcy  ? 
Can  a  fire  insurance  company,  who  have  been  subjected  to  loss 
by  the  burning  of  a  building,  resort  to  the  responsible  author 
of  the  injury,  who  had  no  design  of  affecting  their  interest,  in 
their  own  name  and  right?  Such  are  the  complications  of 
human  affairs,  so  endless  and  far-reaching  the  mutual  promises 
of  man  to  man,  in  business  and  in  matters  of  money  and  prop- 
erty, that  rarely  is  a  death  produced  by  human  agency  which 
does  not  affect  the  pecuniary  interest  of  those  to  whom  the 
deceased  was  bound  by  contract.  To  open  the  door  of  legal 
redress  to  wrongs  received  through  the  mere  voluntary  and 
factitious  relation  of  a  contractor  with  the  immediate  subject 
of  the  injury,  would  be  to  encourage  collusion  and  extravagant 
contracts  between  men,  by  which  the  death  of  eitlier,  through 
the  involuntary  default  of  others,  might  be  made  a  source  of 
splendid  profits  to  the  other,  and  would  also  invite  a  system 
of  litigation  more  portentous  than  our  jurisprudence  has  yet 
known.  So  self-evident  is  the  principle  tjiat  an  injury  thus 
suffered  is  indirectly  brought  home  to  the  party  seeking  com- 
pensation for  it,,  that  courts  have  rarely  been  called  upon  to 
promulgate  such  a  doctrine.  The  case,  however,  of  Anthony 
V.  Slaid,^  referred  to  at  the  bar,  is  in  point.  A  contractor  for 
the  support  of  paupers  had  been  subjected  to  extra  expense,  by 
means  of  a  beating  which  one  of  those  paupers  had  received, 
and  he  sought  from  the  assailant  a  recovery  of  tlie  expendi- 
ture. But  the  court  held  that  the  damage  was  remote  and 
indirect,  having  been  sustained  not  by  means  of  any  natural 
or  legal  relation  between  the  plaintiff  and  the  party  injured, 
but  by  means  of  the  special  contract  by  which  he  had  under- 
taken to  support  the  town  paupers. 

"  The  case,  however,  would  present  a  different  aspect,  if,  by 
virtue  of  the  contract  between  the  railroad  company  and  the 
deceased,  a  direct  relation  was  established  between  the  former 
and  the  insurers.  If  the  contract  for  the  transportation  of  Dr. 
Beach  safely,  either  in  its  terms  or  through  its  necessary  legal 
incidents,  or  by  fair  inference  as  to  the  intent  of  the  parties, 
devolved  upon  the  railroad  company  a  duty  towards  the  pres- 

1  11  Met.  290. 


552  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

ent  plaintiffs,  the  latter  might  sue  for  a  violation  of  that  duty. 
An  obligation  thus  imposed  will  not  always  require  a  suit  for 
its  breach  to  be  brought  by  a  party  to  the  contract ;  an  inde- 
pendent right  of  action  resides  in  the  party  to  whom  the  duty 
was  to  be  performed.  In  this  respect  there  is  no  difference 
between  an  obligation  imposed  by  law  and  by  contract.  Where 
the  duty  of  keeping  a  highway  is  lodged  in  a  certain  quarter 
by  statute,  the  way  is  to  be  kept  in  repair  for  the  public,  for 
everybody ;  and  when  any  person  is  injured  by  its  defects,  the 
breach  of  duty  is  to  him,  and  he  has  an  action  for  the  violation 
of  his  right.  If  a  stage-coach  proprietor  agrees  with  a  master 
to  carry  his  servant,  and  injures  the  latter  on  the  road,  he  is 
liable  directly  to  the  servant ;  for  although  undertaken  at  the 
request  of  and  by  agreement  with  another,  the  duty  was 
directly  to  the  party  injured.^  But  it  is  evident  that  the  pres- 
ent case  cannot  be  brought  within  the  principle  of  such  deci- 
sions. It  would  be  unfair  to  argue  that  when  two  parties  make 
a  contract,  they  design  to  provide  for  an  obligation  to  any  other 
persons  than  themselves  and  those  named  expressly  therein, 
or  to  such  as  are  naturally  within  the  direct  scope  of  the 
duties  and  obligations  prescribed  by  the  agreement.  On  this 
point  it  is  enough  to  say  that  when  an  agreement  is  entered 
into,  neither  party  contemplates  the  requirement  from  the  other 
of  a  duty  towards  all  the  persons  to  whom  he  may  have  a  rela- 
tion by  numberless  private  contracts,  and  who  may  therefore 
be  affected  by  the  breach  of  the  other's  undertakings.  We  can- 
not find  that  any  public  law  charged  the  present  defendants 
with  any  duty  to  the  plaintiffs,  regarding  Dr.  Beach's  life,  nor 
can  we  see  that  Dr.  Beach  exacted,  either  expressly  or  by  rea- 
sonable intendment,  any  obligation  from  the  defendants  towards 
the  insurers  of  his  life,  when  he  contracted  for  his  transporta- 
tion to  New  York.  Had  the  life  of  Dr.  Beach  been  taken  with 
intent  to  injure  the  plaintiffs,  through  their  contract  liability,  a 
different  question  would  arise,  inasmuch  as  every  man  owes 
a  duty  to  every  other  not  intentionally  to  injure  him. 

"  We  decide  that  in  the  absence  of  any  privity  of  contract 
between  the  plaintiff  and  defendants,  and  of  any  direct  obliga- 

1  Longmeid  et  ux.  v.  HoUiday,  G  Eng.  L.  &  Eq.  563. 


LOSS   AND   ITS   ADJUSTMENT,   AND   TO   WHOM    PAYABLE.        553 

tion  of  the  latter  to  the  former  growing  out  of  the  contract  or 
relation  between  the  insured  and  the  defendants,  the  loss  of 
the  plaintiffs,  although  due  to  the  acts  of  the  railroad  com- 
pany, being  brought  home  to  the  insurers  only  through  their 
artificial  relation  of  contractors  with  the  party  who  was  the 
immediate  subject  of  the  wrong  done  by  the  railroad  company, 
was  a  remote  and  indirect  consequence  of  the  misconduct  of 
the  defendants,  and  not  actionable. 

"  Since  the  determination  of  this  case,  we  have  observed  a 
decision,  recently  made  in  Maine,^  fully  confirming  the  legal 
theory  which  we  have  advanced.  The  suit  was  brought  against 
a  party  who  had  wilfully  fired  a  store,  by  the  insurance  com- 
pany, who  had  paid  the  consequent  loss,  and  in  their  own 
name.  The  court  dismissed  the  action  t)n  demurrer,  taking 
the  same  view  of  the  common-law  doctrine  which  we  have 
expressed,  relative  to  the  indirect  and  remote  manner  in  which 
the  interests  of  the  insurer  were  prejudiced  by  the  misconduct 
of  the  wrong-doer.  The  cases  in  which  insurers  have  been 
permitted  to  recover  against  the  authors  of  those  losses  are 
not  in  contravention  of  these  principles.  They  have  recovered, 
not  by  color  of  their  own  legal  right,  but  under  a  general  doc- 
trine of  equity  jurisprudence,  commonly  known  as  the  doctrine 
of  subrogation,  applicable  to  all  cases  wherein  a  party  who  has 
indemnified  another  in  pursuance  of  his  obligation  so  to  do, 
succeeds  to  and  is  entitled  to  a  cession  of  all  the  means  of 
redress  held  by  the  party  indemnified  against  the  party  who 
has  occasioned  the  loss.  In  some  instances  the  doctrine  has 
been  carried  so  far  that  an  insurer  has  been  permitted  to 
recover  from  the  insured  such  compensation  as  the  latter  has 
subsequently  obtained  from  the  wrong-doer,  as  if  the  money 
paid  by  the  tortfeasor  under  such  circumstances  was  really  paid 
for  the  use  of  the  insurer.  By  virtue  of  this  doctrine  there  is 
no  doubt  of  the  right  of  an  insurer,  who  has  paid  a  loss,  to 
use  the  name  of  the  insured  in  order  to  obtain  redress  from 
the  author  of  the  wrong,  —  a  right  to  be  exercised  for  the  ben- 
efit of  the  party  equitably  entitled  to  its  benefits,  not  to  be 
enforced  by  its  possessor  in  his  own  name,  but  by  him  as  the 
1  Eockingham  Mut.  Fire  Ins.  Co.  v.  Bosher,  39  Me.  253. 


554  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

successor  to  the  remedies  of  the  person  whom  he  has  indemni- 
fied. Having  no  independent  claim  on  the  wrong-doer,  he 
might  be  successfully  met  by  the  superior  equities  of  the 
wrong-doer,  such,  for  instance,  as  a  payment  to  the  party 
directly  injured,  without  notice  of  the  insurer's  claim  to  be 
subrogated.  Nothing  can  be  plainer  than  that  an  indirect  lia- 
bility of  this  kind  is  an  argument  rather  against  the  claim  of 
a  direct  responsibility  of  the  wrong-doer  than  a  suggestion  in 
its  favor.  The  views  taken  by  courts  in  recognizing  the  insur- 
er's right  of  subrogation  tend  to  sustain  the  principle  which 
we  now  maintain."  ^ 

§  454.  Loss  —  Right  of  Subrogation.  —  But  in  all  those  cases 
where  tlie  insured  have  a  primary  right  against  third  parties, 
who  have  been  the  a\ithors  of  the  injury  either  through  negli- 
gence or  more  culpable  misconduct  not  amounting  to  felony, 
the  insurers  on  making  good  the  loss  are  entitled  to  enforce 
the  remedy  of  the  assured,  and  in  their  name  to  recoup 
themselves  for  their  expenditure.  This  right  is  recognized 
by  the  courts  as  the  right  of  subrogation.  The  contract  of 
insurance  is  treated  as  an  indemnity,  and  the  insurer  as  a 
surety  who  is  entitled  to  all  the  remedies  and  securities  of  the 
assured,  and  to  stand  in  his  place.  If  the  insurers  were  first 
liable,  payment  by  them  would  be  a  satisfaction  and  relieve  the 
wrong-doer  ;  but  this  is  not  so,  for  the  latter  is  first  liable.  Tlie 
assured  have,  indeed,  a  double  remedy ;  if  they  pursue  that 
against  the  wrong-doer  and  recover  compensation  the  insur- 
ers escape,  but  if  'they  choose  to  enforce  the  claim  against  the 
insurers  in  the  first  instance,  the  latter  are  entitled  to  use  the 
name  of  the  assured  in  an  action  to  recover  the  money  which 
they  have  paid.^  And  the  right  is  based  upon  the  equitable 
doctrine  that  where  one  has  been  obliged  to  pay  money  to 
another  by  the  non-feasance  or  misfeasance  of  a  third,  who, 
being  at  fault,  ought  to  bear  the  loss,  the  party  so  paying,  as 
by  his  direct  obligation  towards   the  party  suffering  the  loss 

1  See  also  Propeller  Monticello,  17  How.  154  ;  Mason  v.  Sainsbury,  26  E.  C.  L. 
36,  3  Doug.  61 ;  Yates  v.  Whyte,  33  E.  C.  L.  349,  4  Bing.  N.  C.  272 ;  Que- 
bec Fire  Ins.  Co.  v.  St.  Louis,  22  Eng.  L.  &  Eq.  73 ;  Hart  v.  W.  R.  Co.,  13  Met. 
99. 

2  Bunyon,  Fire  Ins.  165. 


LOSS   AND  ITS   ADJUSTMENT,   AND    TO    WHOM   PAYABLE.        655 

he  may  be  compelled  to  do,  shall  be  allowed,  indirectly  and 
through  the  right  which  the  injured  party  had,  to  compel  the 
wrong-doer  to  bear  the  burden  which  was  imposed  by  his  fault ; 
although  between  him  and  the  wrong-doer  there  is  no  direct 
relation  upon  which  to  found  a  cause  of  action.  In  other 
words,  the  party  injured  being  so  situated  that  he  may  call, 
by  his  right  at  law,  upon  the  party  who  is  responsible  for  the 
injury,  or,  by  his  contract,  upon  one  who  is  not  at  fault,  for 
his  indemnity,  if  he  elect  the  latter,  then  the  latter  shall  be 
allowed  to  do,  in  his  name,  what  in  the  first  instance  the  in- 
jured party  might  have  done,  and  justice,  as  between  all  the 
parties,  decrees  ought  to  be  done.  And  this  result  is  accom- 
plished by  the  courts  when  suit  is  brought  by  the  insurers  in 
the  name  of  the  insured,  by  holding  that  the  payment  of  the 
money  to  the  latter  is  no  satisfaction  of  the  latter's  claim 
against  the  wrong-doer.  The  liability  of  the  wrong-doer  is  in 
legal  effect  first  and  principal,  and  that  of  the  insurer  second- 
ary, not  in  order  of  time,  but  in  order  of  ultimate  liability.  And 
where  the  insured  insists  upon  his  remedy  against  the  party  sec- 
ondarily liable,  he  is  conscientiously  bound  to  make  an  assign- 
ment, in  equity,  to  the  person  entitled  to  the  benefit,  and  the 
acceptance  of  the  indemnity  from  the  insurers  is  in  the  nature 
of  an  equitable  assignment,  which  authorizes  the  assignor  to 
sue,  in  the  name  of  the  assignee,  for  liis  own  benefit.  And  this 
is  a  right  which  a  court  of  equity  will  support,  by  restraining 
and  prohibiting  the  assignee  from  defeating  it  by  a  release. 
Thus  where  a  house  was  destroyed  by  a  mob,  and  the  insurers 
paid  the  loss,  a  suit  against  the  hundred  which  was  primarily 
responsible  was  maintained  in  the  name  of  the  insured,  but 
for  the  benefit  of  the  insurers.^  So  where  the  underwriters 
have  paid  a  loss  occasioned  by  sparks  from  a  locomotive,  they 
may  recover  from  the  railroad  company  the  amount  thus  paid, 
in  a  suit  in  the  name  of  the  owner  of  the  property  destroyed, 

1  Mason  v.  Sainsbury,  3  Doug.  (jT.  As  to  the  liability  for  negligence  at  com- 
mon law,  see  also  Yates  v.  Whyte,  33  E.  C.  L.  349  ;  Quebec  Fire  Ins.  Co.  v. 
St.  Louis,  22  Eng.  L.  &  Eq.  73  ;  Clark  v.  Inhabitants  of  Birthing,  2  B.  &  C.  254  ; 
Eyan  v.  N.  Y.  Central  E.  E.  Co.,  352;  "Webb  i-.  Eome,  &c.,  E.  E.  Co.,  49  N.  Y. 
42L 


556  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

which  action  the  owner  cannot  control.^  So  where  the  loss  is 
entailed  by  the  negligence  of  a  common  carrier,  whereby  the 
goods  entrusted  to  his  care  are  destroyed  by  fire.  As  between 
a  common  carrier  of  goods  and  the  insurer  the  liability  for 
their  loss  is  primarily  upon  the  carrier,  while  the  liability  of 
the  insurer  is  only  secondary.  In  respect  to  the  ownership 
of  the  goods  and  the  risk  incident  thereto,  the  owner  and  the 
insurer  are  considered  but  one  person,  having  together  the 
beneficial  right  to  the  indemnity  due  from  the  carrier  for  a 
breach  of  his  contract,  or  for  a  non-performance  of  his  legal 
duty.  The  insurer  stands  practically  in  the  position  of  a 
surety,  and  whenever  he  has  indemnified  the  owner  for  the 
loss,  he  is  entitled  to  all  the  means  of  indemnity  which  the 
satisfied  owner  held  against  the  carrier.  This  right  depends 
not  upon  privity  of  contract,  but  is  worked  out  through  the 
right  of  the  creditor  or  owner,  and  in  his  name.^  So  where  a 
house  is  wilfully  burned  by  a  third  person,  or  a  life  is  lost  by 
the  negligence  of  a  steamboat  or  railroad  company.  But  in 
all  such  cases  the  action  must  be  brought  in  the  name  of  the 
party  directly  injured,  or  his  legal  representatives,  and  an  action 
in  the  name  of  the  third  party  will  not  be  sustained.^  But  this 
right  of  subrogation  does  not  accrue  until  payment,  and  full 
payment,  of  the  liability  which  gives  rise  to  such  right  on  the 
part  of  the  insurance  company  claiming  to  be  subrogated.  On 
payment  of  part  only  of  that  liability  the  right  does  not  super- 
vene.*    This  liability  for  negligence  existed  at  common  law  ;  ^ 

J  Hart  V.  Western  R.  R.  Co.,  13  Met.  (Mass.)  99. 

2  Hall  V.  Nash.  &  Chat.  R.  R.  Co.,  13  Wall.  (U.  S.)  367  ;  Gales  v.  Hailman, 
11  Penn.  St.  515. 

^  Rockingham  Mut.  Fire  Ins.  Co.  v.  Bosher,  39  Me.  253 ;  Peoria  Mar.  and 
Fire  Ins.  Co.  v.  Frost,  37  111.  333 ;  Conn.  Mut.  Life  Ins.  Co.  v.  N.  Y.  &  N.  H. 
R.  R.  Co.,  25  Conn.  265.  In  Lower  Canada,  however,  where  a  church  was  set 
on  fire  and  burned  by  the  sparks  from  a  passing  steamboat,  which  had  no  grille 
on  its  chimney,  the  insurance  company  were  allowed,  after  having  paid  the  loss, 
after  a  transfer  of  the  claim  against  the  company,  but  without  any  legal  assign- 
ment thereof  by  the  church  proprietors,  to  |^aintain  in  their  own  name  an  action 
against  the  steamboat  company,  to  recover  the  amount  they  had  been  compelled 
to  pay  under  the  policy.     Quebec  Fire  Ass.  Co.  v.  St.  Louis,  1  L.  C.  222. 

*  People's  Ins.  Co.  v.  Straehle,  2  Cincinnati  Sup.  Ct.  Reporter,  186 ;  Neptune 
Ins.  Co.  V.  Dorsey,  3  Md.  Ch.  338;  Kyner  v.  Kyner,  6  Watts  (Penn.),  221. 

^  Canterbury  v.  Attorney-General,  1  Phil.  306 ;  Pigott  v.  Eastern  Counties 


LOSS   AND   ITS   ADJUSTMENT,   AND   TO    WHOM   PAYABLE.        557 

and  in  Massacliusetts  and  perhaps  other  States,  is  imposed  by 
statute,  without  regard  to  the  question  of  negligence. 

§  455.  Loss  —  Subrogation  —  Wrong-doer  can  have  no  Benefit 
from  Payment  by  the  Insurer.  —  The  principles  Stated  in  the  last 
section  were  further  illustrated  in  a  recent  case  in  Vermont,^ 
where  a  town  which  was  sued  for  injuries  resulting  from  a 
defect  in  a  highway  undertook  to  claim  in  its  behalf,  by  way 
of  reduction  of  damages,  the  amount  which  had  been  paid  the 
plaintiff  by  an  insurance  company.  But  the  court  said  there 
was  no  technical  ground  which  necessarily  leads  to  the  conclu- 
sion that  the  money  received  by  the  plaintiff  of  the  accident 
insurance  company  should  operate  as  a  defence  j;ro  tanto,  or 
inure  to  the  benefit  of  the  town.  The  insurer  and  the  defend- 
ant are  not  joint  tortfeasors  or  joint  debtors,  so  as  to  make  a 
payment  or  satisfaction  by  the  former  operate  to  the  benefit  of 
the  latter.  Nor  is  there  any  legal  privity  between  the  defend- 
ant and  the  insurer,  so  as  to  give  the  former  a  right  to  avail 
itself  of  a  payment  by  the  latter.  The  policy  of  insurance  is 
collateral  to  the  remedy  against  the  defendant,  and  was  pro- 
cured solely  by  the  plaintiff  and  at  his  expense,  and  to  the 
procurement  of  which  the  defendant  was  in  no  way  contribu- 
tory, and  there  is  no  legal  principle  which  seems  to  require 
that  he  should  have  any  benefit  therefrom.  To  the  suggestion 
that  the  plaintiff  was  entitled  to  but  one  satisfaction  for  the 
injury,  the  reply  was,  that  if  this  was  to  be  regarded  as  a 
correct  proposition,  the  question  would  arise  whether  the 
defendant  stands  in  a  position  which  entitles  him  to  make 
the  objection.  And  this  depends  upon  another  question,  Who, 
as  between  the  insurer  and  the  defendant,  ought  to  pay  the 
damage  ?  which  of  the  two  ought  necessarily  to  make  compen- 
sation to  the  plaintiff,  and  ultimately  to  bear  the  loss  ?  If  the 
insurer  ought  ultimately  to  bear  the  loss,  the  defendant  is  enti- 
tled in  this  action  to  have  the  benefit  of  that  payment ;  but  if 
the  defendant  ought  ultimately  to  bear  the  loss,  then  the  pay- 
ment by  the  insurer,  and  the  collection  of  the  entire  damage 

Railway  Co.,  3  C.  B.  229 ;  Aldridge  v.  Gr.  "West.  Railway  Co.,  3  M.  &  G.  615 ; 
Longman  v.  Grand  June.  Canal  Co.,  3  F.  &  F.  738. 
1  Harding  v.  Towushend,  43  Vt.  536. 


558  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

of  the  defendant,  only  creates  an  equity  between  the  plaintiff 
and  the  insurer,  to  be  ultimately  adjusted  between  them,  in 
which  the  defendant  has  no  interest,  and  with  which  he  has  no 


concern 


§  456.  Loss  —  Subrogation  —  Intervention  of  Strangers  to  the 
Contract  —  Debtor  and  Creditor  —  Mortgagor  and  Mortgagee  — 
Vendor  and  Vendee  —  Lessor  and  Lessee.  —  But  this  right  of  sub- 
rogation is  based  upon  the  fact  that  the  person  who  pays  the 
debt  stands  in  the  position  of  a  surety,  or  is  compelled  to  pay 
to  protect  his  own  interest,  as  where  one  is  surety  for  another 
that  he  will  account  for  moneys,  A  mere  stranger  or  volun- 
teer having  no  interested  relationship  to  the  parties,  who  pays 
the  debt  of  another,  cannot  be  subrogated  to  the  creditor's 
rights.2  On  the  other  hand,  if  a  stranger  to  the  contract  sees 
fit  to  donate  to  the  insured  the  amount  of  any  loss  he  may 
have  suffered,  this  will  not  relieve  the  insurers  from  their  obli- 
gation to  perform  their  contract.^  Not  even  the  insurers  can 
intervene  and  intercept,  or  lay  successful  claim  to  a  debt  or  its 
securities,  when  they  are  neither  directly  nor  indirectly  affected 
by  the  conduct  of  the  creditor,  or  authorized  by  his  consent. 
Indeed  it  may  be  stated,  as  a  general  rule,  that  no  one,  except 
the  nominal  assured,  or  his  assignee  after  loss,  can  claim 
either  from  the  insurers,  or  from  the  party  to  whom  the  loss 
has  been  paid,  any  part  of  the  proceeds  of  a  policy,  unless  by 
express  agreement,  or  unless  the  policy  covered  property  in 
which  the  claimant  had  an  interest,  and  was  intended  and  was 
effected  in  part  or  in  whole  for  his  benefit  and  at  his  expense.* 
Thus  a  mortgagor  cannot  recover  from  a  mortgagee  except 

1  See  also  Mason  v.  Sainsbury,  3  Doug.  61 ;  Clark  v.  Inhabitants  of  Blything, 
2  B.  &  C.  254 ;  Yates  v.  Wliyte  et  al.,  4  Bing.  N.  C.  272 ;  Propeller  iMonti- 
cello  V.  Gilbert  Mollison,  17  How.  (U.  S.)  152,  which  were  cited  by  the  court  as 
authorities  upon  the  first  point.  The  case  of  Pym  v.  Great  Northern  Railway 
Co.,  4  B.  &  S.  396,  if  not  distinguishable,  is  opposed  by  Althorp  v.  Wolf,  22 
Smith  (N.  Y.),  355.  And  the  same  may  be  said  of  Hicks  v.  Newport  Rail- 
way Co.,  an  unreported  case  at  Nisi  Prius,  referred  to  in  a  note  to  Althorp  v. 
Wolf. 

^  Hough  V.  Mins.  Life  Ins.  Co.,  Sup.  Ct.  111.,  1  Ins.  L.  J.  836. 

'  People's  Ins.  Co.  v.  Straehle,  2  Cincinnati  Sup.  Ct.  Reporter,  186. 

4  Steele  v.  Franklin  Fire  Ins.  Co.,  17  Penn.  St.  2y0  ;  Turner  v.  Stetts,  28  Ala. 
420. 


LOSS   AND    ITS    ADJUSTMENT,   AND   TO    WHOM    PAYABLE.        559 

under  such  circumstances ;  ^  nor  a  consignor  from  a  con- 
signee ;  ^  nor  a  vendee  from  a  vendor,  who,  not  having  as- 
signed the  policy,  had,  after  loss  of  the  property  sold,  collected 
the  insurance  ;  ^  nor  a  lessor  from  a  lessee  ;  ^  nor  a  lessee  from 
a  lessor  ;  ■'  nor  a  debtor  from  a  creditor.*^  In  order  to  give  the 
right  to  intervene  between  the  insurer  and  the  insured,  the 
party  intervening  must  have  some  relation  to,  or  concern  with, 
the  contract  of  insurance.  But  a  creditor  who  acquires  title 
to  an  estate  under  a  levy  of  execution,  the  time  for  redemp- 
tion having  expired,  has  no  relation  to,  or  concern  with,  a  con- 
tract of  insurance  between  the  former  owner  of  the  estate  and 
the  insurers,  upon  which  to  found  a  claim  upon  the  latter  for 
the  amount  of  the  loss,  or  any  part  of  it.'^  Payment  to  a 
creditor  by  an  insurance  company  of  the  amount  of  a  policy 
taken  out  and  paid  for  by  him  on  the  life  of  the  debtor,  is  not 
pro  tanto  a  satisfaction  of  the  debt,  but  the  debt  still  remains 
a  valid  security  for  its  full  amount  against  the  debtor.^  And 
the  same  is  true  of  a  mortgagee  who  insures  for  himself  and 
at  his  own  expense,  and  receives  the  amount  due  for  the  loss.^ 
Nor  can  a  mortgagee,  under  such  circumstances,  paid  by  the 
insurers,  be  compelled  to  assign  his  mortgage  debt  to  the 
insurers. ^^  But  it  has  been  held  in  New  York  ^^  that  where 
the  mortgagor  insures,  and  with  assent  of  the  company  assigns 
to  the  mortgagee,  the  latter  could  only  recover  for  a  loss  on 
condition  of  assigning  to  the  insurers  an  interest  in  the  mort- 
gage equal  to  the  amount  paid  by  them. 

§  457.  Same  Subject.  —  Some  of  the  earlier  cases,  indeed, 

1  Wliite  V.  Brown,  2  Cush.  (Mass.)  412;  Gushing  v.  Thompson,  34  Me.  496; 
Concord  Mut.  Fire  Ins.  Co.  v.  Woodbury,  45  Me.  447. 

-  Stillwell  V.  Staples,  19  N.  Y.  401,  reversing  same  case  in  G  Duer  (N.  Y.),  63. 

*  King  V.  Preston,  11  La.  An.  95. 

*  Mercliants'  Ins.  Co.  v.  Mazange,  22  Ala.  168. 

5  Miltenberger  v.  Beercom,  9  Penn.  St.  198 ;  Tongue  v.  Nutwell,  31  Md.  302. 

6  Bruce  v.  Gardner,  22  L.  T.  n.  s.  1002. 

■J  Plympton  v.  Farmers'  Mut.  Fire  Ins.  Co.,  43  Vt.  497. 

8  Humphrey  v.  Arabin,  2  Lloyd  &  Goold,  318. 

9  White  V.  Brown,  2  Cush.  (Mass.)  412. 

10  King  V.  State  Mut.  Fire  Ins.  Co.,  7  Cush.  (Mass.)  1 ;  Suffolk  Fire  Ins.  Co. 
V.  Boyden,  9  Allen  (Mass.),  123. 
"  Kip  V.  Mut.  Fire  Ins.  Co.,  4  Edw.  Ch.  (N.  Y.)  86. 


560  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

seem  to  have  gone  further  in  favor  of  the  insurer  than  is  con- 
ceded to  be  permissible  according  to  the  doctrine  of  the  cases 
cited  in  the  last  section.  Thus  in  JEtna  Insurance  Company 
V.  Tjler,^  it  was  held  that  where  the  property  insured  is  held 
by  a  vendee  under  a  contract  of  sale,  and  a  portion  of  the  pur- 
chase-money remains  unpaid  at  the  time  of  the  loss,  and  the 
insured  receives  the  amount  of  the  loss  of  the  underwriter, 
the  latter  will  be  entitled  to  be  substituted  in  the  place  of  the 
insured  in  respect  to  his  rights  and  remedies  against  the  pur- 
chaser. And  upon  the  doctrine  of  the  last  case  the  Court  of 
Errors  and  Appeals  of  New  Jersey  ^  broadly  laid  down  the  rule 
that  where  a  party  holding  a  lien  upon  real  estate  to  secure  a 
debt  effects  an  insurance  upon  such  property,  in  case  of  a  loss 
the  insurance  company,  upon  payment  of  the  insurance,  will 
be  entitled  to  the  benefit  of  the  security  held  by  the  insured 
to  the  amount  of  the  money  paid ;  and  if  they  pay  the  in- 
sured the  whole  amount  of  the  claim  for  which  he  holds  such 
security,  they  will  have  a  right  to  the  whole  of  the  security 
held  by  him.  And  if  the  insured  holds  other  securities  for 
the  same  debt,  the  insurers  will  have  a  right  to  them  also ; 
and  if  after  efifecting  the  insurance  the  insured  parts  with  a 
portion  of  his  securities,  he  will  forfeit  the  right  pro  tanto  to 
recover  of  the  insurers.  But  Benjamin  v.  Saratoga  County 
Mutual  Insurance  Company,^  where  a  vendor,  under  a  contract 
of  sale,  agreed  with  the  vendee  to  sell  him  the  property,  the 
vendee  to  pay  him  the  premiums  he  might  pay  under  an  insur- 
ance which  he  already  had  for  continuing  the  same,  of  which 
facts  the  insurers  had  notice  and  to  which  they  gave  their  con- 
sent, and  it  was  held  that,  upon  payment  of  the  loss  to  the  ven- 
dor, the  insurers  were  not  entitled  to  be  subrogated  to  his  rights 
against  the  vendee ;  and  Kernochan  v.  New  York  Bowery  Fire 
Insurance  Company,*  where  a  policy  was  taken  out  in  the  name 
of  the  mortgagee,  under  an  agreement  between  him  and  the  mort- 
gagor that  the  mortgagee  should  pay  the  premiums,  the  insur- 
ers knowing  nothing  of  the  agreement,  and  the  insurers  were 

1  16  Wend.  (N.  Y.)  385. 

2  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff,  2  Dutch.  (N.  J.)  541. 

3  17  N.  Y.  415.  4  Ibid.  428. 


LOSS    AND    ITS   ADJUSTMENT,   AND    TO   WHOM   PAYABLE.        661 

held  not  entitled  to  subrogation,  —  seem  hardly  consistent  with 
the  two  cases  just  cited  in  this  section.^    And  of  course  a  subro- 
gated right  will  be  strictly  that  of  the  original  party,  and  if  he 
cannot  recover  neither  can  the  party  who  claims  through  him.^ 
§  458.   Loss  —  Right   of  Insurers   to   intervene   by  Contract  — 
Mortgagor  and  Mortgagee.  —  In  order  to  prevent  a  mortgagee 
from  making  liis  insurable  interest  a  speculation  whereby  in  case 
of  loss  he  may  recover  the  amount  insured  and  yet  recover  the 
amount  due  from  the  mortgagor  on  account  of  the  mortgage, 
it  is  usual  to  provide  that  in  case  of  payment  of  any  loss  to  a 
mortgagee  whose  interest  only  is  insured,  the  party  so  paid 
shall,  at  the  time  of  payment,  assign  to  the  company  so  much 
of  his  interest  in  the  mortgage  as  may  not  be  necessary  to 
extinguish  the  balance  of  the  debt  due  thereon.    It  seems  that 
under  such  a  provision,  if  the  mortgagee  enters  into  any  con-  • 
tract  which  by  its  terms  would  be  inconsistent  with  his  right 
of  assignment  of  the  mortgage  debt,  such  contract  would  con- 
stitute a  valid  bar  to  his   recovery.     But  a  contract  whereby 
the  mortgagee  in  possession  lets  a  third  party  into  that  posses- 
sion, and  agrees  for  a  consideration  to  be  paid  at  a  future  time 
that  he  will  upon  such  payment  assign  the  mortgage,  the  con- 
tract being  still  unexecuted,  is  not  such  a  contract.^     The 
Springfield  Fire  and  Marine  Insurance  Company  v.  Brown  * 
presented  a  case  where  a  policy  was  issued  to  the  owner  of 
mortgaged  premises  in  which  the  loss  was  made  payable  to  the 
mortgagee,  and  which  provided  also  that  in  case  of  any  change 
of  title  the  policy  should  be  void  (except  as  to  the  interest  of 
the  mortgagee),  and  further,  that  in  case  of  payment  of  loss 
to  tiie  mortgagee,  for  which  the  insurers  would  not  have  been 
liable  to  the  mortgagor,  the  insurers  should  be  subrogated  to 
the  rights  of  the  mortgagee  ;  and  it  was  held,  on  a  bill  to  fore- 
close, that  the  property  having  been  sold  contrary  to  the  condi- 
tions of  tlie  policy,  and  the  insurers  having  paid  the  mortgagee 
his  loss  and  taken  an  assignment  of  his  mortgage,  the  mort- 

i  See  also  Bradford  v.  Greenwich  Ins.  Co.,  8  Abb.  (N.  Y.)  2GL 
'■*  Alliance  Mar.  Ins.  Co.  v.  Lou.  State  Ins.  Co.,  8  La.  L 

3  Davis  V.  Quincy  Mut.  Fire  Ins.  Co.,  10  Allen  (Mass.),  113. 

4  43  N.  Y.  389. 

36 


562  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

gagor  could  not  require  the  amount  paid  the  mortgagee  by 
the  insurer  to  be  appropriated  towards  the  liquidation  of  the 
mortgage. 

§  459.  Loss  —  Negligence  —  Proximate  Cause.  —  Much  discus- 
sion has  been  had  on  the  subject  of  the  liability  of  railroads  for 
negligence,  largely  turning  upon  the  distinction  between  remote 
and  proximate  causes.  In  Ryan  v.  New  York  Central  Rail- 
road,^ where  fire  was  first  communicated  by  sparks  from  the 
engine  to  a  wood-shed  of  the  company,  and  thence  by  sparks 
from  the  shed  to  the  property  of  the  plaintitf,  it  was  held  that 
the  cause  was  remote,  and  the  plaintiff  could  not  recover. 
And  this  case  seems  to  have  been  followed  in  Pennsylvania.^ 
But  in  Massachusetts  ^  it  was  held  that  such  a  circumstance 
did  not  affect  the  question  of  immediateness  or  remoteness ; 
and  in  Perley  v.  Eastern  Railroad  Company,*  referring  to  the 
case  in  New  York,  the  court  say  :  — 

"  The  defendant's  counsel  have  referred  us  to  the  case  of 
Ryan  v.  New  York  Central  Railroad  Company.^  We  under- 
stand the  liability  in  that  State  is  by  the  common  law,  and  not 
under  the  provisions  of  any  statute.  In  that  case  a  distinc- 
tion is  made  between  proximate  and  remote  damages.  The 
fire  was  communicated  from  the  defendants'  locomotive  to 
their  wood-shed,  and  thence  by  sparks,  one  hundred  and  thirty 
feet,  to  the  plaintiff's  house  ;  and  it  was  held  that  the  plaintiff 
could  not  recover,  because  the  injury  was  a  remote,  and  not  a 
proximate  consequence  of  the  carelessness  of  the  defendants 
in  permitting  their  fire  to  escape.  Our  own  cases,  above  re- 
ferred to,  are  not  noticed  in  the  opinion.  Nor  does  the  opinion 
draw  any  line  of  distinction  between  what  is  proximate  and 
what  is  remote  ;  and  such  a  line  is  not  obvious  in  that  case. 
If,  when  the  cinder  escapes  through  the  air,  the  effect  which  it 
produces  upon  the  first  combustible  substance  against  which 
it  strikes  is  proximate,  the  effect  must  continue  to  be  proxi- 
mate as  to  every  thing  which  the  fire  consumes  in  its  direct 

1  35  N.  Y.  210. 

2  Penn.  R.  R.  Co.  v.  Kerr,  62  Penn.  363. 

3  Hart  V.  Western  R.  R.  Co.,  13  Met.  (Mass.)  99. 

4  98  Mass.  418.  5  35  N.  Y.  210. 


LOSS   AND   ITS   ADJUSTMENT,   AND   TO    WHOM   PAYABLE,        563 

course.  This  is  so,  whether  we  regard  the  fire  as  a  combina- 
tion of  the  burning  substance  with  the  oxygen  of  the  air,  or 
look  merely  at  its  visible  action  and  effect.  As  matter  of  fact, 
the  injury  to  the  plaintiff  was  as  immediate  and  direct  as  an 
injury  would  have  been  which  was  caused  by  a  bullet,  fired 
from  the  train,  passing  over  the  hitermediate  lots  and  wound- 
ing the  plaintiff  as  he  stood  upon  his  own  lot.  It  is  as  much 
so  as  pain  and  disability  are  proximate  effects  of  an  injury, 
though  they  occur  at  intervals  through  successive  years  after 
the  injury  was  received.  Yet  these  are  called  proximate 
effects,  though  the  actual  effects  of  the  injury  may  be  greatly 
modified  in  every  case,  by  bodily  constitution,  habits  of  life, 
and  accidental  circumstances. 

"  The  instructions  given  in  respect  to  the  back  fires,  which 
were  kindled  with  a  view  to  check  the  fire  which  had  pro- 
ceeded from  the  locomotive,  were  correct ;  for  they  required 
the  jury  to  find,  in  substance,  that  tliese  fires  did  not  in  fact 
contribute  to  the  loss  of  the  plaintiff,  but  that  they  were  swal- 
lowed up  by  the  advancing  flame  which  went  on  and  destroyed 
the  plaintiff's  property."  ^ 

1  By  the  statute  of  Massachusetts,  the  railway  company  is  liable  for  fires 
caused  by  sparks  communicated  by  the  engine,  without  reference  to  the  question 
of  negligence  on  their  part.  By  the  common  law  the  liability  is  based  upon 
negligence ;  but  it  is  not  easy  to  see  how  the  distinction  at  all  enters  into  the 
question  whether  a  cause  is  proximate  or  remote.  The  opinions  must  be 
regarded  as  directly  opposed  to  each  other.  Eyan  v.  N.  Y.  Central  R.  R.  Co. 
has  been  said  to  be  inconsistent  with  the  prior  case  of  Field  v.  N.  Y.  Central 
R.  R.  Co.,  32  N.  Y.  339,  in  Webb  v.  Rome,  &c.,  R.  R.  Co.,  3  Lansing  (N.  Y.),  453. 
This,  however,  was  not  admitted  by  the  Court  of  Appeals ;  nevertheless,  they 
affirmed  the  judgment  in  Webb  v.  Rome,  &c.,  R.  R.  Co.,  49  N.  Y.  421,  although 
that  was  founded  upon  the  case  of  Field  v.  N.  Y.  Central  R.  R.  Co.,  and  assumed 
that  case  to  be  totally  inconsistent  with  Ryan  v.  N.  Y.  Central  R.  R.  Co. 


56-4  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 


CHAPTER    XX. 

OF  THE  NOTICE,  PRELIMINARY  PROOF,  PARTICULAR  ACCOUNT,  AND 
PAYMENT  OF  THE  LOSS. 

§460.  Notice  —  Preliminary  Proof — Particular  Account. — 
When  a  loss  has  occurred,  it  devolves  upon  the  assured  to  give 
notice  thereof,  and  also  to  furnish  some  proof  thereof  and  of 
the  amount  claimed.  These  duties  are  usually  required  in 
substantially  the  same  phraseology,  and  with  greater  or  less 
exactness  and  particularity,  as  conditions  precedent  to  the  right 
to  demand  payment,  and  in  order  that  the  insurers  may  inves- 
tigate for  themselves  the  validity  of  the  claim.  They  are  also 
usually  required  within  a  certain  specified  time,  though  not 
always. 

§  461.  Notice  of  Loss  —  Time  and  Mode.  —  When  the  time 
of  notice  is  specified,  it  must  be  given  within  tiie  time  required 
by  the  conditions  of  the  contract.^  It  need  not  be  in  writing, 
unless  expressly  so  stipulated  ;  ^  nor  need  the  insured  go  to 
the  office  or  to  the  agent  of  the  insurers  for  the  purpose  of 
giving  the  notice.  If  the  persons  authorized  to  receive  notice 
on  behalf  of  the  insurers  go  to  and  inspect  the  premises,  they 
thereby  obtain  all  the  information  which  it  is  the  object  of  the 
notice  to  bring  to  their  knowledge,  and  further  notice  will  be 
useless  and  unnecessary.  Thus  where  the  president  and  one 
of  the  directors  of  tlie  company  visit  the  scene  of  the  fire  for 
the  purpose  of  examining  into  the  matter,  no  further  notice 
on  the  part  of  the  insured  will  be  required.^  The  form  is 
immaterial,  if  it  includes  tlie  fact  to  be  made  known,  however 
much  it  is  overloaded  with  surplusage.*     Where  the  notice  of 

1  Davis  V.  Davis,  49  Me.  282. 

2  Killips  V.  Putnam  Fire  Ins.  Co.,  28  Wis.  472. 

3  Eoumage  v.  Mechanics'  Fire  Ins  Co.,  1  Green  (N.  J.),  110. 
*  Rix  V.  Mut.  Ins.  Co.,  20  N.  H.  lyS. 


NOTICE,   PRELIMINARY   PROOF,    ETC.,    OF   THE   LOSS.  565 

loss  and  affidavit  were  required  to  state  "  the  value  of  such 
parts  as  remain,"  and  the  notice  stated  that  the  building  was 
destroyed  on  a  certain  day,  and  was  a  total  loss,  it  appearing 
that  the  building  destroyed  was  insured  for  fifteen  hundred 
dollars,  and  was  valued  at  two  thousand  four  hundred,  and 
that  the  brick  and  stone  work  uninsured  was  worth  about  one 
hundred  dollars,  it  was  held  that  the  notice  of  the  loss  was 
sufficient,  in  the  absence  of  any  evidence  that  it  was  objected 
to,  or  a  more  particular  statement  required.^ 

§  462.  Notice  —  "  Forthwith  "  —  "  Soon  as  Possible,"  &c.  —  If 
the  notice  be  required  to  be  "  forthwith,"  or  ''as  soon  as  possi- 
ble," or  "  immediately,"  it  will  meet  the  requirement,  if  given 
with  due  diligence  under  the  circumstances  of  tlie  case,  and 
without  unnecessary  and  unreasonable  delay,  of  which  the  jury 
are  ordinarily  to  be  the  judges.  To  give  tlie  word  a  literal 
interpretation  would  in  most  cases  strip  the  insured  of  all 
hope  of  indemnity,  and  policies  of  insurance  would  become 
practically  engines  of  fraud.^  Tlius  notice  within  eight  days 
after  the  fire,  and  within  five  days  after  it  came  to  the  knowl- 
edge of  the  insured,  has  been  held  to  be  reasonable.'^  So, 
where  the  fire  happened  on  the  tenth,  and  notice  of  loss,  dated 
the  eleventh,  reached  the  insurers  on  the  fifteenth  of  the  same 
month.*  But  a  delay  of  four  months  in  one  case,'^  of  thirty- 
eight  days  in  another,^  of  twenty  days  in  another,'^  and  of 
eleven  days  in  another,^  there  being  no  sufficient  excuse  there- 
for, has  been  held  to  be  unreasonable.  Yet  where  the  insurers 
had,  contrary  to  their  agi-eement,  refused  to  issue  a  policy,  they 

1  WyiTian  v.  People's  Equity  Ins.  Co.,  1  Allen  (Mass.),  301. 

'-  Kingsley  v.  New  England  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  393  ;  Peoria 
Ins.  Co.  V.  Lewis,  18  111.  533  ;  Edwards  v.  Baltimore  Ins.  Co.,  3  Gill  (Md.),  176  ; 
Prov.  Life  Ins.  Co.  v.  Baura,  29  Ind.  236  ;  St.  Louis  Ins.  Co.  v.  Kyle,  11  Mo.  278; 
Phillips  V.  Prot.  Ins.  Co.,  14  Mo.  220. 

3  New  York  Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.  Sup.  Ct.) 
468. 

*  Schenek  v.  Mercer  County  Mut.  Ins.  Co.,  i  Zabr.  (N.  J.)  447  ;  West  Branch 
Ins.  Co.  V.  Helfenstein,  40  Penn.  St.  289. 

5  McEvers  v.  Lawrence,  1  Hoff  Ch.  (N.  Y.)  171. 

«  Inman  v.  Western  Fire  Ins   Co.,  12  Wend.  (N.  Y.)  452. 

"  Whiteburst  v.  North  Carolina  Mut.  Ins.  Co.,  7  Jones,  Law  (N.  C),  436. 

6  Trask  v.  State  Fire  and  Mar.  Ins.  Co.,  29  Penn.  St.  198. 


566  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

were  held  to  have  waived  their  right  to  object  to  a  notice  sent 
even  eleven  months  after  the  loss.^  Wliether  due  diligence 
has  been  used  in  giving  the  notice  is  a  question  which  is  ordi- 
narily left  to  the  jury,  to  be  found  from  all  the  circumstances 
in  the  case.^  But  where  the  facts  and  circumstances  bearing 
upon  the  question  of  due  diligence  are  not  in  dispute,  it  be- 
comes a  question  of  law  for  the  court/^ 

§  463.  Notice  by  whom  and  to  ■wrhom  given.  —  The  assured, 
no  other  party  being  interested,  is  the  proper  person  to  give 
the  notice.  But  although  the  notice  is  required  from  the 
insured,  a  notice  signed  by  a  third  person  at  the  request  of 
the  insured,  though  not  on  its  face  appearing  to  have  been  by 
his  request,  is  a  sufficient  compliance  with  the  requirement.* 
If  the  policy  has  been  assigned  by  the  assured  with  the  assent 
of  the  insurers,  the  notice  of  loss  properly  comes  from  the 
assignee.^  And  a  notice  from  tlie  local  agent  of  the  company, 
upon  information  communicated  to  him  by  the  assured,  is 
sufficient.^  In  many  cases  the  policy  designates  the  person  to 
be  notified,  as  the  president,  secretary,  or  agent  of  the  com- 
pany. It  is  essential  that  in  such  cases  the  notice  should 
be  given  to  the  person  designated.'''  Wliere  it  was  provided  in 
a  policy  which  had  been  negotiated  through  a  local  agent  of 
the  defendants  that  notice  of  loss  must  be  given  to  the  man- 
ager, "  or  to  some  known  agent  of  the  company,"  and  before 
the  loss  the  defendants  had  transferred  their  business  to  an- 
other company,  it  was  held  that  a  notice  of  loss  given  to  the 
local  agent  was  sufficient,  the  plaintiff  having  had  no  notice 
of  the  change  in  business,  or  termination  of  the  agency.^ 
But  a  director  is  not  an  "  authorized  "  officer  to  receive  such 
a  notice.^ 

1  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  390. 
a  Edwards  v.  Baltimore  Ins.  Co.,  3  Gill  (Md.),  176. 
>*  Kimball  et  als.  v.  Howard  Fire  Ins.  Co.,  8  Gray  (Mass.),  33. 
*  Stimpson  v.  Monmouth  Mut.  Fire  Ins.  Co.,  47  Me.  349. 

5  Cornell  v.  Leroy,  9  Wend.  (N.  Y.)  163. 

6  West  Branch  Ins.  Co.  v.  Helfenstein,  40  Penn.  St.  289. 

7  Patrick  v.  Farmers'  Ins.  Co.,  43  N.  H.  621 ;  Inland  Ins.  and  Uep.  Co.  v, 
Stauffer,  33  Penn.  St.  397. 

»  Marsden  v.  City  and  County  Ass.  Co.,  1  Law  Rep.  (C.  P.)  232. 
Inland  Ins.  and  Dep.  Co.  v.  Stauffer,  33  Penn.  St.  397. 


NOTICE,  PRELIMINARY  PROOF,  ETC.,  OP  THE  LOSS.     567 

§  464.  Notice  —  Waiver.  —  Although  the  notice  of  loss  must 
be  given,  if  required,  and  as  required,  yet  as  it  is  a  stipula- 
tion for  the  advantage  of  the  insurers,  it  is  in  their  option  to 
waive  any  delinquency  on  the  part  of  the  insured  in  this 
respect.  And  such  a  waiver  will  be  inferred  from  any  con- 
duct on  the  part  of  the  insurers  clearly  inconsistent  with  an 
intention  to  insist  upon  the  failure  to  give  due  notice  ;  as,  for 
instance,  the  payment  of  so  much  as  they  estimate  the  loss 
to  be,  though  not  so  much  as  is  claimed  by  the  insured,  or,  in 
other  words,  a  payment  of  a  part  of  the  amount  claimed  to  be 
due  under  the  policy.^  There  seems  to  be  no  reason  to  doubt 
that  a  waiver  is  equally  effectual  whether  the  notice  be  a  gen- 
eral statute  requirement,  or  is  provided  for  in  the  act  of  incor- 
poration, or  be  a  condition  of  the  contract.  Being  all  alike 
provisions  for  the  benefit  of  the  insured,  they  may  be  waived, 
even  though  the  waiver  apply  to  defects  which  are  in  violation 
of  express  statute  provisions.^  A  vote,  however,  to  indefinitely 
postpone  the  question  of  the  payment  of  a  loss  is  no  waiver 
of  a  condition  in  the  policy  requiring  notice  of  a  loss  within 
thirty  days.  It  is  rather  a  refusal  to  allow  any  thing  on  ac- 
count of  it.  A  failure  to  give  notice  within  the  time  required 
stands  upon  a  different  ground  from  a  failure  to  give  the  notice 
in  due  form.  The  latter  defect  may  be  remedied  by  a  new 
and  more  accurate  form,  but  the  former,  if  insisted  upon  by 
the  insurers,  is  irremediable.  It  may,  indeed,  be  waived,  but 
it  would  be  reasonable  to  require  a  different  kind  of  evidence 
from  that  which  ought  to  be  satisfactory  in  cases  of  a  mere 
defect  in  form.  The  silence  of  tlie  insurers  upon  a  mere 
defect  of  form  might  be  very  injurious  to  the  assured,  since,  if 
the  defect  were  pointed  out  to  him,  he  might  at  once  supply 
the  deficiency,  and  save  himself  from  loss.  A  failure  to  give  the 
notice  in  due  time,  on  the  contrary,  leaves  the  insured  entirely 
at  the  mercy  of  the  insurers,  and  to  point  out  to  him  the  fact 
will  not  in  the  least  aid  him  to  remedy  the  defect.  The  omis- 
sion to  point  it  out  to  him  is  therefore  no  wrong  or  prejudice 

1  Westlake  v.  St.  Lawrence  Mut.  Ins.  Co.,  14  Barb.  (N.  Y.)  207. 

2  Lewis  V.  Monmouth  Mut.  Fire  Lis.  Co.,  52  Me.  492. 


568  insurance:  fire,  life,  accident,  etc. 

or  want  of  good  faith  towards  him,  nor  is  the  insurer  under 
any  legal  obligation  so  to  do.^ 

§  465.  Preliminary  Proofs  —  Time  and  Form  —  "  Due  Notice  "  — 
As  to  the  time  witliin  which  the  preliminary  proofs  must  be 
furnished,  as  in  the  case  of  notice,  if  it  is  specified  definitely 
it  must  be  complied  with.^  And  if  no  definite  time  is  fixed, 
they  are  to  be  furnished  within  a  reasonable  time.  And  a 
failure  to  forward  any  proofs  at  all  within  the  required  time 
will  be  fatal,  although  the  circumstances  were  such,  as  where 
the  insured  in  an  accident  policy,  who  met  with  an  instanta- 
neous death,  and  no  survivor  knew  of  the  existence  of  the 
policy,  that  it  was  impossible  that  such  notice  should  be  given. 
The  court  said  that  this  was  not  a  case  where  the  notice  was 
rendered  impossible  by  the  act  of  God,  for  the  insured  might 
have  provided  for  the  contingency  by  informing  some  one  of 
the  existence  of  the  policy.^  This  certainly  is  applying  the 
rule  with  great  strictness,  and  seems  hardly  consistent  with 
the  recent  decision  in  the  Supreme  Court  of  the  United  States, 
where  it  is  held  that  if  the  insured  be  insane  at  the  time  when 
it  l)ecomes  necessary  to  furnish  his  preliminary  proof,  this  will 
excuse  the  non-performance  of  that  requirement.*  But  inabil- 
ity by  reason  of  loss  of  the  policy  is  no  excuse."  And  if  any 
particular  facts  are  required  to  be  proved,  or  any  particular 
mode  of  proof  is  required,  the  facts  must  be  proved,  and  in 
substantially  the  mode  specified.  No  doubt  the  usual  stipula- 
tions that  the  insured  shall  furnish  certain  preliminary  proofs 
of  loss,  when  loss  has  been  sustained,  are  conditions  prece- 
dent, without  compliance  with  which  no  recovery  for  a  loss 
can  be  had.  But  in  conformity  to  the  general  rule  applica- 
ble to  conditions  precedent,  a  failure  to  comply  with  which 
works  a  forfeiture,  they  will  be  construed  strictly  against  the 

1  Patrick  v.  Farmers'  Ins.  Co.,  43  N.  H.  621 ;  St.  Louis  Ins.  Co.  v.  Kyle,  11 
Mo.  278. 

2  Smith  V.  Haverliill  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  297. 
'  Gamble  v.  Accident  Ass.  Co.,  4  Irish  (Law  Exch.),  204. 

*  Germania  Fire  Ins.  Co.  et  als.  v.  Boy  kin,  12  Wall.  (U.  S.)  433.  And  see 
also  Insurance  Companies  v.  Weides,  14  Wall.  (U.  S.)  375. 

5  Blakeiey  v.  Phoenix  Ins.  Co.,  20  Wis.  205.    And  see  post,  §  475. 


NOTICE,   PRELIMINARY   PROOF,   ETC.,   OF   THE  LOSS.  569 

insurers  who  impose  them,  and  for  whose  benefit  they  are 
imposed,  and  liberally  in  favor  of  the  insured,  upon  whom  they 
impose  burdens  more  or  less  onerous  ;  so  that  the  latter  will 
be  held  to  nothing  in  this  behalf  not  expressly  required  by  the 
terms  of  the  condition.^  And  if  loss  from  certain  enumerated 
causes  is  excepted  out  of  the  risks  assumed  by  the  policy,  it  is 
enough  to  state  that  the  loss  was  by  a  cause  not  excepted,  with- 
out negativing  the  fact  that  the  loss  was  within  the  excepted 
risks.^  "  Due  notice  and  proof  of  death  "  is  such  notice  and 
proof  as  shall  appear  to  the  court  according  to  the  rules  of  evi- 
dence to  be  due,  and  not  such  as  in  the  opinion  of  the  insurers, 
or  other  insurance  companies,  may  be  due.  And  a  pamphlet 
given  to  the  assured  at  the  time  he  gives  notice  of  the  loss, 
setting  forth  the  proof  required,  has  no  binding  force  on  the 
assured,  unless  it  be  shown  that  he  has  agreed  to  it  in  some 
"way,  or  was  so  well  aware  of  these  requirements  that  he  may 
be  presumed  to  have  contracted  with  reference  to  them  as  cus- 
tomary.^ And  a  bare  notice,  not  objected  to  before  trial,  will 
be  sufficient."^  The  proviso  will  be  liberally  construed  to  save 
a  forfeiture;  and  unless  the  policy  expressly  calls  for  specific 
information,  and  sets  forth  what  the  proof  shall  be,  no  particu- 
lar kind  of  proof  can  be  insisted  on,  provided  it  furnish  such 
evidence,  within  the  reasonable  efforts  of  the  insured  to  obtain, 
as  ought  to  be  satisfactory.^  And  if  the  policy  provides  for 
satisfactory  proof  of  the  death,  and  such  further  evidence  as 
the  directors  may  think  necessary  to  establish  their  claim,  this 
can  only  be  understood  to  mean  such  evidence  as  the  directors 

1  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.),  4-34;  Wellcome  v. 
People's  Equitable  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  480;  Mason  v.  Harvey, 
8  Wei.  Hurl.  &  Gor.  (Exch.)  819;  Spring  Garden  Mut.  Ins.  Co.  v.  Evans,  9 
Md.  1;  Roper  v.  Lendon,  1  EU.  &  Ell.  (Q.  B.)  825;  Commonwealth  Ins.  Co.  v. 
Sennett,  41  Penn.  St.  161 ;  Blakeley  v.  Phoeni.x  Ins.  Co.,  20  Wis.  205;  Bumstead 
V.  Dividend  Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  81;  Gilbert  v.  North  American  Ins. 
Co.,  23  Wend.  (N.  Y.)  43;  Battaile  v.  Merchants'  Ins.  Co.,  3  Rob.  (La.)  384; 
Great  Western  Ins.  Co.  v.  Staaden,  26  111.  360. 

2  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.),  434;  Lounsbury  f. 
Prot.  Ins.  Co.,  8  Conn.  459. 

3  Taylor  v.  JEtna  Life  Ins.  Co.,  13  Gray  (Mass.),  434. 
*  Heath  i'.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  257. 

5  Mason  v.  Harvey,  8  Exch.  819  ;  Walsh  v.  Wash.  Mar.  Ins.  Co.,  32  N.  Y. 
427.    And  see  also  the  two  cases  last  cited. 


570  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

might  reasonably,  and  not  such  as  they  might  unreasonably 
and  capriciously  require.^ 

§  466.  Preliminary  Proof  —  Form  and  Mode.  —  We  have  jUSt 
said  that  the  preHminary  proof  must  be  substantially  in  the 
mode  required.  It  has  been,  indeed,  very  generally  held  that 
the  production  of  the  certificate  of  "  the  minister,  &c.,  of  the 
parish,"  that  he  knew  and  verily  believed  that  the  loss  really 
happened  by  misfortune  and  not  by  fraud,  if  required,  was  a 
condition  precedent  to  recovery,  although  he  had  refused,  with- 
out reasonable  cause,  to  give  such  a  certificate.^  So,  if  a  simi- 
lar certificate  be  required  from  the  "  nearest  magistrate,"  ^  or 
from  a  "  magistrate  of  the  city."  *  But  in  such  cases  the 
court  will  not  go  into  a  nice  calculation  to  ascertain  whether 
some  other  magistrate  than  the  one  whose  certificate  is  pre- 
sented does  not  live,  or,  if  he  does  not  live,  have  his  office 
nearer  than  the  certifying  one.  This  is  a  case  for  the  appli- 
cation of  the  maxim,  de  minhnis  non  curat  lex.  The  spirit  of 
the  condition  requires  no  such  mathematical  precision.  Its 
object  is  completely  secured  by  the  proximity  of  the  certifying 
magistrate.  If  such  a  rigid  rule  were  to  be  applied  the  condi- 
tion would  become  impossible  of  execution  if  two  magistrates 
should  be  found  to  be  living  equidistant.^  And  where  two 
magistrates  were  nearer  than  the  one  whose  certificate  was 
procured,  but  they  were  creditors  of  the  insured,  it  was  held 
that  the  magistrate  whose  certificate  was  obtained  was  the 
proper  officer  to  certify.^  Indeed,  in  this  latter  case,  the  court 
were  inclined  to  deny  to  the  provision  tlie  validity  and  effect 
of  a  condition  precedent,  but  rather  to  treat  it  as  directory 
only.  So  where  several  magistrates  had  their  places  of  busi- 
ness nearer  to  the  fire  tlian  the  place  of  business  of  the  magis- 

1  Braunstein  v.  Accidental  Death  Ins.  Co.,  1  B.  &  S.  782. 

2  Worsley  v.  Wood,  6  T.  R.  716. 

3  Cornell  v.  Hope  Ins.  Co.,  3  Martin  (La.),  223  ;  Roumage  v.  Mechanics'  Ins. 
Co.,  1  Green  (N.  J.),  110;  Noonan  v.  Hartford  Fire  Ins.  Co.,  21  Mo.  81 ;  Lead- 
better  V.  iEtna  Ins.  Co.,  17  Me.,  265 

*  Prot.  Ins.  Co.  v.  Pherson,  5  Ind.  417 ;  Scott  v.  Phoenix  Ass.  Co.,  Stuart 
(Lower  Canada),  354. 

5  Turley  v.  North  American  Fire  Ins.  Co.,  2  Wend.  (N.  Y.)  379. 

6  ^tna  Ins.  Co.  v.  Miers,  5  Sneed  (Tenn.),  139.    And  see  post,  §  473. 


NOTICE,   PRELIMINARY   PROOF,   ETC.,    OF  THE  LOSS.  571 

trate  who  certified,  though  there  was  no  evidence  that  their 
places  of  residence  were  nearer,  tlie  certificate  was  held  suffi- 
cient.^  And  in  Cornell  v.  Leroy,^  tlie  testimony  of  a  witness 
that  he  thought  the  certifying  magistrate  lived  nearer  the  in- 
sured premises  tiian  another  magistrate  named,  but  was  not 
certain,  and  did  not  know  but  other  magistrates  resided  nearer 
than  the  certifying  one,  was  held  sufficient  jjrima  facie  proof 
of  the  allegation  that  the  certificate  was  that  of  the  nearest 
magistrate.  In  JEtna  Fire  Insurance  Company  v.  Tyler,^  a  cer- 
tificate which  omitted  such  important  facts,  though  required, 
as  that  the  person  certifying  was  acquainted  with  the  circum- 
stances of  the  insured,  and  also  the  amount  of  damage  sus- 
tained by  him,  was  held  to  be  sufficient.  And  in  Bilbrough 
V.  Metropolis  Insurance  Company,*  it  was  held  too  late  to 
make  the  olijection  that  the  certificate  was  defective  for  the 
first  time  at  the  trial.  So  in  Ketchum  v.  Protection  Insur- 
ance Company ,°  it  was  held  unnecessary  to  prove  that  the  mag- 
istrate certifying  was  not  related  to  the  deceased.  Nor  can 
such  a  certificate  be  exacted  by  a  mere  notice  that  it  will 
be  required,  or  any  thing  short  of  an  express  stipulation  in 
the  contract.^  And  even  the  substitution  of  the  certificate  of 
another  person,  not  a  magistrate,  for  that  of  the  nearest  magis- 
trate, which  is  required  by  the  policy,  will  be  waived  if  received 
and  assented  to  by  the  agent  as  sufficient.'  By  statute  in 
Maine  ^  the  insured  is  to  make  oath  to  his  statement  of  loss 
"  before  some  disinterested  magistrate,"  and  this  obviates  the 
objection  under  contracts  made  in  that  State  that  the  certifi- 
cate of  the  nearest  magistrate,  as  is  frequently  required, 
should  be  obtained.  And  no  informality  in  the  certificate  fur- 
nished under  the  statute,  not  objected  to  at  the  time  when 
the   certificate   is   furnished,  can    afterwards   be  objected   to 

1  Longhurst  v.  Conway  Fire  Ins.  Co.,  Dist.  Ct.  (U.  S.)  Iowa,  Northern  Dist., 
1861,  cited  in  Clarke's  Digest  of  Fire  Insurance  Cases.  See  also  Peoria  Mar.  and 
Fire  Ins.  Co.  v.  Whitehill,  25  111.  466. 

2  9  Wend.  N.  Y.)  163.  a  16  Wend.  N.  Y.)  385. 
*  5  Duer  (N.  Y.  Superior  Ct.),  587.  &  1  Allen  (N.  B.),  136. 
6  Taylor  i'.  ^tna  Life  Ins.  Co.,  13  Gray  (Mass.),  434. 

"  Taylor  v.  Roger  Williams  Ins.  Co.,  51  N.  H.  50. 
8  1861,  0.  34,  §  5. 


572  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

the  claim  of  the  plaintiff.^  And  it  may  be  said,  generally, 
that  the  tendency  of  the  courts  in  the  matter  of  preliminary 
proofs  is  to  hold,  as  in  the  case  of  immaterial  statements,  and 
such  as  do  not  concern  the  risk,  made  warranties  by  express 
stipulation,  that  a  substantial  compliance  is  all  that  is  neces- 
sary ;  and  in  some  cases  the  substitution  of  equivalents  has 
been  allowed.^ 

§467.  Life  Insurance  —  Preliminary  Proof — Family  Physi- 
cian.—  That  the  insurers  may  have  an  opportunity  the  better 
to  investigate  the  causes  of  death  for  their  own  satisfaction, 
if  they  so  desire,  it  is  usually  provided  that  the  preliminary 
proofs  shall  give  the  name  or  names  of  the  attending  physi- 
cian or  physicians ;  and  where  a  friend  and  neighbor  of  the 
deceased,  who  was  a  regular  physician,  but  who  had  abandoned 
the  practice  of  his  profession,  was  called  in  because  it  was 
deemed  advisable  td  have  the  advice  of  a  pliysician  at  once, 
and  before  the  possible  arrival  of  the  regular  family  physician, 
who  had  been  summoned  and  in  due  time  attended,  it  was  held 
that  by  the  attending  physician  was  meant  the  usual  family 
physician,  and  his  name  only  need  be  given  in  the  preliminary 
proof.^ 

§468.  Preliminary  Proof — "Waiver.  —  But  the  incomplete- 
ness and  even  non-production  of  all  preliminary  proof  may 
be  waived,  and  will  be  excused,  on  the  ground  of  waiver,  by 
the  insurers,  if  their  conduct  is  such  as  to  render  the  produc- 
tion or  correction  useless  or  unavailing,  or  as  to  induce  in  the 
mind  of  tlie  insured  a  belief  that  no  proofs  will  be  required, 
or  that  those  already  furnished,  though  in  fact  defective,  are 
satisfactory  and  therefore  sufficient.  If  the  insurers  intend  to 
insist  upon  defects  in  the  preliminary  proof,  they  should  indi- 
cate their  intention  in  such  a  way  that  the  insurer  may  not  be 
deceived  into  a  false  security,  and  at  such  time  that  he  shall 
have  opportunity  to  supply  the  defects.  If  they  wish  further 
information  they  should  point  out  in  what  respect,  or  they  will 
be  presumed  to  be  content  with  what  has  been  furnished.^ 

1  Bailey  v.  Hope  Ins.  Co.,  56  Me.  474.  2  See  ante,  §  163. 

»  Gibson  v.  American  Mut.  Life  Ins.  Co.,  37  N.  Y.  (10  Tiff.)  580. 

*  Charleston  Ins.  Co.  v.  Neve,  2  McMullen  (S.  C),  237 ;  Lewis  v.  Monmouth 


NOTICE,    PRELIMINARY    PROOF,   ETC.,    OP   THE   LOSS.  573 

And  the  burden  of  proof  of  notice  of  the  defect  is  on  the 
insurers.  "It  is  to  be  observed,"  say  the  court  in  another 
case,^  "  that  it  is  the  duty  of  the  insurers,  pending  the  consid- 
eration of  the  proofs  of  loss,  to  bear  themselves  with  all  good 
faith  towards  the  claimant,  and  if  they  are  dissatisfied  with 
the  proof  furnished,  and  have,  or  have  not,  the  right  to  de- 
mand further  proof  before  their  liability  becomes  fixed,  they 
ought  to  make  known  to  the  assured  the  fact  and  the  nature 
of  these  demands  without  unnecessary  delay.  Otherwise  they 
will  be  held  to  have  waived  their  rights  in  this  regard."  As 
deficiencies  in  the  preliminary  proof  may  be  supplied  when- 
ever objection  to  pay  the  loss  is  put  upon  that  ground,  good 
faith  on  the  part  of  the  insurers  requires  that,  if  they  mean 
to  insist  upon  formal  defects,  they  should  apprise  the  assured 
of  the  deficiencies,  or  put  their  refusal  upon  that  ground,  as 
well  as  others,  so  as  to  give  iiim  an  opportunity  to  supply  the 
defect  before  it  is  too  late.^  Thus  where  the  insurers  refuse 
to  pay  on  special  grounds,  as  that  the  contract  was  never 
completed,^  or  that  the  insured  had  no  interest,'^  or  any  other 
grounds  having  no  reference  to  the  sufficiency  or  insufficiency 
of  tiie  preliminary  proof,  it  is  a  waiver  of  their  right  to  object 
to  any  deficiency  in  this  particular.^  So  upon  the  ground  of 
inconsistency  with  an  intention  to  require  further  or  better 
proofs,  part  payment  of  a  loss,  without  objection  to  the  absence 
or  sufficiency  of  preliminary  proof,  is  a  waiver.^ 

§469.  Preliminary  Proof — Waiver  —  General  Denial  of  Lia- 
bility. —  A  distinct  denial  of  liability  and  refusal  to  pay,  on  the 

Mut.  Fire  Ins.  Co.,  52  Me.  492;  Post  v.  JEtna  Ins.  Co.,  43  Barb.  (N.  Y.)  351 ; 
Killips  V.  Putnam  Fire  Ins.  Co.,  28  Wis.  472. 

1  Harris  v.  Phoenix  Ins.  Co.,  85  Conn.  310. 

2  ^Etna  Fire  Ins.  Co.  v.  Tyler,  IG  Wend.  (N.  Y.)  85;  Bodle  t;.  Chenango 
County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  53;  St.  Louis  Ins.  Co.  v.  Kyle,  11  Mo. 
278;  O'Niel  v.  Buffivlo  P^ire  Ins.  Co.,  3  Comst.  (N.  Y.)  122;  Clark  v.  New  Eng- 
land Ins.  Co.,  6  Cush.  (xVIass.)  342  ;  Dawes  v.  North  River  Ins.  Co.,  7  Cow.  (N.  Y.) 
426;  Insurance  Co.  v.  Connor,  5  Harris  (Penn.),  136;  McMasters  v.  West  Ches- 
ter County  Mut.  Ins.  Co.,  25  Wend.  (N.  Y.)  383. 

3  Tayloe  v.  Merchants'  Ins.  Co.,  9  How.  (U.  S.)  390. 

*  Coursin  i-.  Penn.  Ins.  Co.,  46  Penn.  323. 

*  Heath  v.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  2-57. 

6  Westlake  v.  St.  Lawrence  County  Mut.  Ins.  Co.,  14  Barb.  (N.  Y.)  206. 


574:  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

ground  that  there  is  no  liability,'  is  a  waiver  of  the  condition 
requiring  proof  of  the  loss.  It  is  equivalent  to  a  declaration 
that  they  will  not  pay  tliough  the  proof  be  furnished ;  and  to 
require  the  presentation  of  proof  in  such  a  case,  when  it  can 
be  of  no  importance  to  either  party,  and  the  conduct  of  the 
party  in  favor  of  whom  the  stipulation  is  made  has  rendered 
it  practically  superfluous,  is  but  an  idle  formality,  the  observ- 
ance of  which  the  law  will  not  sustain.  So  if  the  insurers 
decline  to  pay  without  giving  any  reason  upon  which  to  rest 
their  refusal,  such  a  refusal,  by  necessary  implication,  gives 
the  assured  to  understand  that  the  production  of  preliminary 
proof  will  be  useless, —  an  idle  ceremony  which  the  law  will  not 
require  him  to  perform.^  Even  where  there  has  been  no  refusal 
to  pay  the  loss,  the  preliminary  proof  being  insufficient,  if 
without  objection  on  that  account  the  insurers  proceed  to 
investigate  the  loss  for  themselves,  it  has  been  held  tiiat  the 
evidence  so  obtained  shall  inure  to  the  benefit  of  the  insured 
as  part  of  his  preliminary  proof.^  So,  if  the  insurers  throw 
any  obstacles  in  the  way  of  the  insured  in  his  efforts  to 
bring  the  proofs  within  the  requirements  of  the  condition. 
Thus  where  imperfect  proofs  have  been  filed  within  the  re- 
quired time,  and  the  insured  afterwards,  upon  being  so 
informed,  requests  copies,  which,  after  repeated  evasions,  are 
finally  refused,  corrected  proofs,  filed  after  the  expiration  of 
the  limited  time,  will  be  sufficient.  In  other  words,  the  insur- 
ers will  not  be  allowed  to  insist  upon  a  deficiency  which  they 
have  contributed  to  produce.^  And  of  course  the  waiver  of 
the  proof  is  a  waiver  of  the  condition  that  payment  is  not  to  be 
made  till  a  limited  time  after  the  proof;  so  that,  in  such  case, 
suit  may  be  brought  at  once  upon  the  denial  of  liability,  al- 
though the  time  within  which,  after  proof  of  loss,  the  payment 
would  be  demandable  may  not  have  expired.* 

§  470.   Preliminary    Proof  —  Particular    Defects     pointed    out, 

1  Allegre  v.  Maryland  Ins.  Co.,  6  H.  &  J.  (Md.)  408;  Tayloe  v.  Merchants' 
Ins.  Co.,  9  How.  (U.  S.)  390 ;  Graves  v.  Wash.  Mar.  Ins.  Co.,  12  Allen  (Mass.), 
391. 

'  Sexton  V.  Montgomery  County  Mut.  Ins.  Co.,  9  Barb.  (N.  Y.)  191. 

3  Cornell  v.  Le  Roy,  9  Wend.  (N.  Y.)  163. 

*  Nor.  &  N.  Y.  Transp.  Co.  v.  Western  Mass.  Ins.  Co.,  34  Conn.  561. 


NOTICE,   PRELIMINARY   PROOF,   ETC.,    OF   THE   LOSS.  575 

Waiver  of  others.  —  So  where  the  insurers  place  their  refusal 
to  pay  the  loss  expressly  upon  some  particular  defect  in  the 
preliminary  proofs,  they  cannot  afterwards  object  to  other 
defects  not  then  specified  ;  ^  or  upon  grounds  entirely  distinct 
from  such  defects,  making  no  objection  to  these,  as  where  the 
insured  gives  notice  of  his  loss,  and,  having  lost  his  policy, 
requests  a  copy,  for  whicli  he  expresses  his  willingness  to  pay, 
in  order  that  he  may  furnish  tl)o  necessary  proofs,  but  receives 
a  reply  stating  that  his  claim  is  rejected  for  the  reason  that 
the  policy  had  been  cajicelled  for  non-payment  of  assessments. 
Such  action  on  the  part  of  the  insurers  relieves  the  insured 
from  the  necessity  of  furnishing  any  preliminary  proof."^  So, 
if  the  refusal  to  pay  is  upon  the  ground  that  the  property  lost 
was  not  included  in  the  risk ;  ^  or  that  the  insured  has  for- 
feited his  right  to  recover  by  fraud.'^ 

§  471.  Preliminary  Proof — "What  is  not  a  Waiver.  —  But  a 
general  statement  of  a  travelling  agent  to  the  insured  that 
"  the  matter  would  be  all  right  with  the  company,"  will  not 
amount  to  a  waiver  of  "  notice  specifying  the  amount  of  loss, 
the  manner  of  it,  and  other  particulars."  °  Nor  will  a  reply 
by  the  president  of  the  company  to  the  question.  What  further 
proof  is  required  ?  that  the  policy  will  show,  be  a  waiver  of 
proof  or  of  defects  tlierein.^  Nor  is  a  reply  of  tlie  president 
to  an  explanation  of  the  reason  of  failure  to  give  notice  that 
the  company  would  be  disposed  to  do  what  is  right  amount  to 
such  waiver.''  And  a  waiver  of  notice  is  not  a  waiver  of  the 
preliminary  proof,  or  of  the  particular  account,  when  they  are 
treated  by  tlie  policy  as  distinct  and  separate  acts.^ 

§  472.   Preliminary  Proof — Evidence.  — In  Hinken  v.  Mutual 

1  Phillips  V.  Prot.  Ins.  Co.,  14  Mo.  220. 

2  Blake  v.  Exchange  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265  ;  Hartfora  Prot.  Ins. 
Co.  V.  Harmer,  22  Ohio,  452 ;  Noyes  v.  Washington  County  Mut.  Ins.  Co.,  30 
iVt.  659. 

8  FrankUn  Fire  Ins.  Co.  i;.  Coates,  14  Md.  285. 

*  Peoria  Mar.  and  Fire  Ins.  Co.  v.  Whitehill,  25  lU.  466. 

5  Bogle  V.  North  Carolina  Mut.  Ins.  Co., 7  Jones,  Law  (N.  C),  373. 

6  Spring  Garden  Mut.  Ins.  Co.  v.  Evans,  9  Md.  1. 

-  Smith  I'.  Haverhill  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  297. 
8  Desilver  v.  State  Mut.  Ins.  Co.,  38  Penn.  St.  130. 


576  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

Benefit  Life  Insurance  Company,^  a  question  arose  as  to  the 
amount  of  evidence  necessary  to  sustain  a  verdict  in  favor 
of  the  insured  upon  tlie  allegation  of  having  furnished  the 
required  preliminary  proof.  And  it  was  held  that,  wlien  at 
the  trial  a  witness  testified  that  he  had  delivered  the  prelimi- 
nary proofs  within  the  required  time,  but  nothing  further 
appears  as  to  what  they  were,  except  that  they  then  were  in 
the  possession  of  the  insurers,  and  that  no  objection  had  been 
made  known,  this  was  evidence  that  the  preliminary  proofs 
were  in  accordance  with  the  requirements"  of  the  policy,  and 
sufficient  to  sustain  the  verdict.^ 

§  478.  Preliminary  Proof — Stipulation  as  to  Waiver  —  And 
the  insurers  have  been  held  to  have  waived  their  right  to  insist 
upon  defects  in  preliminary  proof,  even  though  in  one  of  the 
by-laws  it  is  expi-essly  agreed  and  declared  by  the  parties  that 
no  condition,  stipulation,  or  clause  contained  in  the  policy 
shall  be  waived  except  by  writing  indorsed  on  the  policy,  and 
all  the  by-laws  are  printed  as  conditions  of  insurance,  and  pay- 
ment of  loss  is  made  subject  to  proof  thereof  in  conformity  to 
the  conditions,  it  appearing  that  after  informal  and  defective 
preliminary  proofs  had  been  delivered  in,  the  president  and 
secretary  of  tiie  company  examined  the  premises,  and  had 
interviews  with  the  insured  before  the  expiration  of  the  time 
within  which  said  proofs  were  to  be  given,  and  neither  they 
then,  nor  the  insurers  afterwards,  made  any  objection  to  the 
form  or  sufficiency  of  the  preliminary  proofs,  while  there  was 
yet  time  to  remedy  defects,  but  put  their  refusal  to  pay  on 
other  and  distinct  grounds.  Regarding  the  case  as  one  of  some 
difficulty,  the  court  say :  "  How  far  the  provisions,  the  form 
of  the  notice  and  proofs  of  loss,  after  a  valid  contract  has 
been  made  and  a  loss  taken  place  under  it,  can  be  regarded 
as  conditions  of  the  contract  itself,  it  is  not  necessary  to 
determine,  nor  whether  their  being  classed  under  the  designa-. 
tion  of  conditions  of  insurance  could  change  the  nature  and 
purpose  of  the  stipulations  themselves  ;  for  it  seems  to  us 
that  the  question  is  not  as  to  the  provisions  of  the  contract, 

1  N.  Y.  Ct.  of  App.,  2  Ins.  L.  J.  230. 

2  See  also  Waruer  v.  Peoria  Mar.  and  Fire  Ins.  Co.,  14  Wis.  318. 


NOTICE,  PRELIMINARY  PROOF,  ETC.,  OF  THE  LOSS.    577 

but  as  to  the  performance  of  the  provisions.  The  plaintiff  is 
not  seeking  to  set  up  a  contract  from  which  a  material  provi- 
sion has  been  omitted  by  the  oral  consent  of  the  officers  of  the 
company.  The  policy  contained  the  usual  provisions  as  to 
notice  and  proofs  of  loss.  Upon  the  happening  of  the  loss 
tiie  plaintiff  sent  to  the  defendants  certain  notices  and  proofs, 
in  pursuance  of  the  requisition  of  the  by-laws  upon  the  sub- 
ject. If  the  notices  were  defective,  good  faith  on  the  part  of 
the  underwriters  required  them  to  give  notice  to  the  insured. 
If  they  failed  to  do  so  ;  if  they  proceeded  to  negotiate  with  the 
plaintiff  without  adverting  to  the  defects  ;  if,  still  further,  they 
put  their  refusal  to  pay  on  otiier  and  distinct  grounds,  —  they 
are,  upon  familiar  principles  of  law,  estopped  to  set  up  and 
rely  upon  the  defective  notices.  The  law  assumes  that  the 
notices  were  correct,  and  will  not  listen  to  the  defendant  when 
he  seeks  to  show  the  contrary.^  If  the  defendant  relied  upon 
any  exemption  from  the  obligations  of  the  policy,  or  any  modi- 
fication of  them  by  the  agents  or  officers  of  the  company,  or 
any  addition,  he  must  show  such  exemption,  modification,  or 
addition,  by  indorsement  upon  the  policy.  But  the  question 
whether  a  stipulation  as  to  notice  and  proofs  of  loss  has  been 
fulfilled,  or  whether  the  defendant  is  in  a  condition  to  be  heard 
upon  that  question,  must  be  tested  by  the  ordinary  rules  of 
law.  There  is  a  time  when  objections  in  matters  of  form  must 
be  taken.  If  they  are  not  then  made,  they  never  can  be  made. 
The  law  does  not  say  the  procedure  was  perfect,  but  that  the 
question  is  not  open.  The  adherence  to,  and  liberal  applica- 
tion of  this  principle,  are  necessary  to  the  maintenance  of  good 
faith  and  fair  dealing  in  judicial  proceedings."  ^  It  is  worthy 
of  observation  that  this  is  the  language  of  a  court  which  has 
resolutely  resisted  what  appears  to  be  the  general  tendency  to 
apply  the  doctrines  of  waiver  and  estoppel  in  favor  of  the 
insured,  where  there  has  been  a  clear  failure  to  comply  with 
the  express  and  essential  conditions  of  the  contract,  but  where, 

1  Vos  V.  Robinson,  9  Jo)ins.  (N.  Y.)  192;  iEtna  Fire  Ins.  Co.  v.  Tyler,  16 
Wend.  (N.  Y.)  401 ;  Heatli  v.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  257;  Clark  v. 
New  England  Mut.  Fire  Ins.  Co.,  (3  Cush.  (Mass.)  342. 

2  Blake  v.  Exchange  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265. 

37 


578  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

nevertheless,  it  would  be  inequitable  to  permit  the  insurers  to 
avail  themselves  of  such  a  failure  in  defence  of  a  claim  for 
damages. 

§  474.  Particular  Account.  —  Tiie  particular  account  of  the 
loss  or  damage,  usually  required  as  a  part  of  the  preliminary 
proof,  demands  some  attention.  What  and  how  particular  this 
must  be  will  depend  upon  the  nature  of  the  property  insured. 
If,  for  instance,  it  be  a  dwelling-house,  a  statement  that  it  was 
totally  destroyed  on  a  given  day,  will  be  sufficient,  if  there 
was  in  fact  a  total  loss.  If,  however,  there  is  a  partial  loss, 
the  extent  of  the  damage  should  be  stated.  So  in  cases  of 
insurance  upon  merchandise  and  personal  effects  generally, 
where  the  loss  is  only  partial,  the  particulars  of  the  nature, 
quality,  and  quantity  of  the  effects,  and  of  the  damage  sus- 
tained, should  be  given,  in  order  to  aid  the  insurers  to  form 
a  judgment  as  to  the  amount  of  the  loss.  It  is  an  account,  in 
its  technical  sense,  of  the  amount  that  is  required,  and  not  a 
statement,  conjectural  or  otherwise,  of  the  real  or  supposed 
causes  of  the  loss  or  damage.  In  other  words,  the  particular 
account  is  to  be  an  account,  and  not  an  accounting  for  the  loss 
or  damage.  If  this  were  not  clear  upon  the  words  themselves, 
the  usual  subsidiary  clause  making  it  compulsory  upon  the 
insured  to  produce,  in  addition  to  his  account,  if  required,  his 
books  of  account  and  other  vouchers,  would  seem  to  leave  no 
doubt  upon  the  true  construction  of  the  provision.  Of  course 
it  should  be  stated  what  was  the  cause  of  the  loss  or  damage, 
so  far  as  to  bring  it  within  the  risk  insured  against,  as  that  it 
was  by  fire,  or  by  death,  or  by  flood,  or  by  storm,  or  by  some 
particular  accident,  as  the  case  may  be,  but  not  to  the  extent 
of  stating  how  it  happened  or  was  occasioned.^  It  is  also  to 
be  borne  in  mind,  that  with  reference  to  notice,  particular 
accounts,  and  preliminary  proofs  generally,  courts  will  not 
require  the  insured  to  do  more  than  is  clearly  required  by  the 
terms  of  the  contract ;  and,  whether  these  be  general  or  par- 
cular,  will  treat  them  as  conditions  imposing  burdens,  to  be 
for  that  reason  construed  liberally  in  favor  of  those  upon  whom 

1  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  434. 


NOTICE,   PRELIMINARY   PROOF,   ETC.,    OF   THE   LOSS,  579 

the  burdens  are  imposed. ^  And  they  will  give  due  weight  to 
the  fact  whether,  in  the  particular  case,  the  insurers  have 
greater  or  less  facilities  for  obtaining  the  required  iuformatiou 
irrespective  of  the  communications  of  the  insured.  Thus,  in 
fire  insurance,  where  the  insurers  or  their  agents  may  make 
personal  inspection,  they  will  not  require  so  great  particularity 
as  in  marine  insurance,  where,  not  unfrequeutly,  the  inspection 
is  wiioUy  impracticable.^ 

§475.  Particular  Account  —  "What  is  required.  —  The  "par- 
ticular account  of  loss  or  'damage"  does  not  require  a  state- 
ment of  the  manner  in  which  the  loss  happened,  or  of  the  cause 
or  the  occasion  of  it ;  nor  need  it  negative  excepted  causes  of 
loss.  The  fact  of  loss  within  the  risk,  the  subject-matter,  and 
the  amount  of  injury  sustained,  are  all  that  are  necessary.^ 
Nor  need  it  state  the  interest  of  the  insured,  unless  specially 
required.^  A  general  statement  of  the  aggregate  value  of  the 
property  lost,  which  consisted  of  divers  articles,  has  been  held 
to  be  an  excuse  for  an  insufficient  "  particular  account,"  where 
from  the  loss  of  Itooks  and  accounts,  or  for  other  causes,  no 
better  or  more  detailed  statement  could  be  made.°  But  the 
account  should  not  fail  to  give  the  amount  of  loss,  and  to  state 
the  fact  tiiat  it  was  upon  the  property  insured.^ 

§  476.  Loss  —  When  Suit  may  be  brought  —  When  Proof  made. 
—  If  the  loss  be  made  payable  at  a  certain  specified  time 
after  the  rendition  of  the  requisite  preliminary  proof,  no  action 
brought  before  the  lapse  of  that  time  can  be  maintained."  And 
if  new  proofs  are  furnished  in  the  place  of  defective  ones,  the 

i  Heath  v.  Franklin  Ins.  Co.,  1  Cash.  (Mass.)  257;  Catlin  v.  Springfield  Fire 
Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  i34;  Lawrence  v.  Ocean  Ins.  Co.,  11  Johns. 
(N.  Y.)  260;  Norton  v.  Rensselaer  and  Saratoga  Ins.  Co.,  7  Cow.  (N.  Y.)  645. 

2  HaflF  V.  Mar.  Ins.  Co.,  4  Johns.  (N.  Y.)  132. 

3  Catlin  V.  Springfield  Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  434. 

*  Gilbert  v.  North  American  Ins.  Co.,  23  Wend.  (N.  Y.)  43;  Miller  v.  Eagle 
Life  Ins.  Co.,  2  E.  D.  Smith,  208. 

&  McLaughlin  v.  Washington  County  Ins.  Co.,  23  Wend.  (N.  Y.)  525  ;  Norton 
V.  Rensselaer  and  Saratoga  Ins.  Co.,  7  Cow.  (N.  Y.)  645;  Bumstead  v.  Dividend 
Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  81 ;  Hofiman  v.  Mma.  Fire  Ins.  Co.,  1  Robt.  (N.  Y.) 
501 ;  s.  c.  32  N.  Y.  405. 

6  Lycoming  Countj'  Mut.  Ins.  Co.  v.  Updegraff",  40  Penn.  St.  311. 

■?  Harris  v.  Prot.  Ins.  Co.,  1  Wright  (OhioJ,  548. 


580  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

time  within  which  the  action  may  be  brouglit  is  to  be  reck- 
oned from  the  presentation  of  the  new  proofs ;  ^  but  if  the  pol- 
icy requires  notice  of  loss,  making  no  mention  of  the  proof  or 
time  of  payment,  the  loss  will  be  payable  in  a  reasonable  time 
after  notice.^  If  the  policy  require  that  the  particular  account 
shall  be  delivered  in,  the  insured  must  see  to  it,  at  his  peril, 
that  the  account  arrives  at  the  office  within  the  required  time. 
A  general  request  of  the  company  that  all  communications  and 
notices  be  addressed  to  them  postpaid,  will  not  excuse  such  an 
address  of  such  a  particular  account.^ 

§  477.  Preliminary  Proof  —  Fraud  and  false  Sw^earing  —  Pay- 
ment by  Mistake.  —  The  fraud  and  false  swearing  in  the  pre- 
liminary proof,  which  it.  is  sometimes  provided  shall  prevent 
a  recovery,  is  intentional,  and  with  the  purpose  of  defrauding. 
It  maybe  done  with  reference  to  any  material  matter, —  by 
overvaluing  the  loss,  by  undervaluing  what  is  saved,  by  swear- 
ing to  the  loss  of  property  which  was  not  in  existence,  and  in 
divers  other  ways.^  A  claim  honestly  made  is  not,  under  the 
condition  against  fraud,  invalidated  on  account  of  error,  or 
even  some  degree  of  exaggeration  or  overestimate ;  but  if  the 
insured,  with  reference  to  the  quantity  or  the  value  of  the 
goods  insured,  makes  a  claim  which  he  knows  to  be  false  and 
unjust,  then  he  cannot  recover  any  thing.^  And  the  mere  fact 
that  tiie  amount  of  loss,  as  found  by  the  jury,  is  less  than  tliat 
stated  by  the  insured  in  his  preliminary  proof,  is  not  sufficient 
to  sustain  tlie  defence  of  false  swearing,^  even  though  the  dis- 
crepancy be  so  considerable  as  to  amount  to  two-fifths;^  though 
such  a  discrepancy  would  be  evidence  bearing  upon  sucli  issue, 
which  the  insured  would  be  called  upon  to  explain.^     But  in 

1  Kimball  v.  Hamilton  Ins.  Co.,  8  Bosw.  (N.  Y.  Superior  Ct.)  495. 

'  Toofey  v.  Railway  Passenger  Assurance  Co.,  U.  S.  C.  Ct.,  Southern  Dist. 
111.,  2  Ins.  L.  J.  27(3. 

3  Hodgkins  v.  Mont.  County  Mut.  Ins.  *Co.,  34  Barb.  (N.  Y.)  213. 

*  Moadinger  v.  Mechanics'  Mut.  Ins.  Co.,  2  Hall  (Superior  Ct.  N.  Y.),  490  ; 
Marion  v.  Great  Rep.  Ins.  Co.,  35  Mo.  148 ;  Franklin  Fire  Ins.  Co.  v.  Updegraff, 
43  Penn.  St.  350;  Park  v.  Phoenix  Ins.  Co.,  19  Upper  Canada  (Q.  B.),  110. 

&  Per  Cockburn,  C.  J.,  Nisi  Priuf!,  Chapman  v.  Pole,  22  L.  T.  n.  s.  307. 

6  Franklin  Ins.  Co.  v.  Culver,  6  Ind.  137. 

T  Moore  v.  Prot.  Ins.  Co.,  2  Me.  77. 

^  Hoffman  v.  West.  Mar.  Fire  Ins.  Co.,  1  La.  An.  216 ;  Marchesseau  v.  Merch- 
ants' Ins.  Co.,  1  Hob.  (La.)  438. 


v^ 


NOTICE,   PRELIMINARY  PROOF,   ETC.,   OF   THE  LOSS.  581 

Levy  V.  Baillie/  a  rule  nisi  for  a  new  trial  was  made  absolute 
where  tlie  claim  sworn  to  was  X  1,085,  and  the  amount  found 
by  the  jury  was  £500,  on  the  ground  that  that  was  in  effect 
a  verdict  for  the  defendant  under  the  condition.  And  if  the 
sworn  statement  discloses  a  ground  of  defence  for  the  insurer, 
he  may  avail  himself  of  it,  and  the  insurer  will  be  bound  by 
his  statement  at  the  trial,  unless  an  amended  statement  is  fur- 
nished to  the  insurers  before  that  time.^  And  if  payment  of 
the  loss  be  obtained  by  means  of  fraudulent  proofs,  the  money 
may  be  recovered  back  in  an  action  for  the  deceit.  In  such  an 
action  it  was  ruled  that  the  defendants  might  be  held  liable, 
even  though  the  plaintiffs  did  not  rely  exclusively  upon  their 
statements,  but  were  partly  induced  by  other  statements  or 
proofs  to  make  the  payment.  It  is  sufficient,  upon  this  point, 
*'  if  the  plaintiffs  so  far  relied  on  these  statements  (of  the 
defendants)  that  they  would  not  have  paid  the  money  had  it 
not  been  for  these  statements."  If  the  representations  of  the 
defendants  were  calculated  and  intended  to  induce  the  plain- 
tiffs to  alter  their  condition  by  parting  with  their  money,  and 
had  that  effect,  it  would  be  immaterial  that  other  representa- 
tions and  influences  were  also  brought  to  bear,  wliich  may  have 
had  a  tendency  towards  the  same  general  results.^ 

1  7  Bing.  349. 

2  Campbell  v.  Chapter  Oak  Fire  Ins.  Co.,  10  Allen  (Mass.),  213;  Irving  v. 
Excelsior  Fire  Ins.  Co.,  1  Bosvv.  (N.  Y.  Superior  Ct.)  507. 

3  Hartford  Live  Stock  Ins.  Co.  v.  Mathews  and  another,  102  Mass.  221. 


Note.  —  Since  this  chapter  was  printed,  the  cases  of  France  v.  Mtna.  Life  Ins. 
Co.  and  Same  to  use  of  Selvage  v.  Same,  tried  in  the  United  States  Circuit  Court 
for  the  Eastern  District  of  Pennsylvania,  before  Cadwalader,  J.,  have  come  to 
hand,  in  which  the  following  points  arose,  and  were  decided  as  stated  in  the  syl- 
labus of  the  cases.     2  Ins.  L.  J.  657. 

The  defendant  issued  two  policies  upon  the  life  of  the  deceased,  for  tlie  bene- 
fit of  his  sister,  one  of  the  plaintiffs,  wlio  paid  the  premiums.  At  the  time  the 
■policies  were  issued,  and  afterward,  until  the  death  of  the  assured,  the  sister  was 
a  married  woman,  and  in  no  respect  dependent  upon  her  brother,  nor  was  he  in 
any  way  indebted  to  her. 

Held,  that  if  the  deceased,  at  the  time  of  the  insurance,  was  unmarried  and 
without  issue  or  parent  living,  the  insurance  for  the  benefit  of  his  sister  was  valid, 
if  the  risk  insured  was  properly  described  in  the  policies. 

The  policies  each  contained  a  clause  providing  that  the  proposal,  answers,  and 


582  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

declaration  in  tlie  application  should  be  a  part  of  the  policy,  and  that  if  they  were 
false  or  fraudulent,  the  policy  siiould  be  void. 

Held,  that  the  clause  in  the  policies  made  the  answers  to  the  questions  part 
of  the  contract,  and  that  they  thus  had  the  effect  of  warranties,  and  that  if  tliey 
were  wholly  or  in  any  material  respect  false  or  fraudulent,  the  plainiiHs  could 
not  recover ;  and  that  by  the  expression  "  in  any  material  respect,"  the  court 
must  be  understood  as  meaning  in  any  respect  or  degree  material  to  the  risk 
insured,  whether  as  to  age  or  health,  or  otherwise  howsoever. 

The  deceased,  in  answer  to  a  question  in  the  application  as  to  whether  he  had 
ever  had  any  of  certain  specified  diseases,  among  which  was  rupture,  answered, 
"  None." 

Held,  that  if  lie  was  ruptured  at  the  time,  or  at  any  such  previous  period  that 
the  rupture  may  have  been  material  to  any  question  of  the  soundness  of  his 
health,  when  his  life  was  insured,  or  if,  at  that  time  or  within  such  period,  he 
wore  a  truss  in  order  that  it  might  repress  hernial  extrusion,  the  verdict  should 
be  for  the  defendant. 

The  deceased,  in  answer  to  questions  in  his  applications,  stated  that  his  age 
was  thirty  years. 

Held,  that  if  the  answers  to  the  questions  were  materially  untrue  as  to  the 
age  of  the  applicant,  the  policies  are  void,  and  that  if  he  was  thirty-seven,  or  even 
thirty-five  years  old,  the  difference  was  not  immaterial. 

Held,  that  if  the  policj'  had  been  assigned  by  the  beneficiary  to  Selvage,  before 
the  death  of  the  assured,  as  security  for  a  loan,  the  defendants  could  not  be 
estopped  from  denying  their  liability  as  to  the  amount  of  the  loan,  by  any"  thing 
alleged  to  have  occurred  after  the  death  of  the  assured. 

If  the  agent  was  the  agent  of  the  defendant  to  receive  preliminary  proofs,  and 
having  received  them,  knew  that  Selvage  was  negotiating  with  the  beneficiary 
for  the  purchase  of  the  policy,  and  by  representing  to  him  that  the  insurance 
would  be  paid,  induced  him  to  buy  it,  and  if  what  passed  between  them  was 
mutually  understood  and  intended  as  a  waiver  of  any  such  objections  as  have 
been  made  on  this  trial,  the  plaintitTs  may  recover,  although  the  policy  would 
otherwise  have  been  void,  for  the  reasons  stated  in  the  objections.  Verdict  in 
first  case  for  defendant ;  in  second,  for  plaintiffs. 

There  was  an  intimation  from  the  learned  judge  that  his  ruling  on  the  third 
point  was  too  favorable  for  the  plaintiffs  ;  and  the  ground  upon  which  he  refused 
to  rule  that  there  cohld  be  no  insurable  interest  in  such  a  case  may  be  inferred 
from  the  following  observation  immediately  following  the  ruling  above  stated  : 
"  There  are  persons  who  may  be  described  as  presumptively  next  of  kin,  and 
who  can  insure  the  lives  of  their  relatives." 


LIMITATION   OP   SUIT    AS   TO   TIME   AND    PLACE,   ETC.  583 


CHAPTER  XXI. 

OP   LIMITATION   OF   SUIT   AS   TO   TIME   AND   PLACE.       ARBITRATION. 

§  478.  Limitation  as  to  Time  —  From  Loss.  —  A  condition  in 
a  policy  of  fire  insurance,  that  no  action  against  the  insurers 
for  the  recovery  of  any  claim  upon  the  policy  shall  be  sustained, 
unless  commenced  within  a  certain  period  after  the  loss  shall 
have  occurred,  and  that  the  lapse  of  this  period  shall  be  con- 
clusive evidence  against  the  validity  of  any  claim  asserted,  if 
an  action  for  its  enforcement  be  subsequently  commenced,  is 
valid,  and  is  not  in  contravention  of  the  policy  of  statutes  of 
limitation.  It  stands  upon  the  same  grounds  as  other  condi- 
tions precedent. 

There  is  no  principle  of  common  law  forbidding  such  a 
condition.  Originally  there  was  no  limitation  to  actions.  The 
first  statute  of  limitations,  which  has  been  substantially  fol- 
lowed, provided  that  suits  in  certain  cases  should  be  brought 
within  six  years,  and  not  afterwards.  But  there  is  nothing 
in  tlie  act  which  forbids  a  limitation  short  of  this  period, 
by  agreement  of  parties.  It  only  prohibits  the  *suit  after  six 
years.  There  can  be  no  doubt  that,  prior  to  the  statute,  it 
would  have  been  competent  for  the  parties,  by  a  clause  in 
their  contract,  to  limit  the  time  within  which  suit  might  be 
brought.  There  is  nothing  in  the  act,  necessarily  or  by  fair 
construction,  taking  away  the  right.  And  the  adoption  of  such 
a  condition  is  based  upon  grounds  of  prudence  and  policy 
which  must  challenge  the  general  approval.  Insurance  com- 
panies are  always  liable  to  be  imposed  upon  by  fraud.  It  is 
often  very  difficult  to  detect  the  fraud,  and  to  obtain  evidence 
to  substantiate  it  in  a  court  of  justice  ;  and  the  greater  the 
lapse  of  time  the  greater  the  difficulty.  It  is  therefore  a  wise 
and  provident  precaution  to  take,  —  one  which  the  law  ought, 
if  possible,  to  uphold,  —  to  limit,  by  the  terms  of  their  policies, 


684  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  time  within  which  actions  shall  he  hrought,  as  a  neces- 
sary protection  to  themselves  against  fraud  ;  and  they  have  the 
same  right  to  introduce  such  a  stipulation  as  to  introduce  any 
other.^  Even  language  less  explicit,  as  that  the  insured  may 
hring  his  action  within  a  limited  time,  has  been  held  to  bar  an 
action  brought  after  that  time.^  And  the  limitation,  being  part 
of  the  contract,  applies  whatever  may  be  the  form  of  the  suit.^ 
§  479.  Limitation  —  From  Time  -when  Loss  becomes  Due  — 
From  Proof.  —  In  some  cases  it  is  provided  that  a  suit  is  not 
to  be  brought  until  the  expiration  of  a  certain  time  after  the 
loss  becomes  due  ;  and  it  has  been  held  tliat  where  a  loss,  sub- 
ject to  such  provision,  was  allowed,  payable  in  sixty  days,  suit 
brought  therefor  two  months  after  the  allowance  was  properly 
brought.  The  demand  is  due  from  and  after  the  determination 
of  the  amount  or  allowance.  It  is  payable  at  the  expiration  of 
the  time  limited.  That  it  is  not  due  till  the  expiration  of  the 
time  limited  for  the  payment  is  not  the  correct  interpretation ; 
after  the  allowance  it  is  dehitum  in  prceseiiti,  solvendum  in 
futuro.^  If  the  policy  provides  that  suit  shall  be  brought 
within  a  certain  time  after  the  "  loss  or  damage  shall  occur 
and  become  due,"  and  further  provides  that  the  payment  of 
losses   shall    be   made  in  ninety  days  after  proofs   shall   be 

1  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136  ;  Amesbury  et  al. 
V.  Bowditch  Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  596;  Riddlesbarger  v.  Hartford 
Ins.  Co.,  7  Wall.'(U.  S.),  386  ;  .Cray  v.  Same,  1  Blatchford  (U.  S.  C.  Ct.),  280; 
Brown  v.  Roger  Williams  Ins.  Co.,  7  R.  I.  301 ;  s.  c.  5  R.  I.  304 ;  Wilson  v. 
iEtna  Ins.  Co.,  27  Vt.  99  ;  Williams  et  al.  v.  Vermont  Mut.  Ins.  Co.,  20  Vt.  222 ; 
Peoria  Ins.  Co.  v.  Whitehill,  25  111.  466  ;  North  Western  Ins.  Co.  v.  Phcsnix  Oil  and 
Candle  Co.,  31  Penn.  St.  449 ;  Bruce  et  ux.  v.  Savannah  Mut.  Ins.  Co.,  24  Geo. 
97  ;  Portage  County  Mut.  Ins.  Co.  v.  West,  6  Ohio,  599 ;  Carter  v.  Humbolt  Fire 
Ins.  Co.,  12  Iowa,  287  ;  Stout  ;;.  City  Fire  Ins.  Co.,  ib.  371 ;  Ripley  v.  ^Etna  Ins. 
Co.,  29  Barb.  (N.  Y.)  552;  Fullam  v.  New  York  Union  Ins.  Co.,  7  Gray  (Mass.), 
61.  The  case  in  the  Supreme  Court  of  Indiana,  Eagle  Ins.  Co.  v.  Lafayette  Ins. 
Co.,  9  Ind.  443,  rested  upon  French  v.  Lafayette  Ins.  Co.,  5  McLean,  461,  which 
has  been  overruled  by  the  case  cited  above  from  7  Wallace  (U.  S.  Sup.  Ct.), 
386.  See  also  Ripley  v.  JEtna  Ins.  Co.,  30  N.  Y.  136  ;  Brown  v.  Hartford  Ins; 
Co.,  5  R.  I.  394  ;  Hickey  v.  Anchor  Ass.  Co.,  18  Upper  Canada  (Q.  B.),  403  ;  Pat- 
rick V.  Farmers'  Ins.  Co.,  43  N.  H.  621  ;  Roach  v.  New  York  and  Erie  Ins.  Co., 
30  N.  Y.  546  ;  Woodbury  Sav.  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  518. 

2  Portage  County  Mut.  Fire  Ins.  Co.  v.  West  et  al.,  6  Ohio,  n.  s.  599. 

3  Fullam  V.  New  York  Union  Ins.  Co.,  7  Gray  (Mass.),  61. 
■*  Utica  Ins.  Co.  v.  American  Mut.  Ins.  Co.,  16  Barb.  171. 


LIMITATION   OP   SUIT   AS   TO   TIME   AND    PLACE,    ETC.  585 

received  at  the  office  of  the  company,  the  proofs  having  been 
furnished  with  due  diligence,  tlie  time  limited  for  bringing  suit 
will  begin  to  run  at  the  expiration  of  the  ninety  days.^ 

§  480.  Limitation  —  Execution.  —  And  a  like  provision,  with 
reference  to  the  levy  of  an  execution  for  similar  reasons,  is  also 
valid.  And  the  provision  of  the  charter  of  a  mutual  fire  insur- 
ance company  that  no  execution  shall  issue  upon  any  judg- 
ment obtained  against  them  until  three  months  after  the 
rendition  thereof,  will  be  enforced,  though  the  judgment  upon 
which  the  execution  is  sought  to  be  enforced  be  founded  upon 
a  foreign  judgment  rendered  long  before.  The  provision  of 
the  charter  becomes  a  constituent  part  of  the  contract  between 
the  parties,  and  the  analogy  between  a  stipulation  not  to  bring 
suit  within  or  after  the  expiration  of  a  certain  period,  and  a 
stipulation  not  to  levy  execution,  is  sufficient  to  warrant  the 
court  in  ordering  a  stay  of  execution.^ 

§  481 .  Limitation  —  Reinsurance.  —  Reinsurance,  under  a  pol- 
icy which  stipulates  that  suit  shall  be  brought  within  a  limited 
time  after  any  loss  or  damage  shall  occur,  expires  at  the  expi- 
ration of  the  time  limited  after  the  loss  of  the  property  by  the 
peril  insured  against,  and  not  after  the  payment  by  the  rein- 
sured of  the  loss.  The  payment  by  him,  though  in  one  sense 
a  loss  to  him,  is  not  the  loss  or  damage  referred  to  in  the  pol- 
icy of  reinsurance.^ 

§  482.  Limitation — Avoidance  —  Nev7  Promise.  —  And  a  new 
promise  or  acknowledgment  will  not  revive  such  a  cause  of 
action.  If  the  prescribed  time  be  suffered  to  elapse  without 
suit,  there  remains  no  longer  a  legal  liability  in  any  form. 
There  is  no  indebtedness  which, though  by  the  operation  of  the 
statute  incapable  of  being  enforced  l)y  suit,  may  nevertheless 
be  reanimated  and  invested  with  that  quality  by  an  acknowl- 
edgment or  new  promise.  The  contract  is  of  a  peculiar  descrip- 
tion, resembling  a  wagering  contract,  in  which  the  insurers,  for 
a  small  premium,  undertake  to  indemnify  the  party  who  suffers 

1  Longliurst  v.  Conway  Fire  Ins.  Co.,  U.  S.  D.  Ct.,  Iowa,  1861,  cited  in  Clarke's 
Digest  of  Fire  Insurance  Cases. 

■i  Judkins  v.  Union  Mut.  Fire  Ins.  Co.,  39  N.  H.  172. 

s  Prov.  Ins.  Co.  v.  ^tna  Ins.  Co.,  16  Upper  Canada  (Q.  B.),  105. 


586  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

the  loss.  The  amount  for  which  they  may  become  responsible 
greatly  exceeds  the  premium  paid  ;  and  the  liability  depends 
upon  a  contingency  over  which  neither  party  has  any  control. 
For  whatever  the  insurers  may  eventually  have  to  pay,  they 
become  liable  by  positive  stipulation  rather  than  upon  any  prin- 
ciple of  natural  justice  growing  out  of  an  adequate  consider- 
ation received.  So  far  as  this  liability  exceeds  the  premium 
paid,  it  more  nearly  resembles  a  penalty  than  a  simple  debt, 
and  thus  would  more  naturally  fall  into  the  class  of  cases  in 
which  statutes,  prescribing  a  time  within  which  suits  shall  be 
brought,  are  construed  as  limitations  upon  the  liability  rather 
than  mere  denials  of  a  remedy.^  It  was  intimated  in  Brown 
et  ux.  V.  Savannah  Mutual  Insurance  Company,^  that  such  a 
limitation  might  not  be  upheld  if  the  period  within  which  suit 
must  be  brought  be  so  unreasonable  as  to  raise  a  presumption 
of  imposition  or  undue  advantage  in  some  way. 

§  483.  Nor  can  such  suit,  brought  after  the  expiration  of  the 
time  limited,  although  a  prior  suit  commenced  within  the  lim- 
ited period  may  have  been  non-suited,  or  judgment  thereon 
arrested,  be  maintained.  The  condition  is  without  exception, 
and  the  exceptions  of  statutes  of  limitations  cannot  be  imported 
into  it  by  the  court.^ 

§  484.  Limitation  —  Excuse  —  Absence  of  Defendant.  —  Per- 
haps, however,  the  doctrine  of  the  last  case  should  be  taken 
with  the  qualification  that  the  failure  of  the  first  suit  is  not 
imputable  to  the  fault  of  the  insurers.  Such  seems  to  have 
been  the  view  taken  in  a  case  in  Michigan,  where  suit  was 
brought  thirteen  days  before  the  expiration  of  the  time  limited. 
The  writ  was  immediately  placed  in  the  hands  of  the  officer, 
who  made  return  that  he  could  not  find  the  defendant.  There- 
upon the  next  day,  which  was  two  days  after  tiie  expiration 
of  the  time  limited,  another  summons  was  issued,  with  which 
the  defendant  was  served.  The  limitation  in  this  case  was  in 
the  contract,  and  not  in  the  charter  of  the  company.     The 

i  Williams  et  al.  v.  Vermont  Mut.  Ins.  Co.,  20  Vt.  222. 

2  24  Geo.  97      And  see  Anjj;ell  on  Limitations,  5th  ed.  p.  16,  note. 

3  Riddlesbarger  v.  Hartford  Ins.  Co.,  7  Wall.  (U.  S.)  386;  Brown  v.  Roger 
Williams  Ins.  Co.,  7  R.  I.  301 ;  Wilson  v.  JEtna.  Ins.  Co.  of  New  York,  27  Vt.  99. 


LIMITATION   OF   SUIT   AS   TO   TIME   AND   PLACE,   ETC.  587 

court,  without  stopping  to  consider  whether  the  issue  of  the 
second  summons  was,  or  was  not,  a  continuation  of  the  suit, 
sustained  the  action.  It  appeared  to  them  to  have  heen  the 
fault  of  the  defendant  —  the  absence  of  their  agent  —  that 
the  first  summons  was  not  served,  and  the  action  commenced 
within  the  limited  period  ;  and  this  was  sufficient  to  defeat  the 
limitation,  or  extend  it  till  the  service  was  made  under  the 
second  summons,  which  was  issued  immediately  on  the  return 
of  the  first.  While  a  limitation  by  statute  is  arbitrary  and 
peremptory,  admitting  of  no  excuse  beyond  the  period  fixed, 
a  limitation  by  contract  must,  upon  the  principles  governing 
contracts,  be  more  flexible  in  its  nature,  and  liable  to  be  de- 
feated or  extended  by  any  act  of  the  defendant  whicli  prevents 
the  plaintiff  from  bringing  his  action  within  the  prescribed 
period.  And  the  fundamental  idea,  the  tacit  condition  upon 
which  such  a  limitation  must  rest,  and  without  which  it  could 
not  be.  tolerated  for  a  moment,  is,  that  the  defendant  shall  be 
accessible  to  the  service  of  process  by  which  suit  may  be  com- 
menced against  him,  if  not  for  the  whole  period,  at  least  for  a 
sufficient  time  immediately  preceding  its  close  to  enable  the 
plaintiff  to  commence  suit  by  the  service  of  process  in  the  ordi- 
nary legal  mode.  If  this  be  not  so,  then  it  follows  that  the 
defendant  could  take  advantage  of  his  own  wrong,  and,  by 
absenting  himself  entirely,  defeat  the  plaintiff's  right  of  action.^ 
But  this  importation  into  the  contract  of  the  exception  of 
absence,  after  the  analogy  of  statutes  of  limitations,  has  not 
elsewhere  met  with  approbation.^  In  the  last  cited  case,  how- 
ever, no  attempt  had  been  made  to  bring  the  action  within  the 
limited  period,  for  the  alleged  reason  that  the  action  could 
not  have  been  maintained  unless  the  defendant  had  voluntarily 
appeared,  and  there  was  no  means  of  compelling  an  appear- 
ance ;  and  perhaps  the  observation  of  the  court,  that  never- 
theless the  plaintiff  might  have  sued  out  process  within  the 
limited  period,  is  indicative  tliat,  had  this  been  done,  the  result 
would  have  been  different. 

§  485.   Limitation  —  Excxise  —  Pending    Negotiations.  —  Xor 

1  Peoria  Mar.  and  Fire  Ins.  Co.  v.  Hall,  12  Mich.  202. 

2  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136. 


588  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

will  the  operation  of  such  a  limitation  be  suspended  or  pre- 
vented by  negotiations  for  a  settlement,  as  by  a  reference  pend- 
ing between  the  parties,  if  there  be  no  agreement  for  delay, 
and  the  defendant  has  done  nothing  to  mislead  the  plaintiff.^ 

§486.  Limitation  —  Excuse  —  Effect  of  War.  —  Where  by 
the  terms  of  the  policy  suit  is  to  be  brought  within  twelve 
months  after  loss,  and  to  a  suit  brought  after  that  time  the 
lapse  of  time  shall  be  deemed  conclusive  evidence  against  the 
validity  of  the  claim ;  and  insured  was  prevented  by  the  inter- 
vention of  war  from  bringing  his  suit  within  twelve  months 
after  the  loss,  the  court  held  that  war  having  rendered  compli- 
ance with  this  condition  impossible,  tlie  presumption  from  the 
lapse  of  time  was  destroyed,  and  did  not  revive,  and  that  the 
insured  might  bring  his  suit  at  any  period  within  the  stat- 
ute of  limitations,  without  regard  to  the  fact  wliether  twelve 
months  of  peace  within  which  he  might  liave  brought  his  suit 
had  elapsed. 2 

§  487.  Limitation  —  Excuse  —  Inconsistent  Conditions.  —  And 
where  the  other  conditions  are  such  that  a  reasonable  compli- 
ance with  them  is  inconsistent  with  a  compliance  with  tlie  con- 
dition requring  suit  to  be  brought  within  a  specified  time, 
the  latter  will  not  be  allowed  to  defeat  a  recovery.  Tims 
where  suit  is  to  be  brought  within  six  months  from  the 
time  of  the  loss,  and  the  loss  is  not  payable  until  sixty 
days  after  the  adjustment,  and  the  parties,  in  good  faith  and 
without  objection,  are  occupied  so  long  in  adjusting  the  loss 
that  sixty  days  from  tlie  date  of  the  adjustment  does  not 
expire  within  the  six  months,  a  suit  brought  at  the  expiration 
of  sixty  days  will  be  sustained.^  So  wliere  the  insurable  inter- 
est was  a  mechanic's  lien,  the  value  of  wiiich  could  only  be 
determined  by  a  judgment  of  court  upon  suit,  which  was 
brought  immediately  upon  the  occurrence  of  the  loss,  but  did 
not  come  to  judgment  till   after  the  expiration  of  the  time 

1  Gooden  v.  Amoskeag  Fire  Ins.  Co.,  20  N.  H.  73. 

2  Semmes  v.  City  Fire  Ins.  Co.  of  Hartford,  13  Wall.  (U.  S.)  159,  reversing 
s.  0.  6  Blatchf  (C.  Ct.  U.  S.)  445  ;  Lynchburgh  Hose  Fire  Ins.  Co.  v.  Knox,  ante, 
§  39,  note;  HiUyard  v.  Mut.  Ben.  Life  Ins.  Co.,  Sup.  Ct.  N.  J.,  1872,  2  Ins.  L.  J. 
137. 

3  Mayor,  &c.,  of  New  York  v.  Hamilton  Fire  Ins.  Co.,  10  Bosw.  (N.  Y.)  537. 


LIMITATION    OF    SUIT    AS   TO    TIME    AND    PLACE,    ETC.  589 

limited  for  bringing  suit  for  the  loss,  it  being  also  stipulated 
that  proof  of  the  value  of  the  loss  must  be  made  belbre  it 
could  be  demanded,  it  was  held  that  the  limitation  of  the  suit 
was  inoperative.^  The  insurers,  in  issuing  a  policy  upon  a 
mechanic's  lien,  must  be  presumed  to  issue  it  subject  to  the 
unavoidable  delay  in  the  judicial  ascertainment  of  the  value 
of  the  interest  if  a  loss  should  occur.  If,  with  reasonable  dili- 
gence, that  value  cannot  be  legally  ascertained  in  time  to  bring 
an  action  on  the  policy  within  the  limited  period,  it  follows 
either  that  there  is  a  dishonest  purpose  on  the  part  of  the 
company  in  inserting  such  a  condition,  or  else  they  intend  in 
such  case  to  waive  it,  or  treat  it  as  wholly  inapplicable  and 
nugatory.^  Nor  will  a  collateral  suit  brought  after  the  expira- 
tion of  the  limited  time  in  aid  of  a  suit  at  law  brought  within 
the  limited  time,  be  barred  ;  as  where  a  bill  in  equity  is 
brought  to  reform  a  policy.  Had  there  been  no  suit  at  law 
pending,  a  bill  in  equity  for  relief  would  have  been  barred.^ 
And  if  the  insurers  refuse  to  issue  a  policy,  and  a  bill  in  equity 
to  enforce  the  agreement  to  issue  it  be  filed,  they  cannot  avail 
themselves  of  such  a  limitation  as  applicable  to  the  bill  in 
equity."* 

§488.  Limitation  —  "Waiver.  —  But  this  condition,  like  all 
others  intended  for  the  benefit  of  the  insurers,  may  be  waived 
by  them ;  and  as  the  condition  is  a  harsh  one  in  its  bearing  on 
the  insured,  and  works  a  forfeiture  when  upheld,  the  courts 
will  not  require  very  stringent  evidence  in  order  to  defeat  its 
application.  A  positive  act  of  the  company  intended  to  induce 
postponement  is  not  necessary.  And  where  the  evidence  upon 
this  point  is  conflicting,  waiver  is  a  question  of  fact  for  the 
jury.^     Mere  silence,  however,  is  no  waiver,*^  though  it  may 

1  Stout  V.  City  Fire  Ins.  Co.  of  New  Haven,  12  Iowa,  371. 

2  Longhurst  v.  Star  Ins.  Co.,  19  Iowa,  364. 

3  Woodbury  Savings  Bank  v.  Cliarter  Oak  Ins.  Co.,  31  Conn.  518. 
*  Penley  v.  Beacon  Ins.  Co.,  7  Grant  (Canada),  130. 

5  Ripley  v.  ^Etna  Ins.  Co.,  2'J  Barb.  (N.  Y.)  552;  Coursin  v.  Penn.  Ins.  Co., 
46  Penn.  St.  323  ;  Ketchura  o.  Prot.  Ins.  Co.,  1  Allen  (N.  B.),  136;  Columbian 
Ins.  Co.  V.  Lawrence,  2  Pet.  (U.  S.)  25;  Graves  v.  Washington  Mar.  Ins.  Co., 
12  Allen  (Mass.),  391. 

6  Ante,  §  464.  Sclirceder  v.  Kingston  Ins.  Co.,  2  Phila.  286 ;  s.  c.  Leg.  Int. 
14,  164. 


590  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

be  evidence  thereof  to  go  to  a  jury ;  ^  nor  are  loose  conversa- 
tions about  a  settlement ;  ^  nor  is  a  peremptory  refusal  to  pay, 
though  on  the  ground  that  actions  have  been  brought  by  other 
parties,  and  nothing  will  be  done  towards  payment  while  such 
actions  are  pending,  a  waiver  of  the  right  to-  insist  upon  the 
limitation.  Tlie  insured  is  not  misled  thereby,  nor  is  he  ex- 
pressly or  impliedly  requested  to  delay  by  the  insurer.^  Nor, 
as  we  have  just  seen,*  is  the  mere  pending  of  negotiations  in 
good  faith.  If,  however,  they  are  not  prosecuted  in  good  faith, 
or  are  made  the  occasion  of  delay,  —  a  result  to  wliich  the 
insurers  mainly  contribute  by  holding  out  hopes  of  an  amicable 
adjustment  whereby  the  insured  is  led  to  feel  a  false  security, 
this  is  a  waiver.^  So,  if  the  delay  for  any  cause  be  attributa- 
ble to  the  insurers,  and  the  insured  be  not  in  fault.  Thus 
in  Ames  v.  New  York  Union  Insurance  Company,^  where  the 
policy  provided  that  suit  must  be  brought  within  six  months 
from  the  day  of  the  loss,  and  that  the  insurers  should  have 
ninety  days  after  proofs  were  furnished  within  which  to  pay, 
the  proofs  of  loss  were  delivered  to  the  defendants  some  nine 
days  after  the  fire.  Tiiey  were  then  retained,  without  objec- 
tion, for  eighty-five  days,  when  suggestion  was  made  by  the 
insurers  that  further  proof  was  necessary,  which  further  proof 
was  furnished  in  seven  days  more.  No  further  objections 
were  made.  By  the  delay,  however,  the  time  within  which  the 
plaintiff  had  a  right  to  demand  payment  did  not  arrive  till 
after  the  time  limited  for  bringing  suit.  The  defendants  had 
thereby  secured  an  extension  of  time  within  which  to  pay  the 
loss,  and  put  it  out  of  the  power  of  the  plaintiff  to  success- 
fully maintain  a  suit  commenced  within  six  months  after  the 
loss  occurred.     To  the  same  effect  is  Curtis  v.  Home  Insur- 

1  Ripley  v.  iEtna  Ins.  Co.,  29  Barb.  (N.  Y.)  552. 

2  Ripley  v.  ^tna  Ins.  Co.,  30  N.  Y.  136 ;  Lambkin  v.  "West.  Ass.  Co.,  13 
Upper  Canada  (Q.  B.),  237. 

3  Ripley  V.  JEtna  Ins.  Co.,  30  N.  Y.  136. 

4  Ante,  §  485. 

5  Mickey  v.  Burlington  Ins.  Co.,  Sup.  Ct.  Iowa,  2  Ins.  L.  J.  15  ;  Grant  v.  Lex- 
ington Fire,  Life,  and  Mar.  Ins.  Co.,  5  Ind.  26  ;  Fullam  v.  New  York  Union 
Ins.  Co.,  7  Gray  (Mass.),  61 ;  Blacky.  Winneslieik  Ins,  Co.,  Sup.  Ct.  Wis.  1  Ins. 

L.  J.  ii.a 

6  14  N.  Y.  254. 1 


LIMITATION   OP   SUIT    AS   TO    TIME    AND    PLACE,   ETC.         591 

ance  Company ,i  where  it  is  said  that  if  the  conduct  of  the 
insurers  during  the  negotiations  is  such  that  the  insured  may 
reasonably  believe  that  they  intend  to  pay  them,  delay  is  ex- 
cusable ;  otherwise  not. 

§489.  Limitation  —  Suit.  —  "Suit"  to  recover  a  claim  by 
virtue  of  the  policy,  means  any  proceeding  in  a  court  for  the 
purpose  of  reaching  and  getting  possession  of  the  loss  which 
may  be  found  to  be  payable;,,  under  whatever  mode  the  law 
permits.  A  creditor,  for  instance,  of  the  person  who  suffers 
the  loss  may  proceed  by  trustee  process  or  foreign  attach- 
ment, and  under  this  try  the  question*  of  the  liability  of  the 
insurers  to  the  insured.  And  such  suit,  if  brought  within  the 
time  limited,  is  a  compliance  with  the  condition.^  Of  course 
the  creditor  would,  in  such  case,  have  no  greater  rights  than 
his  debtor;  and  if  the  debtor  has  failed  to  comply. with  a  con- 
dition precedent  -to  his  right,  as,  for  instance,  to  submit  to 
examination  on  oath,  when  so  required,  his  creditor  cannot 
recover.  That  the  debtor  received  no  actual  notice  of  the 
requirement,  will  not  help  the  creditor,  if  the  insurers  make 
reasonable  efforts  to  notify  him.  If  the  want  of  notice  were 
attributable  to  the  negligence  of  the  insurers,  it  might  be 
otherwise.  A  failure,  on  their  part,  to  notify  within  reason- 
able time  might  be  deemed  a  waiver  of  the  condition.^ 

§  490.  Limitation  as  to  Place.  —  A  condition  in  the  contract 
limiting  the  venue  or  place  where  the  action  shall  be  brought, 
is  invalid.  There  is  an  obvious  distinction  between  a  stipula- 
tion by  contract  as  to  the  time  when  a  right  of  action  shall  accrue 
or  be  lost,  on  the  one  hand,  and  a  stipulation  as  to  the  forum 
before  which,  and  the  proceedings  by  which,  an  action  shall  be 
commenced  and  prosecuted,  on  tiie  other.  The  one  is  a  condi- 
tion annexed  to  the  acquisition  and  continuance  of  a  legal  right, 
and  depends  on  contract  and  the  acts  of  the  parties  ;  the  other 
is  a  stipulation  concerning  the  remedy  which  is  created  and 
regulated  by  law.  The  time  within  which  money  shall  be 
paid  is  matter  of  contract,  depending  on  the  will  and  acts  of 
the  parties  ;  but,  in  case  of  breach,  the  tribunal  before  wliich 

1  IBissell  (C.  Ct.  U.  S.),4S5. 

'  Harris  v.  Phoenix  Ins.  Co.,  35  Conn.  310.  3  ibid. 


592  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

a  remedy  is  to  be  sought,  the  means  and  processes  by  which 
it  is  to  be  conducted,  affect  the  remedy,  and  are  created  and 
regulated  by  law.  The  remedy  does  not  depend  on  contract, 
but  upon  law,  generally  the  lex  fori,  regardless  of  the  lex  loci 
contractus,  which  regulates  the  construction  and  legal  effect  of 
the  contract.  It  is,  moreover,  a  well-settled  maxim  that  par- 
ties cannot,  by  their  consent,  give  jurisdiction  to  courts,  and 
it  would  seem  to  follow  that  parties  cannot  take  away  juris- 
diction where  the  law  has  given  it.  And  mutual  and  stock 
companies  are  equally  under  the  disability.^  Upon  the  same 
general  grounds  an  a^-reement  not  to  sue,  except  in  a  partic- 
ular State,  will  not  defeat  an  action  on  the  policy  in  a  different 
State.  Such  an  agreement  is  against  public  policy .^  It  is  also 
against  the  statute  of  Missouri.^  If  the  venue  be  fixed  by 
the  terms  of  the  charter,  a  subsequent  act  of  the  legislature 
changing  the  venue  and  extending  the  right  to  sue  in  coun- 
ties where  there  is  an  agency  of  the  insurers  is  valid,  as 
affecting  only  the  remedy.* 

§  491.  Limitation  —  Strictly  construed.  —  But  the  limitation 
as  to  venue  and  as  to  time  will  be  strictly  construed  and  con- 
fined to  the  exact  case  stated  in  the  charter  or  contract.  Thus, 
where  the  charter  provides  that  after  a  loss  the  directors  shall 
proceed  and  determine  the  amount,  and  if  the  party  suffering 
is  not  satisfied  with  the  determination,  he  may  bring  his  action 
at  a  particular  court ;  if  the  directors  repudiate  the  claim  alto- 
gether, the  party  suffering  may  sue  in  any  court  open  to  him 
by  the  general  provisions  of  law.  The  limitation  can  only  be 
supported  in  the  special  case  provided  for.^  The  reasons  for 
the  distinction  are  obvious.  So  far  as  the  claim  for  insurance  is 
disputed,  and  may  be  a  subject  of  litigation  between  the  parties, 

1  Nute  V.  Hamilton  Mut.  Ins.  Co.,  6  Gray  (Mass.),  174  ;  Hall  v.  People's  Mut. 
Fire  Ins.  Co.,  6  Gray  (Mass.),  185  ;  Amesbury  et  al.  v.  Bowditcli  Mut.  Fire  Ins. 
Co.,  6  Gray  (Mass.),  596. 

2  Reichard  v.  Manhattan  Life  Ins.  Co.,  31  Mo.  518. 

3  Eev.  Code,  884. 

*  Howard  v.  Kentucky  and  Louisville  Mut.  Ins.  Co.,  13  B.  Mon.  (Ky.)  282; 
Sanders  v.  Hillsborough  Ins.  Co..  44  N.  H.  238. 

5  Williams  v.  Columbian  Mut.  Ins.  Co.,  29  Me.  465 ;  Boynton  et  al.  v.  Mid- 
dlesex Mut.  Fire  Ins.  Co.,  4  Met.  (Mass.)  212;  Martin  v.  Penobscot  Mut.  Fire 
Ins.  Co.,  53  Me.  419. 


LIMITATION   OF   SUIT   AS   TO    TIME    AND    PLACE,    ETC.  593 

the  insurers  may  well  provide  in  their  by-laws  that  an  action 
shall  be  speedily  brought,  so  that  the  extent  of  their  liability 
may  be  settled  while  the  facts  are  recent,  and  the  witnesses  by 
whom  they  are  to  be  proved  are  readily  accessible.     But  there 
is  no  such  reason  for  the  limitation  of  the  time  within  which 
a  suit  shall  be  brought,  when  it  is  sought  to  recover  only  the 
amount  under  the    policy,  which    has  been   ascertained  and 
admitted  to  be  justly  due  by  the  insurers. ^     In  the  case  last 
cited,  the  distinction  adverted  to  in  St.  Louis  Insurance  Com- 
pany V.  Kyle,^  that  there  could  be  no  waiver  of  notice,  while 
there  might  be  of  preliminary  proof,  is  declared  not  to  be  well 
founded.     It  has  been  held,  however,  in  Ohio,  that,  altliough 
the  insurers  neglect  to  ascertain  and  determine  the  loss,  under 
a  policy  that  provides  that  an  action  shall  be  brought  in  a 
certain  county  if  the  insured  shall  not  be  satisfied,  the  action 
must  be  brought  in   the  county  named.     The  statute  of  that 
State,  however,  provides  that  suits  on  policies  of  insurance 
may  be  brought  in  any  county  where  the  contract  is  made, 
except  in  cases  where  the  policies  are  issued  by  companies 
whose   charters    specify  the   county   in   which    suit   shall  be 
brought.^     And  in  Button  v.  Vermont  Mutual  Fire  Insurance 
Company,"^  it  is  held,  contrary  to  the  almost  uniform  current 
of  authorities,  that  a  refusal  to  pay  a  claim  is  a  determi- 
nation and  ascertainment,  within  the  meaning  of  such  a  con- 
dition, and  consequently  no  action  can  be  maintained  except 
as  provided  in  the  policy.     No  reference  by  court  or  counsel  is 
made  to  any  of  the  decisions  to  the  contrary. 

§  492.  Arbitration  —  Agreement  to  refer  generally  invalid. — 
Not  unfrequently  policies  contain  a  stipulation,  that  in  case  of 
loss,  and  the  parties  cannot  agree  upon  the  terms  of  adjust- 
ment, all  matters  ih  dispute  shall  be  submitted  to  arbitration, 

1  Amesbury  et  al.  v.  Bowditch  Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  608  ;  Bart- 
lett  I'.  Union  Mut.  Fire  Ins.  Co.,  40  Me.  500;  Nevins  v.  Eockingham  Fire  Ins. 
Co.,  5  Fost.  (N.  H.)  22  ;  Indiana  Mut.  Fire  Ins.  Co.  v.  Routledge,  7  Iiid.  25  ;  Phil- 
lips V.  Prot.  Ins.  Co.,  14  Mo.  220. 

2  11  Mo.  278. 

8  Portage  County  Mut.  Ins.  Co.  v.  Stukey,  18  Ohio,  455.    This  decision  seems 
to  rest  upon  the  pecuHarity  of  the  general  statute. 
i  17  Vt.  369. 

38 


594  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

—  a  practice  which  may  be  traced  almost  to  the  infancy  of  in- 
surance, and  originated  no  doubt  in  a  laudable  desire  to  avoid 
the  vexation,  delay,  and  expense  of  litigation.  It  has  not,  how- 
ever, proved  so  effectual  for  that  purpose  as  was  anticipated, 
since  the  courts  have  very  uniformly  deemed  the  stipulation  to 
have  no  binding  force.  It  plainly  tends  to  oust  them  of  their 
jurisdiction,  and  they  will  not  specifically  enforce  the  agree- 
ment.^ Of  course,  if  the  parties  consent  or  prefer  to  adjust 
their  disputes  in  this  way,  the  courts  will  not  interfere  to  pre- 
vent. On  the  contrary,  such  a  course  will  be  encouraged ; 
and  if  arbitration  be  resorted  to,  and  proceed  to  an  award,  the 
award  will  be  recognized  as  a  good  plea  in  bar  to  an  action  on 
the  policy .2  And  so  where  there  has  been  an  actual  submis- 
sion, and  the  reference  is  still  pending.^  And  the  courts  will 
enforce  the  award. ^  But  neither  a  provision  enabling  the  par- 
ties to  submit  matters  in  controversy  to  arbitration,  nor  a  cove- 
nant so  to  do,  will  prevent  the  courts  from  taking  their  rightful 
jurisdiction  in  the  premises.  All  such  agreements  have  for 
their  purpose  the  substitution  of  a  tribunal,  erected  by  the  par- 
ties, for  the  tribunal  which  public  policy  and  the  general  laws 
have  established  and  clothed  with  the  requisite  powers  to  make 
them  the  efficient  and,  upon  the  whole,  the  best  means  of  hear- 
ing and  determining  controversies  between  individuals.  If  the 
stipulation  were  to  be  held  valid,  the  courts  might  be  called 
upon  to  enforce  it.  The  dispute  would  thus  come  to  them  at 
last,  and  they  have  preferred  to  ignore  the  validity  of  the  stip- 
ulation and  to  refuse  to  enforce  it,  rather  than  permit  them- 
selves to  be  occupied  with  the  somewhat  ludicrous  question 
whether  parties  may  come  into  court  for  the  purpose  of  com- 
pelling each  other  to  keep  out.^  In  Louisiana,  it  has  been 
intimated   that   the   agreement  to  refer  would   be  upheld   if 

1  Thompson  i-.  Charnock,  8  T.  R.  139;  Goldstone  v.  Osborne,  2  C.  &  P.  550. 

2  Roper  V.  Lendon,  1  El.  &  El.  (Q.  B.)  825;  102  E.  C.  L. ;  Burchell  v.  Marsh, 
17  How.  (U.  S.)  344. 

3  Kill  V.  Ilollister,  1  Wilson,  129. 

<  Richardson  i-.  Suffolk  Ins.  Co.,  3  Met.  (Mass.)  573;  Hughes  v.  Mut.  Fire 
Ins.  Co.  of  New  Castle,  9  Upper  Canada  (Q.  B.).  387. 

5  Kill  r.  HoUister,  1  Wilson,  129  ;  Scott  v.  Avery,  20  Eng.  L.  &  Eq.  327  ;  s.  c. 
5  H.  L.  C.  811 ;  Scott  v.  The  Phenix  Ass.  Co.,  1  Stuart  (Lower  Canada),  152. 


LIMITATION   OF   SUIT   AS   TO   TIME   AND   PLACE,   ETC.         595 

insisted  upon.  But  the  point  was  not  directly  before  the 
court,  the  court  holding  that  the  insurers,  having  refused  to 
pay,  without  invoking  this  article,  had  waived  the  right  to  set 
it  up  in  bar  of  the  action.^ 

§  493.  Arbitration  —  Agreement  to  refer  special  Matter  valid. 
—  While,  however,  it  is  perfectly  well  settled  that  any  agree- 
ment that  contemplates  the  exclusion  of  an  aggrieved  party 
from  a  suit  of  law  is  invalid,  there  seems  to  be  no  doiibt  that 
any  agreement  as  to  the  mode  of  settling  the  amount  of  loss, 
or  the  time  for  paying  it,  or  any  particulars  of  that  nature  which 
do  not  go  to  the  root  of  the  action,  but  are  preliminary  thereto 
or  in  aid  thereof,  as,  for  instance,  an  agreement  that  at  the 
trial  of  an  action  it  shall  not  be  lawful  for  either  party  to  enter 
into  the  question  of  the  amount  of  the  loss,  but  that  it  shall 
always  be  settled  by  reference,  and  that  the  only  question  to  be 
tried  at  law  shall  be  the  right  to  recover,  is  valid.  A  distinction 
is  made  between  an  agreement  to  refer  every  matter  in  dispute 
to  arbitration,  and  one  to  pay  such  a  sum  as  the  damage  shall 
be  found  by  a  third  party  to  amount  to,  which  latter  operates 
to  reduce  the  policy  from  a  contract  to  pay  the  amount  of  dam- 
age absolutely,  and  to  substitute  the  arbitrator  for  the  jury  to 
ascertain  its  amount.-  Tlie  following  condition  is  common  in 
English  policies,  and  is  believed  to  be  valid  :  — 

"  If  any  difference  shall  arise  in  the  adjustment  of  a  loss,  the 
amount  (if  any)  to  be  paid  by  the  company  shall,  whether  the 
right  to  recover  on  the  policy  be  disputed  or  not,  and  inde- 
pendently of  all  other  questions,  be  submitted  to  the  arbitra- 
tion of  some  person,  to  be  chosen  by  both  parties,  or  of  two 
indifferent  persons,  one  to  be  chosen  by  the  party  insured,  and 
the  other  by  the  directors.  And  in  case  either  party  shall 
refuse  or  neglect  to  appoint  an  arbitrator  within  twenty-eight 
days  after  notice,  the  other  party  shall  appoint  both  arbitrators  ; 
and  in  case  of  the  arbitrators  differing  therein,  the  amount 
shall  be  submitted  to  the  arbitration  of  an  umpire,  to  be  chosen 

1  Millaudon  v.  Atlantic  Ins.  Co.,  8  La.  557. 

2  Scott  V.  Avery,  20  Eng.  L.  &  Eq.  327  ;  s.  c.  5  H.  L.  C.  811 ;  Braunstein  v. 
Accidental  Deatli  Ass.  Co.,  1  B.  &  S.  782 ;  Tredwen  v.  Holman,  1  H.  &  C.  72 ; 
Lowndes  i^.  Stamford,  18  Q.  B.  425;  Trott  v.  City  Ins.  Co.,  1  Cliff.  (C.  Ct.  U.  S.) 
489. 


596  insurance:  fire,  life,  accident,  etc. 

by  the  arbitrators  before  they  proceed  to  act,  and  the  award 
of  the  arbitrators  or  umpire  (as  the  case  may  be)  shall  be 
conclusive  evidence  of  the  amount  of  the  loss,  and  the  party 
insured  shall  not  be  entitled  to  commence  or  maintain  any  ac- 
tion at  law  or  suit  in  equity  upon  his  policy,  until  the  amount 
of  the  loss  shall  have  been  referred  and  determined  as  herein- 
before provided,  and  then  only  for  the  amount  so  awarded. 
Each  party  to  pay  his  or  their  own  costs  of  the  reference,  and 
a  moiety  of  the  costs  of  the  award,  and  of  the  arbitrators  and 
umpire  ;  and  the  reference,  in  all  other  respects,  to  be  subject 
to  such  rules  and  conditions  as  are  usually  inserted  in  orders 
of  reference  at  Nisi  Prius,  if  the  parties  differ  about  the  same."  ^ 
In  Goldstone  v.  Osborne,^  the  agreement  was,  that  if  any  dif- 
ference should  arise  on  any  claim,  it  should  be  submitted  to 
arbitration,  and  that  no  compensation  shall  be  payable  until 
after  an  award  determining  its  amount.  But,  it  appearing  that 
the  insurers  disputed  the  right  of  the  plaintiff  to  recover  any 
thing,  Best,  C.  J.,  allowed  the  action  to  go  on,  although  there 
had  been  no  reference  as  to  the  amount  of  loss.^ 

§  494.  Arbitration  —  Provision  for  in  Act  of  Incorporation.  — 
If,  by  the  terms  of  the  act  of  incorporation,  arbitration  be  pro- 
vided for  in  such  a  manner  as  to  indicate  that  it  was  the  inten- 
tion of  the  legislature  to  erect  such  a  tribunal  for  the  benefit 
of  the  parties,  and  to  compel  a  resort  to  arbitration  in  the  first 
instance,  before  appealing  to  the  courts,  then  the  courts  would 
not  entertain  a  suit  until  such  arbitration  had  been  had.*  The 
question  has  undergone  further  elaborate  consideration  in  the 
recent  case  of  Elliott  v.  Royal  Exchange  Insurance  Company,^ 
where  the  discussion  turned  upon  the  point  whether  the  form 
of  the  provision  in  question  was  such  as  to  amount  to  a  con- 
dition precedent,  or  only  to  a  collateral  stipulation.  If  the 
former,  then  it  was  valid  ;  if  the  latter,  then  it  was  of  no  avail. 
The  facts  were,  so  far  as  they  do  not  appear  in  the  opinion  of 

1  Law  of  Fire  Insurance,  Bunyon,  108. 

2  2  C.  &  P.  550. 

'  See  also  Millaudon  v.  Atlantic  Ins.  Co.,  8  La.  557. 

*  Reeves  v.  White,  10  Eng.  L.  &  Eq.  332  ;  Crisp  v.  Bunbury,  8  Bing.  394  ;  Ex 
parte  Payne,  5  Dowl.  &  L.  P.  C.  679. 
5  2  L.  Rep.  (Exch.)  237. 


LIMITATION   OP   SUIT   AS   TO    TIME   AND   PLACE,    ETC.         597 

the  court,  that  the  policy,  which  was  under  seal,  in  one  of  its 
articles  provided  that  "  the  loss  or  damages,  after  the  same 
shall  be  adjusted,  shall  immediately  be  paid,"  and  that  "  in 
case  any  difference  shall  arise  touching  any  loss  or  damage, 
such  difference  shall  be  submitted"  to  arbitrators,  whose  award 
in  writing  shall  be  conclusive  and  binding  on  the  parties.  The 
covenant  was  to  pay  according  to  the  exact  tenor  of  the  articles 
subjoined  to  the  policy.  Upon  this  policy  an  action  was  brought, 
and  the  defendants  replied  that  a  difference  arose  between  them 
and  the  plaintiff,  which  the  plaintiff  refused  to  submit  to  arbi- 
tration. The  majority  of  the  court  concurred  with  Kelly,  C.  B., 
who  said :  — 

"  The  question  in  this  case  is,  whether  the  plaintiff  is  enti- 
tled to  recover  the  amount  of  a  loss  by  fire,  which  he  has  suf- 
fered, and  for  which  he  claims  to  be  compensated  under  a 
policy  effected  by  the  defendants,  such  loss  not  having  been 
adjusted  as  pointed  out  in  the  articles,  subject  to  which  the  pol- 
icy was  made.  The  form  of  the  policy  is  a  covenant  by  the 
defendants  that  their  capital,  stock,  &c.,  shall  be  subject  to 
make  good  the  plaintiff's  loss,  <£ 2,200,  'according  to  the  exact 
tenor  of  the  articles  thereunto  subjoined.'  If  the  sentence  had 
stopped  at  the  figures  X 2,200,  and  in  a  subsequent  part  of  the 
instrument  there  had  been  independent  provisions,  which  might 
be  supposed  to  have  qualified  these  words,  it  might  have  been 
a  question  of  greater  doubt  wliether  these  provisions  were  to 
be  held  a  condition  precedent  or  a  collateral  stipulation,  which 
could  not  avail  to  oust  the  jurisdiction  of  the  court.  But  the 
covenant  is  itself,  in  its  very  terms,  qualified  and  made  condi- 
tional by  the  subsequent  words  referring  to  the  articles,  which, 
following  without  any  interval,  form  an  integral  and  substan- 
tial part  of  the  covenant.  Therefore,  in  order  to  ascertain 
whether,  when  a  loss  has  been  sustained  by  the  insured,  a 
right  of  action  has  accrued  to  him,  we  must  look  at  the  arti- 
cles, '  according  to  the  exact  tenor '  of  which  the  insurance  is 
to  be  paid.  Now  the  10th  article  provides  that  upon  the 
occurrence  of  any  loss  or  damage  by  fire,  the  party  is  forthwith 
to  give  notice  to  the  officers,  and  within  fifteen  days  to  deliver 
in  a  particular  account  of  his  damage,  evidenced  and  verified 


598  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

as  may  be  required,  '  which  loss  or  damage,  after  the  same 
shall  be  adjusted,  shall  immediately  be  paid  in  money,'  with 
an  option  to  the  company  to  reinstate.  Collecting  the  mean- 
ing of  the  parties  from  the  language  used  by  them  in  this  sen- 
tence, and  putting  on  it  the  ordinary  and  usual  construction, 
the  effect  is,  not  that  the  plaintiff  is,  in  the  event  of  loss,  enti- 
tled immediately  to  recover  the  amount  of  his  loss,  but  what 
he  is  entitled  to  recover  is  the  amount  of  the  loss  after  it  has 
been  adjusted,  which  means  adjusted  in  the  manner  pointed 
out  by  the  subsequent  articles.  It  appears  to  me  that  to  de- 
cide to  the  contrary  would  be  to  disregard  entirely  the  obvi- 
ous intentions  of  the  parties,  expressed  in  words,  which  state 
emphatically  that  before  the  loss  is  paid  its  amount  shall  be 
adjusted. 

"  We  were  pressed  with  the  weight  of  authority,  and  it  was 
ably  argued  that  it  is  impossible  to  decide  in  favor  of  the 
defendants,  consistently  with  prior  decisions,  and  with  the 
well-recognized  principle  that  no  contract  shall  oust  the  juris- 
diction of  the  courts  of  law;  and  it  was  urged  that  the  contract 
was  neither  more  nor  less  than  a  contract  on  the  part  of  the 
company  to  make  good  the  loss,  with  a  separate  and  collateral 
stipulation  that  the  amount  shall  be  referred  to  arbitration.  It 
is  no  doubt  difficult  to  reconcile  and  give  effect  to  two  propo- 
sitions so  nearly  in  direct  opposition,  as  that  no  contract  of  the 
parties  shall  oust  the  jurisdiction  of  the  courts,  and  that  on 
any  difference  arising  between  two  parties,  it  shall  be  referred 
to  arbitration.  But  the  fair  result  of  the  authorites  is  that,  if 
the  contract  is  in  such  terms  that  a  reference  to  a  third  person, 
or  to  a  board  of  directors,  is  a  condition  precedent  to  the  right 
of  the  party  to  maintain  an  action,  then  he  is  not  entitled  to 
maintain  it  until  that  condition  is  complied  with  ;  but  if,  on 
the  other  hand,  the  contract  is  to  pay  for  the  loss  (or  other 
matter  in  question),  with  a  subsequent  contract  to  refer  the 
matter  to  arbitration,  contained  in  a  distinct  clause,  collateral 
to  the  other,  then  that  contract  for  reference  shall  not  oust  the 
jurisdiction  of  the  courts,  or  deprive  the  party  of  his  action. 
Now  it  seems  to  me  impossible,  without  directly  overruling  or 
disregarding  the  decision  of  the  House  of  Lords,  in  Scott  v. 


LIMITATION   OP   SUIT   AS   TO   TIME   AND    PLACE,   ETC.  599 

Avery ,^  to  say  that  the  stipulation  here  is  not  a  condition 
precedent.  There  the  words  were  that  '  the  sum  to  be  paid  by 
this  association  to  any  suffering  member  for  any  loss  or  dam- 
age shall,  ?■;<  the  first  {nstance^he  ascertained  by  the  committee.' 
Here  they  are  '  that  the  loss,  after  the  same  shall  be  adjusted, 
shall  immediately  be  paid.'  In  both  cases  a  stipulation  follows 
that  any  difference  arising  between  the  parties  shall  l)e  referred 
to  arbitration.  The  House  of  Lords,  in  that  case,  having  held 
that  the  ascertainment  of  the  loss  by  the  committee  or  by  arbi- 
tration was  a  condition  precedent,  and  that  without  such  ascer- 
tainment the  plaintiff  had  no  cause  of  action,  I  cannot  see  any 
distinction  which  would  justify  us  in  holding  here  that  the 
adjustment  of  the  loss,  as  provided  in  the  articles,  was  not  a 
condition  precedent.  All  the  cases  cited  were  in  favor  of  the 
defendant's  contention,  with  the  exception  of  Horton  v.  Sayer^ 
and  Roper  v.  London,^  which  were  both  decided  on  the  ground 
that  the  agreement  to  refer  was  only  a  collateral  stipulation. 
In  the  latter  case,  the  court  came  to  that  decision  on  a  con- 
tract very  much  resembling  the  present  one.  I  do  not  enter 
into  the  question  whether  the  true  construction  was  put  on  the 
instrument  in  that  case  ;  the  point  seems  to  have  been  given  up 
early  in  the  argument,  and  the  matter  was  hardly  discussed. 
But  on  another  part  of  the  same  contract,  words  contained  in 
one  of  several  conditions,  subject  to  which  the  policy  was  made, 
were  held  to  constitute  a  condition  precedent ;  and  that  part 
of  the  decision  rather  supports  our  present  judgment.  This 
contract,  I  think,  speaks  plainly  to  the  effect  I  have  stated, 
and  my  judgment  therefore  is  for  the  defendants."  ^ 

Bramwell,  J.,  dissented,  not  because  he  differed  with  his 
brethren  as  to  the  law,  but  because  he  thought  the  provision  in 
question  a  collateral  stipulation  and  not  a  condition  precedent,^ 

1  5  H.  L.  C.  511.  2  4  H.  &  N.  64. 

3  1  E.  &  E.  825. 

*  Elliott  V.  Royal  Exchange  Ins.  Co.,  Law  Rep.  (2  Exch.)  237. 

5  The  opinion,  though  a  dissenting  one,  is  worth  the  space  we  shall  be  obliged 
to  give  it  in  this  note.  Bramwell,  J. :  "I  think  the  plaintiff  is  entitled  to  judg- 
ment. I  agree  that  there  is  no  doubt  as  to  the  law,  nor  did  I  ever  think  there 
was,  even  before  the  decision  in  Scott  v.  Avery.  In  the  argument  of  that  case 
(the  arbitration  clause  in  which  was  framed  by  Mr.  Justice  Cresswell)  Mr.  Man- 


600  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  49").  Arbitration  —  Condition.  —  In  Campbell  V.  American 
Popular  Life  Insurance  Company,^  where  it  was  provided  that 
payment  of  the  loss  was  to  be  on  condition  that,  in  the  opinion 
of  the  surgeon-general  of  the  company,  the  insured  did  not  die 
from  "  intemperance,"  while  if  such  was  his  opinion,  then  the 

isty  and  myself  were  counsel  for  the  defendants.  We  scarcely  cited  a  case,  but 
laid  down  a  proposition  which  was  almost  immediately  adopted  by  the  judges 
below  and  by  the  House  of  Lords.  That  proposition  was,  that  if  two  persons, 
whether  in  the  same  or  in  a  different  deed  from  that  which  creates  the  liability, 
agree  to  refer  the  matter  upon  which  tlie  liability  arises  to  arbitration,  that  agree- 
ment does  not  take  away  the  right  of  action.  But  if  the  original  agreement  is 
not  simply  to  pay  a  sum  of  money,  but  that  a  sum  of  money  shall  be  paid  if 
something  else  happens,  and  that  something  else  is  that  a  third  person  shall  settle 
the  amount,  then  no  cause  of  action  arises  iintil  the  third  person  has  so  assessed 
the  sum.  For  to  say  the  contrary  would  be  to  give  the  party  a  different  measure 
or  rate  of  compensation  from  that  for  which  he  has  bargained.  This  is  plain 
common  sense,  and  is  what  I  understand  the  House  of  Lords  to  have  decided  in 
Scott  V.  Avery.  Now  the  construction  of  this  policy  appears  to  me  far  from 
clear,  upon  the  point  whether  the  defendants  agree  to  pay  the  adjusted  amount, 
or  whether  they  agree  to  pay  the  actual  loss,  with  a  provision  for  adjusting  the 
loss.  If  the  latter  is  the  true  construction,  then  the  principle  of  Scott  v.  Avery 
does  not  apply,  or  rather  it  applies  to  exclude  them  from  their  defence.  The 
words  of  the  policy  are  that  the  defendants  will  pay  to  the  plaintiff'  any  loss  or 
damage  by  fire,'  according  to  the  tenor  of  the  articles.  The  articles,  which  are 
thus  part  of  the  covenant,  then  say,  '  which  loss  or  damage,  after  the  same  shall 
be  adjusted,  shall  immediately  be  paid.'  To  my  mind,  these  words  refer  not  to 
an  essential  term  of  the  covenant  (which  I  prefer  to  the  phrase  '  condition  prece- 
dent'), but  to  the  time  when  the  payment  is  to  be  made,  that  is,  immediately  after 
the  adjustment.  Tliis  verbal  examination  may  seem  critical,  but  it  is  called  for; 
for  if  the  adjusted  loss  only  is  stipulated  to  be  paid,  the  consequence  will  be  that 
if  the  assured,  after  the  adjustment,  discovers  that  something  has  been  burned 
which  has  been  bona  Jide  omitted  from  his  claim,  he  will  be  precluded  by  this 
clause  from  recovering  it.  But  I  do  not  think  that  it  was  in  the  contemplation  of 
the  parties  to  be  so  irrevocably  bound.  If  not,  then  the  agreement  is  to  pay  not 
the  adjusted,  but  the  actual  amount,  with  a  proviso  for  settling  the  matter  in  case 
of  dispute.  The  clause  goes  on  to  say  that  the  defendants  may,  at  their  option, 
restore  ;  so  that  it  is  not  merely  their  intention  to  pay  tlie  adjusted  loss.  It  is 
then  provided  tliat  in  case  '  any  difference  shall  arise,  touching  any  loss  or  dam- 
age,' it  shall  be  settled  by  arbitration.  Now  it  is  impossible  to  say  that  this  is 
merely  a  substitute  for  adjustment  between  the  parties,  for,  under  these  words, 
the  arbitrator  would  have  power,  not  merely  to  adjust  the  amount  that  shall  be 
paid,  but  to  determine  whether  the  plaintiff  shall  have  any  payment  at  all,  or 
whetlier,  by  reason  of  non-payment  of  premiums  or  of  fraud,  he  has  forfeited  his 
right  to  recover.  I  think,  tiierefore,  that  this  is  a  collateral  agreement  to  refer 
to  arbitration,  and  not  an  agreement  that  only  the  adjusted  loss  sliall  be  paid." 

1  Supreme  Court,  Dist.  of  Columbia,  4  L.  Times  (U.  S.  Eeports),  6;  s.  c.  2 
Bigelow's  Digest  of  Life  and  Accident  Insurance  Cases,  16. 


LIMITATION    OF   SUIT   AS   TO   TIME   AND   PLACE,   ETC.  GOl 

company  were  to  repay  all  the  premiums,  with  compound  inter- 
est, the  subject  came  again  under  consideration,  with  a  resiilt 
favorable  to  the  validity  of  the  provision  as  a  condition  prece- 
dent. The  court  thus  stated  its  views  as  to  the  present  state 
of  the  law  :  "  It  is  not  denied,"  say  the  court,  "  that  any 
mere  agreement  between  the  parties  that  any  future  differences 
growing  out  of  their  contract  shall  be  decided  by  arbitrators 
or  referees,  thereafter  to  be  chosen,  will  not  be  allowed  by  the 
court  to  oust  their  jurisdiction.  But  in  this  branch  of  the 
law  there  exist  distinctions  which,  if  carefully  observed  and 
followed,  will,  in  our  judgment,  reconcile  the  authorities,  and 
produce  a  beautiful  correspondence,  where  at  first  view  there 
may  ajjpear  nothing  but  a  conflict  of  authorities.  Tiie  leading 
case  on  tliis  question  was  that  of  Kill  v.  Hollister,^  decided  in 
the  Court  of  King's  Bench.  The  following  is  the  condensed 
and  careful  opinion  in  this  case  :  '  This  is  an  action  upon  a 
policy  of  insurance,  wherein  a  clause  was  inserted  that,  in  case 
of  any  loss  or  dispute  about  the  policy,  it  should  be  referred 
to  .arbitration  ;  and  the  plaintiff  avers,  in  his  declaration,  that 
there  has  been  no  reference.  Upon  the  trial  at  Guildhall  the 
point  was  reserved  for  the  consideration  of  the  court,  whether 
this  action  well  laid  before  reference  was  had.  And  by  the 
whole  court :  If  there  had  been  a  reference  depending,  or  made 
and  determined,  it  might  have  been  a  bar  ;  but  the  agreement 
of  the  parties  cannot  oust  the  court.  And  as  no  reference  has 
been  nor  any  is  depending,  the  action  is  well  brought,  and  the 
plaintiff  must  have  judgment.'  To  the  same  effect  are  Thomp- 
son V.  Charnock,-  Goldstone  v.  Osborne,^  and  Street  v.  Rigby,* 
following  a  prior  decision  made  by  Lord  Thurlow,  to  which 
may  1)0  added  Scott  v.  Avery .^  These  decisions,  however,  do 
not  apply  to  an  agreement  where  the  parties  have  actually 
chosen  and  named  the  referee  ;  tor  in  such  a  case  the  court 
say,  in  Kill  v.  Hollister,  the  reference  might  have  been  pleaded 
in  bar.  It  is  only  the  imperfect  and  executory  agreement  to 
have  a  reference  entered  into  hereafter  which  the  court  say 

1  1  Wilson,  129.  2  8  T.  R.  136. 

3  2  C.  &  P.  550.  *  6  Ves.  815. 

i  8  Excb.  487. 


602  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

will  not  oust  its  jurisdiction.  It  is  because  no  reference  has 
been  agreed  upon  and  settled  between  the  parties,  that  the 
agreement  is  not  a  bar.^  An  imperfect  and  executory  agree- 
ment, such  as  that  referred  to,  cannot  be  enforced  in  equity, 
for  the  reason  that  a  court  of  equity  will  not  and  cannot 
compel  the  parties  to  come  to  an  agreement  in  the  choice  of 
referees.  ...  If  the  controversy,  therefore,  be  not  in  efifect 
actually  referred  by  such  an  agreement,  as  it  certainly  is  not, 
it  must  remain  under  the  jurisdiction  of  the  court.  .  .  .  The 
efifect  of  these  decisions,  therefore,  is  this,  and  nothing  more, 
that  an  agreement  to  refer,  which  is  so  imperfect  as  not  to  be 
specifically  enforced  in  equity,  and  for  breach  of  which  noth- 
ing but  nominal  damages  can  be  recovered  at  law,  will  not  be 
allowed  to  oust  the  courts  of  jurisdiction,  else  there  will  be  a 
failure  of  justice.  .  .  .  But  if  the  contract  be  drawn  in  the 
'  prudential  way,'  recommended  by  Lord  Eldon,^  by  inserting 
a  stipulation  for  liquidated  damages,  or  there  be  a  separate 
bond  to  bind  the  parties  by  penalty  to  its  performance,  the  con- 
tract must  be  fulfilled,  or  the  penalty  will  be  enforced."  And 
nowhere,  adds  the  court,  "  have  we  been  able  to  find  a  decision 
or  even  a  dictum  to  sustain  the  doctrine  of  the  court  below, 
.  .  .  that  a  contract,  binding  the  parties  to  a  reference,  was 
contrary  to  pubHc  policy."  This  case  doubtless  well  stands  on 
the  doctrine  upon  which  the  cases  of  an  agreement  to  procure 
the  certificates  of  certain  persons  to  certain  facts,  before  action 
can  be  brought,  are  upheld,  to  wit,  on  the  ground  that  they  are 
by  contract  made  conditions  precedent  to  the  bringing  of  an 
action,  and  are  subject  to  no  such  objection  as  is  an  agreement 
to  refer,  which,  if  held  to  be  valid,  cuts  ofif  all  right  of  action. 
Any  stipulation,  therefore,  which  merely  looks  to  the  require- 

1  With  due  deference  to  the  learned  court,  it  is  suggested  that  the  effect  of 
the  decision  in  Kill  r.  Hollister  is  not  accurately  stated.  They  do  not  say  that 
an  agreement  to  refer  to  a  particular  person  would  be  good.  They  say  only  that 
an  agreement  to  refer  will  not  oust  them  of  their  jurisdiction,  but  intimate  that  if 
the  agreement  had  been  acted  on,  then  it  might  have  been  a  good  plea  in  bar. 

'^  "  There  might  have  been  an  agreement  for  liquidated  damages  to  enforce  a 
specific  performance,  if  an  action  could  not  produce  sufficient  damages,  or  equity 
would  not  entertain  a  bill  for  specific  performance."  Per  Lord  Eldon,  Street  v. 
Rigby,  ubi  supra. 


LIMITATION   OF   SUIT   AS   TO    TIME   AND   PLACE,   ETC.  603 

ment  of  certain  acts  to  be  done  or  omitted  before  bringing 
an  action,  seems  to  be  valid,  since  such  a  stipulation  not  only 
does  not  oust  the  courts,  but  obviously  contemplates  and  makes 
preparation  for  an  appeal  to  the  courts.  The  distinction  be- 
tween an  agreement  to  do  certain  things  before  bringing  an 
action,  and  an  agreement  to  refer  to  arbitration,  which  is  tan- 
tamount to  an  agreement  not  to  bring  an  action,  is  too  obvious 
to  need  remark.  Any  agreement  which  does  not  prevent  the 
parties  from  coming  into  court  will  doubtless  be  sustained. ^ 

§  496.   Arbitration  —  Equitable  Adjustment  after  Forfeiture.  — 

In  Nightingale  v.  State  Life  Insurance  Company  of  Worcester,^ 
there  was  a  provision  in  the  policy  that  in  case  of  forfeiture 
from  any  cause  the  party  interested  should  have  the  benefit  of 
such  equitable  adjustment  as  may,  from  time  to  time,  be  pro- 
vided by  the  board  of  directors  ;  and  it  was  held  that,  whether 
any  such  adjustment  could  be  made  was  entirely  in  the  discre- 
tion of  the  directors,  not  in  any  way  subject  to  the  control  of 
the  court.  "  It  is  true,"  said  Ames,  C.  J.,  in  givhig  the  opin- 
ion of  the  court,  "  that  by  the  qualifying  clause  of  the  condi- 
tion of  forfeiture  the  executors  of  the  assured*  would  have  been 
entitled  to  the  benefit  of  any  equitable  adjustment  provided  for 
by  existing  rules  established  by  the  directors,  or  accorded  by 
their  special  act.  Whether  such  rules  should  be  established, 
or  such  special  dispensation  from  the  forfeiture  should  be 
granted,  was,  as  it  seems  to  us,  left  by  this  qualifying  clause 
wholly  to  the  discretion  of  the  directors,  who  '  from  time  to 
time '  might  act  in  the  matter  ;  except,  indeed,  that  they  should 
not  be  permitted  to  change,  to  the  injury  of  the  assured,  an 
established  rule  of  adjustment,  existing  at  the  time  of  the  act 
or  omission,  of  the  forfeiture.  The  construction  which  sup- 
poses that  such  discretion  was  designed  by  both  parties  to  the 
contract  to  be  reposed  in  the  directors,  as  fair  arbiters  for  all 
interested,  borrows  support  from  the  fact  that,  under  the  char- 
ter of  this  company,  the  directors  are  elected  by  tlie  joint  votes 
of  the  assured  and  liolders  of  the  guaranty  stock,  and  are  to 

1  Trott  V.  City  Ins.  Co.,  1  Cliff.  (C.  Ct.  U.  S.)  439.    And  see  also  ante,  §§  484, 
485. 

-'  5  R.  I.  38. 


604  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

be  chosen,  in  moieties,  out  of  these  two  classes  of  the  members 
of  the  corporation.  No  rule  of  equitable  adjustment  applica- 
ble to  the  case  at  bar  appears  to  have  been  established  by  the 
directors  of  this  company,  and  the  request  made  to  them  by 
the  claimants  for  special  action  in  their  favor  was,  upon  full 
consideration,  rejected.  We  cannot  interfere  with  their  dis- 
cretion in  this  matter  without  doing  violence  to  the  contract 
upon  which  we  are  called  to  adjudicate,  and  must  therefore  ren- 
der." In  Manby  v.  Gresham  Life  Assurance  Company  ^  there 
was  an  agreement,  if  the  insured's  health  should  improve,  to 
remit  an  extra  premium  charged  on  account  of  the  infirm 
state  of  his  health,  upon  the  "  society  being  satisfied  "  of  the 
fact.  Having  entirely  recovered,  and  become  sound  and  well, 
the  insured  brought  his  bill  in  equity  to  compel  them  to  remit 
the  premium.  But  the  court  said  they  could  not  interfere 
with  the  judgment  of  the  directors,  if  bona  fide  exercised.  It 
could  not  undertake  to  say  in  which  way  their  judgment  should 
be  given. 

1  29  Beav.  429. 


WAIVER   AND    ESTOPPEL.  605 


CHAPTER    XXII. 

OF   "WAIVER   AND    ESTOPPEL. 

§  497.  Bqt  insurers  may,  and  often  do,  find  themselves  in 
such  a  position  tliat  thev  cannot  avail  themselves  either  of  a 
breach  of  warranty,  or  of  a  misrepresentation  or  concealment. 
And  when  in  this  position  they  are  said  to  be  estopped  from 
availing  themselves,  or  to  have  waived  the  right  to  avail  them- 
selves, of  such  a  defence.  And  the  rule  here  is,  with  refer- 
ence to  the  negotiations  had  at  the  time  of  taking  out  the 
policy,  that  where  the  application  is  reduced  to  writing  by 
the  insurer  or  his  agent  upon  the  oral  statement  of  the  appli- 
cant, whetlier  the  application  is,  or  is  not,  made  tantamount  to 
a  warranty,  by  being  made  part  of  the  contract,  the  insurer 
being  under  a  strong  moral  obUgation  to  .secure  to  the  appli- 
cant the  protection  for  which  he  pays,  if  a  controversy  arises 
upon  the  truthfulness  of  the  application,  and  statements  al- 
leged by  the  insurer  to  be  essential  were  omitted,  and  others 
falsely  made,  and  he  seeks  to  avoid  the  contract  on  that- 
ground,  parol  evidence  is  admissible  to  show  that,  at  the  time 
the  negotiations  were  pending,  the  facts  alleged  to  have  been 
omitted  or  falsely  stated  were  in  fact  truly  stated,  or  were 
accepted,  as  they  were  stated,  as  and  for  the  truth  by  the 
insurer,  or  that  the  conduct  of  the  insurer  led  the  applicant  to 
believe  tliat  such  as  were  omitted  were  immaterial,  and  such 
as  were  alleged  to  be  false  were  truly  made. 

§  498.  Estoppel  by  Act  of  Agent.  —  Prior  to  the  case  of 
Plumb  V.  Cattaraugus  County  Mutual  Insurance  Company,^ 
the  rule  in  that  State  had  been  that  statements  in  the  applica- 
tion which  were  referred  to  and  made  part  of  the  policy  were 
warranties,  a  breach  of  which  worked  a  forfeiture,  whether 
the  application  was  made  and  signed  by  the  applicant,  or,  at 

1  18  N.  Y.  392.      • 


606  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

his  request,  filled  up  by  an  agent  of  the  company  authorized  to 
receive  and  forward  applications,  and  then  signed  by  the  appli- 
cant. But  in  that  case  the  rule  was  changed  upon  the  follow- 
ing facts :  The  agent  and  surveyor  of  the  company  presented 
to  the  plaintiff  a  blank  application,  and  solicited  him  to  effect 
an  insurance  in  the  company  for  which  he  acted.  After  some 
hesitation  the  plaintiff  told  the  agent  that  if  he  insisted  upon 
taking  the  application  that  day,  he  must  get  along  alone,  and 
act  on  his  own  responsibility.  "Whereupon  the  agent  pro- 
ceeded to  make  the  survey  alone  ;  and  having  filled  up  the 
application,  presented  it  to  the  plaintiff  with  the  assurance 
that  it  was  all  right  and  just  as  it  should  be,  who  thereupon, 
stating  that  he  relied  upon  this  assurance,  signed  it.  It  ap- 
peared, however,  that  there  were  material  misstatements  in 
the  survey  as  to  the  relative  distances  and  positions  of  sur- 
rounding buildings.  Under  these  circumstances  the  court 
held  that  it  was  a  case  for  the  application  of  the  doctrine  of 
estoppel,  and  that,  since  the  agent  acted  within  the  scope  of 
his  authority,  what  he  had,  with  a  full  knowledge  of  the  facts, 
asserted  to  be  true,  the  company  could  not  be  allowed  to 
prove  to  be  false,  for  the  purpose  of  showing  a  breach  of  the 
warranty.  And  the  doctrine  of  this  case  was  subsequently 
affirmed  in  the  case  of  Rowley  v.  Empire  Insurance  Company,^ 
where  the  agent  was  empowered,  among  other  things,  "  to  take 
applications."  The  plaintiff  stated  verbally  to  the  agent  the 
facts  necessary  to  meet  the  requirements  of  the  company,  and 
among  other  things  that  the  property  was  incumbered  by  mort- 
gage, and  then  signed  the  application,  which  the  agent  pro- 
ceeded to  fill  up  on  his  return  to  his  residence.  In  it,  however, 
he  stated  that  there  was  no  incumbrance  on  the  property  ;  and 
the  falsity  of  this  statement  the  insurers  sought  to  show  in 
order  to  defeat  a  recovery.  But  the  court  held  that  they  were 
estopped  from  so  doing.  A  party  who  deals  with  an  agent, 
through  whom  he  applies  for  and  obtains  a  policy,  has  a  right  to 
presume  that  such  material  facts  as  are  made  known  to  him 
are  known  to  his  principal,  and  when  policies  are  issued  with  a 
full  knowledge  of  such  facts,  the  insured  is  to  suffer  no  preju- 

1  36  N.  Y.  (9  Tiff.)  650. 


WAITER   AND    ESTOPPEL.  607 

dice,  nor  are  the  insurers  to  gain  any  advantage  by  insisting 
upon  conditions  which  it  would  be  dislionest  to  enforce.^  The 
doctrine  of  these  cases  has  been  made  the  subject  of  statutory 
enactment  in  Maine,  whereby  such  statements  are  made  con- 
clusive upon  the  company  where  the  application  is  drawn  up 
by  the  agent  who  knows  the  facts.^ 

§  499.  And  the  Supreme  Court  of  the  United  States  has  at 
last  thrown  the  great  weight  of  its  authority  into  the  scale  in 
favor  of  this  doctrine  of  equitable  estoppel,^  the  elasticity  of 
which  it  must  be  admitted  has  been  put  to  the  test  of  the 
severest  tension.  But  to  this  the  courts  seem  to  have  been 
driven  by  the  constantly  increasing  tendency  of  insurance  com- 
panies to  seek  profit  at  the  expense  of  the  unwary,  and  protec- 
tion against  sharp,  not  to  say  dishonest,  practices,  by  invoking 
another  rule  of  law,  —  that  parol  evidence  is  inadmissible  to 
contradict  or  vary  the  terms  of  a  written  contract,  —  which  was 
intended  to  prevent  fraud  and  not  to  work  injustice.  In  that 
case  the  court  say :  — 

"  In  the  case  before  us,  a  paper  is  offered  in  evidence  against 
the  plaintiff,  containing  a  representation  concerning  a  matter 
material  to  the  contract  on  which  the  suit  is  brought,  and  it  is 
not  denied  that  he  signed  the  instrument,  and  that  the  repre- 
sentation is  untrue.  But  the  parol  testimony  makes  it  clear, 
beyond  a  doubt,  that  this  party  did  not  intend  to  make  that 
representation  when  he  signed  the  paper,  and  did  not  know  he 
was  doing  so ;  and,  in  fact,  had  refused  to  make  any  statement 
on  that  subject.  If  the  writing  containing  this  representation 
had  been  prepared  and  signed  by  the  plaintiff  in  his  applica- 

1  Security  Ins.  Co.  v.  Fay,  22  Mich.  (4  Clarke)  473 ;  ^tna  Live  Stock  and 
Fire  Ins.  Co.  v.  Olmstead,  21  Mich.  (3  Clarke)  246  ;  North  Am.  Fire  Ins.  Co.  v. 
Throop,  ib.  146 ;  Aurora  Fire  Ins.  Co.  v.  Eddy,  5-5  111.  213. 

2  Stat.  1861,  c.  .34,  §  2.  By  that  statute  it  is  enacted  that  "  no  insurance  com- 
pany shall  avoid  payment  of  a  loss  by  reason  of  incorrect  statements  of  value, 
or  title,  or  erroneous  description  by  tlie  insured  in  the  contract  of  insurance,  if 
the  jury  shall  find  that  the  diflerence  between  the  property  as  described  and  as 
really  existing  did  not  contribute  to  the  loss,  or  materially  increase  the  risk  ;  any 
change  in  the  property  insured,  its  use  or  occupation,  or  breach  of  any  of  the 
terms  or  conditions  of  the  contract  by  the  insured,  shall  not  afiect  the  contract, 
unless  the  risk  was  thereby  materially  increased." 

3  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222. 


608  insurance:  fire,  life,  accident,  etc. 

tion  for  a  policy  of  insurance  on  the  life  of  his  wife,  and  if  the 
representation  complained  of  had  heen  inserted  by  himself,  or 
by  some  one  who  was  his  agent  alone  in  the  matter,  and  for- 
warded to  the  principal  office  of  the  defendant  corporation, 
and  acted  upon  as  true  by  the  officers  of  the  company,  it  is 
easy  to  see  that  justice  would  authorize  them  to  hold  him  to 
the  truth  of  the  statement ;  and  that  as  they  had  no  part  in  the 
mistake  which  he  made,  or  in  the  making  of  the  instrument 
which  did  not  truly  represent  what  he  intended,  he  should 
not,  after  the  event,  be  permitted  to  show  his  own  mistake  or 
carelessness  to  the  prejudice  of  the  corporation. 

"  If,  however,  we  suppose  the  party  making  the  insurance 
an  individual,  and  to  have  been  present  when  the  application 
was  signed,  and  soliciting  the  assured  to  make  the  contract  of 
insurance,  and  that  the  insurer  himself  wrote  out  all  these 
representations,  and  was  told  by  the  plaintiff  and  his  wife  that 
they  knew  nothing  at  all  of  this  particular  subject  of  inquiry, 
and  that  tliey  refused  to  make  any  statement  about  it ;  and 
yet,  knowing  all  this,  wrote  the  representation  to  suit  himself, 
it  is  equally  clear  that  for  the  insurer  to  insist  that  the  policy 
is  void  because  it  contains  this  statement,  would  be  an  act  of 
bad  faith  and  of  the  grossest  injustice  and  dishonesty.  And 
the  reason  for  this  is,  that  the  representation  was  not  the 
statement  of  the  plaintiff,  and  that  the  defendant  knew  it  was 
not  when  he  made  the  contract ;  and  that  it  was  made  by  the 
defendant,  who  procured  the  plaintiff's  signature  thereto. 

"  It  is  in  precisely  such  cases  as  this  that  courts  of  law  in 
modern  times  have  introduced  the  doctrine  of  equitable  estop- 
pels ;  or,  as  it  is  sometimes  called,  estoppels  in  pais.  The 
principle  is,  that  where  one  party  has,  by  his  representations 
or  his  conduct,  induced  the  other  party  to  a  transaction  to 
give  him  an  advantage  which  it  would  be  against  equity  and 
conscience  for  him  to  assert,  he  would  not  in  a  court  of  jus- 
tice be  permitted  to  avail  himself  of  that  advantage.  And 
although  the  cases  to  which  this  principle  is  to  be  aj)plied  are 
not  as  well  defined  as  could  be  wished,  the  general  doctrine 
is  well  understood,  and  is  applied  by  courts  of  law  as  well  as 
equity  where  the  technical  advantage  thus  obtained  is  set  up 


WAIVER   AND   ESTOPPEL.  609 

and  relied  on  to  defeat  the  ends  of  justice  or  establish  a  dis- 
honest claim.  It  has  been  applied  to  the  precise  class  of  cases 
of  the  one  before  us  in  numerous  well-considered  judgments 
by  the  courts  of  this  country."  ^ 

§  500.  Estoppel  —  Misrepresentation  —  Agency.  ^—  In  Sparrow 
V.  Mutual  Benefit  Life  Insurance  Company ,2  the  validity  of  the 
policy  was  made  dependent  upon  the  truth  of  the  answers  to 
the  inquiries  contained  in  the  application  ;  and  the  insured 
was  inquired  of  in  the  same  interrogatory  as  to  prior  insur- 
ance, other  insurance,  and  also  if  he  had  insurance  upon  his 
life  in  other  companies,  in  what  companies,  and  to  what 
amount.  Tlie  answer  was,  "  Yes  ;  5,000,  under  policy 
17,990."  It  appeared  in  evidence  that  the  insurers,  a  Xew 
Jersey  corporation,  had  a  general  agent  in  Boston  for  Massa- 
chusetts, who  had  supervision  over  the  other  agencies  within 
the  State,  and  appointed  sub-agents,  whose  duty  it  was  to  sub- 
mit to  applicants  for  insurance  certain  questions,  and  to  see 
that  they  were  answered.  This  sub-agent  solicited  the  insured, 
at  the  place  of  business  of  the  latter,  to  make  application  for 
insurance,  and  took  down  from  the  dictation  of  the  insured  all 
of  the  answer  except  the  number  of  the  policy,  which  was 
inserted  by  the  clerk  of  the  sub-agent  at  the  latter's  direction, 
the  information  having  been  obtained  from  the  records  in  the 
office,  and  all  having  been  done  after  the  signature  of  the  in- 
sured was  made  to  the  application.  The  answer  was  untrue 
as  to  the  amount  of  other  insurance,  and  incomplete  as  to  the 
offices  in  which  it  was  placed.  It  was  held  to  be  a  question  of 
fact  for  the  jury  as  to  each  particular  act  in  the  negotiation, 
whether  the  agent,  who  might  be  acting  now  for  the  company 
and  now  for  the  insured,  was  in  fact  acting  for  the  one  or  the 
other ;  and  the  responsibility  of  each  particular  act  or  declara- 

1  Plumb  V.  Cattaraugus  Ins.  Co.,  18  N.  Y.  392 ;  Rowley  v.  Empire  Ins.  Co., 
36  N.  Y.  550 ;  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  526 ; 
Combs  V.  Hannibal  Savings  and  Ins.  Co.,  43  Mo.  148  ;  North  American  Fire  Ins. 
Co.  V.  Throop,  22  Mich.  146 ;  yEtna  Live  Stock  and  Tornado  Ins.  Co.  v.  01m- 
stead,  21  Mich.  246 ;  Miller  v.  2klut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216 ;  McBride 
V.  Republic  Fire  Ins.  Co.,  Sup.  Ct.  Wis.,  2  Ins.  L.  J.  270 ;  Miner  v.  Phoenix  Ins 
Co.,  27  Wis.  693. 

'  Tried  before  Shepley,  J.,  in  the  Circuit  Court  of  the  United  States,  First 
Judicial  District  (Massachusetts),  April,  1873,  and  not  yet  reported. 

39 


610  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

tion  would  rest  with  that  party  for  whom  the  agent  acted  in 
the  matter,  and  under  whose  direction  and  control,  as  to  that 
particular  matter,  he  might  be,  adopting  and  applying  the  doc- 
trine as  laid  down  in  Union  Mutual  Insurance  Company  v. 
Wilkinson.^  Such  an  agent  is  not  necessarily  the  agent  of 
the  insurers  in  every  act,  because  he  may  be  controlled  and 
directed  in  the  particular  matter  by  the  insured,  when  of 
course  he  is  the  agent,  pro  hac  vice,  for  the  insured.  But 
where  such  an  agent  by  his  advice,  opinion,  or  otherwise, 
acting  within  the  general  sphere  of  his  duties,  leads,  directs, 
or  controls  the  assured,  he  is  the  company's  agent,  and  they  are 
bound  by  his  acts  and  their  results.  And  in  the  same  case 
where  the  answer,  in  the  making  of  which  the  agent  of  the 
company  intervened,  was  untrue  and  incomplete,  the  defend- 
ant requested  the  court  to  instruct  the  jury  that  if  the  insured 
accepted  the  policy,  with  the  knowledge  that  the  answers  to 
the  several  questions  were  as  they  appeared  at  the  trial,  he 
was  bound  by  them,  whatever  knowledge  the  agent  of  the 
company  might  have  had  from  him,  or  from  any  other  person, 
relating  to  the  subject-matter  inquired  about.  But  the  court 
declined  to  so  instruct,  without  qualification,  but  did  instruct 
that  if  the  insured  accepted  the  policy  with  the  knowledge 
that  the  answers  were  in  the  words  as  they  appeared  at  the 
trial,  that  those  words  could  not  be  altered  or  changed,  or 
their  meaning  altered  or  changed  by  the  introduction  of  parol 
evidence,  and  that  although  the  agent  of  the  company  was 
aware  from  other  sources  that  the  answers  were  untrue,  yet 
if  they  were  knowingly  made  by  the  insured  and  adopted  by 
him,  and  their  truth  made  the  test  of  the  validity  of  the  policy, 
he  was  bound  by  them.  But  there  was  a  clear  distinction 
between  words  used  in  the  request  as  to  matters  which  would 
conclude  the  insured,  and  as  to  matters  which  would  estop  the 
office.  If  the  insured  adopts  the  particular  answer,  he  is  con- 
cluded from  saying  that  the  words  used  mean  any  tbing  differ- 
ent from  what  they  purport  to.  But  the  question  as  to  what 
concludes  the  insured  is  not  to  be  confused  with  the  question 
as  to  what  estops  the  office.     These  are  entirely  distinct  and 

1  13  WaU.  (U.  S.)  222;  ante,  §  144. 


WAIVER   AND    ESTOPPEL.  611 

separate.  The  office,  for  instance,  presents  a  question  hav- 
ing two  clauses.  Both  are  answered  with  equal  truth  and  ful- 
ness. With  regard  to  one  clause,  the  answer  is  put  down  and 
adopted  and  signed  by  the  assured.  With  regard  to  the  other, 
the  office  puts  down  but  a  part  of  the  answer.  While  the 
insured  is  concluded  as  to  the  first,  yet  when  the  company 
defends  upon  the  ground  that  the  answer  to  the  second  is  not 
true  and  full,  the  insured  may  be  allowed  to  reply  that  he  did 
say  something  in  reply  to  the  interrogatory  which  the  insurers 
did  not  put  down,  because  they  regarded  it  then  as  immaterial. 
And  although  in  the  light  of  subsequent  events  it  proves  to 
have  been  material,  yet  as  the  insured  determined  to  omit  it, 
it  was  their  act  and  not  his,  and  so  they  shall  not  be  allowed 
to  set  it  up  against  him.  The  questions,  whether  a  party 
insured  is  concluded  by  an  answer  which  he  has  adopted,  and 
whether  the  insurers  are  estopped  from  setting  up  some  imper- 
fection in  an  answer,  for  which  they  are  directly  responsible, 
are  entirely  distinct.  And  this  distinction  is  the  foundation 
of  the  doctrine  laid  down  in  the  Union  Mutual  Life  Insurance 
Company  v.  Wilkinson,^  under  which  parol  evidence  is  al- 
lowed, not  to  vary  or  change  the  language  as  it  is,  but  to  show 
that  the  party  claiming  to  set  up  an  omission  or  modification 
is  in  such  a  condition  that  he  cannot  set  it  up  by  reason  of  his 
own  knowledge  of  his  own  acts. 

§  501.  Estoppel  ■where  Facts  arise  pending  Negotiations.  —  This 
estoppel  is  oftenest  based  on  matter  arising  pending  the  negotia- 
tion, as  where  the  amount  of  the  risk  taken  is  beyond  the  limit 
prescribed  by  the  charter;^  or  a  special  risk  prohibited  by  the  by- 
laws is  taken  ;^  or  prepayment  of  prenaium,  though  by  the  terms 
of  the  policy  made  essential  to  its  validity,  is  not  insisted  on ;  * 
or  an  incomplete  answer,  or  no  answer  at  all,  to  a  question 

1  13  Wall.  (U.  S.)  222. 

'-  Hoxsie  V.  Prov.  Mut.Fire  Ins.  Co.,  6  R.  I.  517;  Fuller  v.  Boston  Fire  Ins. 
Co.,  4  Met.  (Mass.),  206  ;  Cumberland  VaUey  Mut.  Prot.  Ins.  Co.  v.  Schell,  29 
Penn.  St.  31.     But  see  post,  §  510. 

3  Merch.  and  Manuf.  Ins.  Co.  i'.  Curran,  45  Mo.  142. 

*  Sheldon  v.  Atlantic  Fire  and  Mar.  Ins.  Co.,  26  N.  Y.  117  ;  Heaton  v.  Man- 
hattan Fire  Ins.  Co.,  7  R.  I.  502;  Kibbe  et  als.  v.  Travellers'  Ins.  Co.,  N.  Y. 
Supreme  Ct.,  1872,  not  yet  reported. 


612  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

in  the  application  ;  ^  or  the  insnrers  renew  a  policy  after  notice 
that  the  statements  in  the  application  are  untrue.^  Notice 
which  is  sufficient  to  excite  attention,  and  put  a  party  on  his 
guard,  and  call  for  inquiry,  is  notice  of  every  thing  to  which 
sucli  inquiry  might  have  led,  as  of  a  change  of  business  or  an 
application  for  a  renewal  of  a  policy,  where  the  agent  of  the 
applicant  states  his  belief  of  the  fact  of  a  change,  and  refers  to 
a  certain  person  for  information,^  or  misleads  the  insured  in  the 
very  matter  of  supplying  the  information  upon  which  the  appli- 
cation is  filled  up.* 

§  502.  Estoppel  where  Facts  arise  during  the  Currency  of  the 
Policy.  —  It  nevertheless  not  unfrequently  takes  place  where 
the  facts  upon  which  it  is  based  arise  after  the  negotiations 
have  been  completed,  and  during  the  currency  of  the  contract, 
as  where  assessments  are  made  on  the  premium  notes  or  pre- 
miums received  after  knowledge;  actual  or  constructive,  of  a 
breach  of  the  condition  of  a  policy.^  "  The  defendants,"  said 
the  court,  in  Frost  v.  Saratoga  County  Mutual  Insurance  Com- 
pany,^ "  with  full  knowledge  of  the  facts  invalidating  the  pol- 
icy, have  chosen  to  act  upon  the  premium  note  of  the  plaintiff, 
as  an  available  security  in  their  favor,  and  which  he  was  bound 
to  pay.  Several  sums  have  accordingly  been  assessed  by  the 
directors  of  the  company,  and  payment  thereof  required  on  said 
note.     These  payments  have  been  made  by  the  plaintiff,  and 

1  Hall  V.  Peoples'  Mut.  Ins.  Co..  6  Gray  (Mass.),  185;  Blake  v.  Exchange 
Mut.  Ins.  Co.,  12  Gray  (Mass.),  26-5 ;  Liberty  Hall  Ass.  v.  Housatonic  Mut.  Fire 
Ins.  Co.,  7  Gray  (Mass.),  261 ;  Nichols  v.  Fayette  Mut.  Fire  Ins.  Co.,  1  Allen 
(Mass.),  63. 

2  Witherell  v.  Marine  Ins.  Co.,  49  Me.  200. 

>•  Reynolds  v.  Commercial  Fire  Ins.  Co.,  47  N.  Y.  (Com.  of  App.)  559. 

*  Sweeney  v.  Promoter  Life  Ass.  Co.,  14  Irish  Law,  n.  s.  476. 

5  Ins.  Co.  V.  Stockbower,  26  Penn.  St.  199  ;  Buckley  v.  Garrett,  47  Penn.  St. 
204;  Keenan  v.  Dubuque  Mut.  Fire  Ins.  Co.,  13  Iowa,  375;  North  Berwick 
Co.  V.  New  England  Fire  and  Mar.  Lis.  Co.,  52  Me.  336 ;  Tuttle  v.  Robin- 
son, 33  N.  H.  104 ;  Frost  v.  Saratoga  Mut.  Ins.  Co.,  5  Denio,  155 ;  Carroll  v. 
Charter  Oak  Ins.  Co.,  38  Barb.  (N.  Y.)  402  ;  s.  c.  in  Ct.  of  App.,  10  Abbott,  n.  s. 
166  ;  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Mitchell,  48  Penn.  St.  384;  Hods- 
don  V.  Guardian  Life  Ins.  Co.,  97  Mass.  144 ;  Bevin  v.  Conn.  Mut.  Life  Ins.  Co., 
23  Conn.  244  ;  Supple  v.  Cain,  9  Irish  Law,  n.  s.  1265  ;  Wing  v.  Harvey,  2  De  G., 
M.  &  G.  265 ;  s.  c.  27  Eug.  L.  &  Eq.  140 ;  Hale  v.  Union  Mut.  Fire  Ins.  Co.,  32 
N.  H.  205. 

e  6  Denio  (N.  Y.),  154. 


WAIVER    AND    ESTOPPEL.  613 

the  question  is  presented,  Can  the  defendants,  who  have  thus 
affirmed  the  original  and  continuing  validity  of  the  premium 
note,  in  which  the  plaintiff  has  fully  acquiesced,  be  allowed  to 
set  up  that  this  policy,  which  formed  the  only  consideration  of 
the  note,  was  never  valid,  and  that  on  the  sole  ground  of  a 
breach  of  warranty  on  the  part  of  the  plaintiff,  the  facts  con- 
stituting such  breach  of  warranty  being  as  well  known  to  the 
defendants  when  they  exacted  and  received  payments  on  the 
note  as  they  are  at  the  present  time  ?  This  is  the  point  to  be 
determined,  and  I  should  certainly  with  great  reluctance  come 
to  the  conclusion  that  the  defendants  can  be  allowed  to  occupy 
the  position  they  now  assume.  It  is  wholly  inconsistent  with 
the  ground  taken  by  them  when  they  called  for  payments 
on  the  premium  note,  and  I  think  common  justice  forbids  any 
change  of  position  in  this  respect.  '  It  is  a  question  of  ethics,' 
as  was  said  in  Dezell  v.  Odell,^  and  morality  requires  that  these 
defendants  shall  be  held  strictly  to  the  ground  they  have  chosen 
to  assume  for  themselves.  An  estoppel,  according  to  Lord 
Coke,  is  where  '  a  man's  own  act  or  acceptance  stoppeth  or 
closeth  up  his  mouth  to  allege  or  plead  the  truth.'  -  Estoppels 
are  of  three  kinds  :  by  matter  of  record,  by  deed,  and  in  pais  ; 
but  our  present  concern  is  with  the  latter  class  only.  Such  an 
estoppel  arises  when  one  person  is  induced  by  the  assertion  of 
another  to"  do  that  which  would  be  prejudicial  to  his  own  inter- 
est, if  the  person  by  whom  he  had  been  induced  to  act  in  this 
manner  was  allowed  to  contradict  and  disprove  what  he  had 
before  affirmed.  In  the  case  of  Pickard  v.  Sears,^  the  principle 
is  thus  stated  by  Lord  Den  man  :  '  The  rule  of  law  is  clear, 
that  when  one  by  his  words  or  conduct  wilfully  causes  another 
to  believe  the  existence  of  a  certain  state  of  things,  and  induces 
him  to  act  on  tliat  belief,  so  as  to  alter  his  own  previous  posi- 
tion, the  former  is  concluded  from  averring  against  the  latter 
a  different  state  of  things  as  existing  at  the  same  time.'  In 
the  case  of  Dezell  v.  Odell,*  Cowen,  J.,  said  :  '  We  then  have  a 
clear  case  of  an  admission  by  the  defendant  intended  to  influ- 
ence the  conduct  of  the  man  with  whom  he  was  dealing,  and 

1  3  Hill,  2-25.  2  Co.  Litt.  352  a. 

3  6  A.  &  E.  469.  *  Supra. 


614  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

actually  leading  him  into  a  line  of  conduct  which  must  be  preju- 
dicial to  his  interest,  unless  the  defendant  be  cut  off  from  the 
power  of  retraction.  This  I  understand  to  be  the  very  defini- 
tion of  an  estoppel  in  loais.''  The  estoppel  is  allowed  to  pre- 
vent fraud  and  injustice,  and  exists  whenever  a  party  cannot 
in  good  conscience  gainsay  his  own  acts  or  assertions.  The 
authorities  upon  this  point  are  numerous,  and  all  speak  the 
same  language.^  '  It  makes  no  difference,  in  the  operation  of 
this  rule,  whether  the  thing  admitted  was  true  or  false,  it  being 
the  fact  that  it  has  been  acted  upon  that  renders  it  conclusive.'^ 
Here  the  defendants,  in  affirming  the  validity  of  the  premium 
note,  necessarily  affirmed  that  the  policy  was  also  originally 
valid.  This  affirmation  was  acted  upon  by  the  plaintiff,  for  he 
advanced  money  in  consequence  of  its  being  made,  and  the 
defendants  shall  not  now  be  allowed  to  set  up  any  fact  dehors 
the  policy  in  order  to  impeach  the  original  validity  of  the  con- 
tract of  insurance.  Qui  sentit  commodiim,  sentire  debet  et  onusy 
§  503.  Estoppel  if  •what  is  undertaken  by  the  Insured  is  kno'wrn 
by  the  Insurer  to  be  impossible.  —  So  if  a  policy  be  issued,  or 
a  contract  of  insurance  made,  under  such  circumstances  that 
it  is  known  to  the  insurers  that  the  conditions  of  the  policy,  as 
to  the  payment  of  the  premium,  will  not,  because  they  cannot, 
be  complied  with,  this  will  be  deemed  a  waiver  of  such  con- 
ditions, and  an  estoppel  against  setting  up  a  non-compliance 
therewith  as  a  defence,  as  appears  by  a  very  recent  case  in 
the  Circuit  Court  of  the  United  States  for  the  District  of  Cali- 
fornia.^ The  San  Francisco  agent  of  a  New  York  company  for- 
warded an  application,  dated  June  5,  1867,  reciting  that  if  the 
application  was  accepted  the  policy  was  to  be  in  force  from 
that  date.  The  application  was  accepted,  and  a  policy,  dated 
April  5, 1867,  was  issued,  reciting  that  the  quarterly  premiums 
were  due  on  or  before  the  sixth  days  of  April,  July,  October, 
and  January,  and  providing  that  if  not  paid  on  or  before  said 

1  Gregg  V.  Wells,  10  A.  &  E.  90  ;  Coles  v.  Bank  of  England,  ib.  437  ;  Sandys 
V.  Hodgson,  ib.  472;  Stevens  v.  Baird,  9  Cowen  (N.  Y.),  274  ;  Welland  Canal  v. 
Hathaway,  8  Wend.  (N.  Y.)  480  ;  2  Smith,  Lead.  Cases,  458,  467,  notes ;  1  Greenl. 
Ev.  §§  22,  27,  204,  207. 

2  Ib.  §§  208,  209. 

»  Young  V.  Mut.  Life  Ins.  Co.  of  New  York,  2  Ins.  L.  J.  289. 


WAIVER  AND   ESTOPPEL.  615 

days,  "  at  the  office  in  New  York  (unless  otherwise  expressly 
agreed  in  writing),  or  to  agents,  when  they  produce  receipts 
signed  by  the  president  or  secretary,"  it  was  to  be  void.  The 
time  of  passage  between  San  Francisco  and  New  York  was 
then  from  twenty-three  to  thirty  days,  and  the  policy  arrived 
at  San  Francisco  August  2,  1867.  And  hereupon  the  court 
observes : — 

"  The  policy  bears  date  April  5th,  and  the  receipts  prepared 
by  the  company  correspond  with  this  date.  The  company, 
therefore,  regarded  the  second  quarter's  premium  as  due  July 
6th,  and  acted  upon  that  idea,  although  the  application  was 
made,  and  the  first  memorandum  receipt  and  contract  given 
on  June  5tli.  The  promissory  note  given  for  the  first  quar- 
ter's premium  being  payable  without  grace,  fell  due  August 
4th.  It  will  be  seen  that  the  condition  of  the  policy  imposing 
a  forfeiture  required  payment  to  be  made  '  at  the  office  of  the 
company  in  the  city  of  New  York,  or  to  agents,  tvheji  they  pro- 
duce receipts  signed  by  the  president  or  secretary,  unless  other- 
wise expressly  agreed  in  writing.'  There  is  no  evidence  in 
this  case  of  its  having  been  otherwise  agreed  in  writing.  It 
does  not  appear  that  the  policy  was  received  at  the  San  Fran- 
cisco office  before  the  2d  of  August.  At  or  about  the  6th  of 
July  the  policy  must  have  been  in  the  defendant's  office  in 
New  York,  which  would  have  given  twenty-seven  days  to 
August  2d,  to  make  the  passage  to  San  Francisco.  The  defend- 
ant knew  at  the  time  of  despatching  the  policy  that  the  second 
instalment  of  premium  had  not  been  paid  at  the  office  in  New 
York.  It  also  knew  that  it  could  7iot  he  paid  to  its  agents  here, 
in  accordance  with  the  terms  of  the  contract,  so  as  to  be  obli- 
gatory upon  defendant,  for  the  reason  that  the  only  receipt 
duly  signed  as  specified  in  the  policy  authorizing  payment  to 
its  agents  was  attached  to  the  policy,  and  would  not  reach 
San  Francisco  till  the  month  of  August,  a  month  after  it  was 
due.  The  defendant  did  not  expect  payment  at  its  office  in 
New  York  city,  or  it  would  not  have  sent  its  receipt  to  its 
agent  to  enable  him  to  receive  payment.  The  defendant,  then, 
by  its  officers  in  New  York,  transmitted  the  policy  and  receipts, 
with  knowledge    that   payments  had  not,  and  would  not  be 


616  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

made  at  tlie  office  in  New  York,  and  that  it  could  not  he  made 
elseiohere  in  the  mode  required  by  the  terms  of  the  contract 
for  a  month  after  due.  Yet  the  policy  was  sent  with  an  intent 
that  it  should  be  delivered  and  payment  received  by  its  agent 
in  San  Francisco,  although  it  knew  that  there  must  necessa- 
rily be  a  forfeiture  upon  the  strict  letter  of  the  contract.  Also, 
after  the  receipt  of  the  policy  at  San  Francisco,  on  the  2d  of 
August,  nearly  a  month  after  the  instalment  fell  due,  accord- 
ing to  the  terms  of  the  policy,  the  defendant's  agent,  necessa- 
rily knowing  that  payment  had  not  been  made,  stamped  and 
countersigned  the  receipt,  ready  for  delivery  upon  payment, 
thereby  treating  the  agreement  as  still  in  force.  Again,  on 
the  8th  of  August,  four  days  after  the  note  given  for  the  first 
quarter's  premium  fell  due,  and  after  default  in  payment,  and 
necessarily  with  the  knowledge  of  non-payment  of  both  the 
note  and  second  instalment,  the  agent  of  the  defendant  ad- 
dressed to  Young  the  note  before  set  out  in  this  opinion.^ 

"  This  act,  after  the  forfeiture,  if  any  there  was,  had  at- 
tached, recognizes  the  agreement  as  being  still  in  force.  The 
letter  does  not  even  demand  payment,  or  refer  to  the  fact  of 
non-payment,  or  fix  any  time  when  the  insured  should  call 
for  the  policy  or  make  payment.  It  simply  notifies  him  that 
his  policy  has  arrived,  and  asks  whether  it  should  be  sent  to 
him  at  Yallejo,  or  whether  he  would  call  and  get  it  when  in 
the  city,  implying  that  it  would  be  at  his  option  to  have  it 
sent  to  him  at  once,  or  wait  his  convenience  till  he  should 
come  to  the  city  and  be  able  to  call  for  it.  The  defendant 
manifested  no  haste  or  anxiety  upon  the  subject,  for  the  policy 
was  on  hand  from  the  second  to  the  eighth  of  August  at  least, 
before  the  notice  to  Young  was  even  written,  and  it  does  not 
appear  when  it  was  sent.     It  does  not  appear  that  this  or  any 

1     "  San  Francisco,  Aug.  8,  1867. 
"M.  P.  Young,  Esq.,  Vallejo,  Cal. 

"  Deal-  Sir,  —  Your  policy  of  insurance  with  the  Mutual  Life  Insurance  Com- 
pany has  arrived.    Please  inform  me  whether  I  shall  send  it  to  you  at  Vallejo, 
or  if  you  will  call  and  get  it  when  you  are  in  the  city. 
"  Respectfully  yours, 

"  H.  D.  HoMANS,  General  Afjetit. 

"Peril.  W.  Heath,  Jr." 


WAIVER    AND    ESTOPPEL.  617 

Other  notice  reached  him.  Xo  other  act  of  the  company  is 
shown  inconsistent  with  this  action,  or  tending  in  the  slightest 
degree  to  show  an  intention  to  insist  upon  a  forfeiture  till 
after  the  death  of  Young,  when  the  policy  was  cancelled, 
October  31st,  payment  of  the  loss  having  before  been  refused. 
It  could  hardly  have  been  expected  that  Young  would  call  to 
make  the  second  payment  until  notified  whether  the  risk  had 
been  accepted,  especially  as  there  was  ample  time  between 
June  5th,  when  the  application  was  made,  and  the  5th  of  Sep- 
tember, the  time  when  the  next  payment  would  have  fallen 
due,  had  the  date  of  the  policy  agreed  with  the  date  of  the 
application,  and  the  preliminary  memorandum  of  agreement 
given  to  him  by  defendant's  agent  in  San  Francisco.  It  was 
doubtless  supposed  that  notice  of  acceptance  or  rejection  would 
be  given  before  the  note  for  the  first  quarter's  premium  would 
fall  due.  But  however  this  may  be,  the  several  acts  of  the 
defendant,  and  all  its  acts  and  the  acts  of  its  officers  in  rela- 
tion to  the  matter  shown  to  the  court,  which  were  performed 
subsequent  to  the  accruing  of  the  forfeiture,  if  any  accrued, 
treat  the  agreement  for  insurance  as  still  in  force.  They 
affirmatively  indicate  an  intention  not  to  insist  upon  a  forfeit- 
ure, and  had  the  accident  and  death  not  occurred,  there  can  be 
no  doubt,  from  the  facts  shown,  that  even  as  late  as  the  death 
of  Young  the  premium  would  have  been  received  and  the 
policy  delivered.  In  the  case  cited  by  counsel  of  Chipman 
against  the  same  defendant,  tried  in  this  court  a  year  ago, 
there  was  no  act  of  any  kind  shown  on  the  part  of  the  com- 
pany indicating  an  intention  to  waive  the  forfeiture,  or  in  any 
way  recognizing  a  subsisting  contract.  Whereas  in  this  case, 
all  the  acts  of  the  company  after  the  forfeiture  accrued,  and 
prior  to  Young's  death,  shown  to  the  court,  recognize  the  con- 
tract as  still  subsisting,  and  manifest  an  intention  not  to  claim 
a  forfeiture. 

"  1  think,  upon  the  facts,  the  court  must  find  a  waiver  of 
any  forfeitures  which  had  accrued,  and  that,  under  the  circum- 
stances, after  the  death  of  the  assured,  it  was  too  late,  for  the 
first  time,  to  insist  upon  the  forfeiture." 

§  504.  Estoppel   -where    Facts    arise    after   Loss.  —  So  also  au 


618  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC. 

estoppel  arises  where  the  facts  arise  after  a  loss,  as  where  an 
ofifer  of  settlement  after  personal  examination  by  an  agent  is 
made,  and  no  compliance  has  been  had  with  the  condition  that 
notice  of  a  loss  shall  be  given  forthwith,  or  a  particular  state- 
ment of  loss  furnished ;  ^  or  notice  of  an  election  to  rebuild 
after  full  knowledge  that  misrepresentations  were  made  at  the 
time  of  taking  out  the  policy  ;  ^  or  defective  notices,  accounts, 
certificates,  or  proofs  of  loss  are  received  without  objection,  or 
objections  founded  on  other  grounds.^ 

§  505.  What  Acts  or  Omissions  amount  to  an  Estoppel  or 
"Waiver  after  Loss. —  The  terms  "  estoppel "  and ''  waiver,"  though 
not  technically  identical,  are  so  nearly  allied,  and,  as  applied 
in  the  law  of  insurance,  so  like  in  the  consequences  which  fol- 
low their  successful  application,  that  they  are  used  indiscrimi- 
nately by  the  courts.  To  constitute  a  waiver,  as  of  a  particular 
account  of  loss,  or  an  estoppel  against  setting  up  the  want 
of  such  an  account  as  a  defence  to  an  action  by  the  insured  to 
recover  a  loss,  there  should  be  shown  some  act  or  declaration 
by  the  company  during  the  currency  of  the  time  within  which 
the  account  is  required  dispensing  with  it,  or  some  delay  or 
omission  to  act,  from  which  the  insured  might  reasonably  infer 
that  the  underwriters  did  not  mean  to  insist  upon  it.  There 
is  a  time  when  objections  in  matters  of  form  must  be  taken. 
If  they  are  not  then  made,  they  never  can  be  made.  The  law 
does  not  say  that  the  procedure  is  perfect,  but  that  the  ques- 
tion is  not  open.  The  adherence  to,  and  liberal  application 
of,  this  principle,  are  necessary  to  the  maintenance  of  good 

1  Lycoming  County  Mut.  Ins.  Co.  r.  Schreffler,  42  Penn.  St.  188 ;  Eranklin 
Fire  Ins.  Co.  v.  Updegraflf,  43  Penn.  St.  350. 

2  Bersche  v.  Globe  Mut.  Ins.  Co.,  31  Mo.  546. 

3  Burastead  v.  Dividend  Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  81 ;  Francis  v.  Somer- 
ville  Mut.  Ins.  Co.,  1  Dutch.  (N.  J.)  78;  Underbill  v.  Agawam  Mut.  Ins.  Co.,  6 
Cusb.  (Mass.)  440  ;  Kernocban  v.  New  York  Bowery  Fire  Ins.  Co.,  17  N.  Y.  428 ; 
Priest  V.  Citizens'  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  602  ;  Lewis  v.  Monmouth 
Mut.  Fire  Ins.  Co.,  52  Me.  492;  Baxter  v.  Cbelsea  Mut.  Ins.  Co.,  1  Allen  (Mass.), 
294  ;  Bartlett  v.  Union  Mar.  and  Fire  Ins.  Co.,  46  Me.  500  ;  Noyes  v.  Washington 
County  Mut.  Ins.  Co.,  30  Vt.  659  ;  Cornell  v.  Milwaukie  Mut.  Fire  Ins.  Co.,  18 
Wis.  387  ;  Byrne  v.  Rising  Sun  Ins.  Co.,  20  Ind.  103  ;  Mellen  v.  Eagle  Life  and 
Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y.  Superior  Ct.),  268;  Works  v.  Farmers' 
Mut.  Fire  Ins.  Co.,  57  Me.  28  ;  Turley  i-.  N.  A.  Fire  Ins.  Co.,  25  Wend.  (N.  Y.) 
347 ;  Eathbone  v.  City  Fire  Ins.  Co.,  31  Conn.  193. 


WAIVER   AND   ESTOPPEL.  619 

faith  and  fair  dealing  in  judicial  proceedings.^  Thus  the 
insured  is  estopped  to  object  to  a  failure  to  bring  suit  within 
the  time  limited,  when  such  failure  is  induced  by  the  conduct 
of  the  insurers  ;  ^  or  to  bringing  suit  within  the  time  before 
the  expiration  of  which  the  loss  is  not  payable,  when  the  in- 
surers deny  all  liability  ;  ^  though  it  is  otherwise  if  the  refusal 
to  pay  is  conditional,  as  upon  the  ground  that  other  suits  have 
been  brought  against  them,  and  that  they  will  do  nothing 
while  these  suits  are  pending.*  So  parties  are  estopped  from 
objecting  to  defective  notices,  accounts  of  loss,  certificates,  and 
preliminary  proofs  by  an  absolute  denial  of  liability  ;  or  refusal 
to  pay  on  the  merits  of  the  case ;  ^  and  by  a  part  payment  of  the 
loss.^  And  if  the  agent  of  the  company,  after  an  examination 
of  tlie  circumstances  attending  the  loss,  informs  the  insured 
that  he  cannot  recommend  the  company  to  pay  tbe  loss  because 
it  appears  by  his  statements  that  he  had  sold  more  goods  than 
he  had  purchased,  this  is  a  denial  of  all  liability  on  the  part 
of  the  company,  and  a  waiver  of  its  right  to  demand  the  usual 
proofs  of  loss."  And  when  one  defect  alone  is  objected  to, 
others  are  waived.^  But  if  the  proofs  are  declared  to  be  defec- 
tive, the  insurers  need  not  go  further  and  specify  wherein 
they  are  defective,  although  requested  so  to  do.  A  reference 
to  the  policy  for  information  upon  that  point  will  be  sufficient 
to  avoid  an  estoppel  or  waiver.^  And  waiver  of  notice  is  not  a 
waiver  of  a  particular  account  of  loss  where  both  are  required.^*' 
The  insurers  will  also  be  estopped  to  take  at  the  trial  any 

1  Blake  v.  Exchange  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265,  per  Thomas,  J. 

2  Ames  V.  New  York  Ins.  Co.,  14  N.  Y.  254 ;  Grant  v.  Lexington  Ins.  Co.,  5 
Ind.  23. 

3  Norwich  and  N.  Y.  Transp.  Co.  v.  Western  Mass.  Fire  Ins.  Co.,  6  Blatchf. 
(U.  S.  C.  Ct.)  241. 

*  Ripley  v.  ^tna  Fire  Ins.  Co.,  30  N.  Y.  136. 

5  Norwich  and  N.  Y.  Transp.  Co.  v.  Western  Mass.  Fire  Ins.  Co.,  6  Blatchf. 
(U.  S.  C.  Ct.)  241 ;  Manhattan  Fire  Ins.  Co.  v.  Stein,  5  Bush  (Ky.),  562;  Fran- 
cis V.  Ocean  Ins.  Co.,  6  Cow.  (N.  Y.)  404. 

6  Westlake  v.  St.  Lawrence  County  Mut.  Fire  Ins.  Co.,  14  Barb.  (N.  Y.)  206. 
■^  McBride  v.  Republic  Fire  Ins.  Co.,  Sup.  Ct.  Wis.,  2  Ins.  L.  J.  271. 

8  Ayres  i'.  Hartford  Fire  Ins.  Co.,  17  Iowa,  176. 

9  Kimball  v.  Hamilton  Fire  Ins.  Co.,  8  Bosw.  (N.  Y.  Superior  Ct.)  495;  Spring 
Garden  Mut.  Fire  Ins.  Co.  v.  Evans,  9  Md.  1. 

w  Desilver  v.  State  Mut.  Fire  Ins.  Co.,  38  Penn.  St.  130. 


620  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

technical  advantage  of  a  mistake  into  which  they  have  led  the 
insured.  Thus  where  the  original  policy,  which  was  under 
seal,  was  burned  with  the  property  insured,  and  the  insured 
applied  for  and  obtained  a  copy  of  the  policy,  by  which  it 
did  not  appear  that  the  original  was  under  seal,  upon  which 
an  action  of  assumpsit  was  brought,  upon  objection  by  the 
insurers  that  the  original  policy  was  under  seal,  and  that 
therefore  the  action  should  have  been  covenant,  the  court 
refused  to  allow  them  to  deny  that  the  copy  which  they  them- 
selves had  furnished  was  a  true  copy.^  So  receiving  a  pre- 
mium with  knowledge  estops  the  insurers  from  denying  that 
the  property  covers  the  policy ;  ^  and  if  it  be  a  second  pre- 
mium, they  will  be  estopped  to  set  up  the  collusion  and  fraud 
of  their  agent  with  the  insured,  if  known  to  them  before  the 
receipt  of  the  second  premium.^ 

§  506.  No  Estoppel  where  the  Facts  are  not  kno-wn.  —  We 
have  already  seen  that  this  estoppel  takes  place  as  well  upon 
the  acts  and  omissions  of  agents  as  upon  those  of  the  princi- 
pals.* And  it  need  not  be  said  that  if  there  is  no  knowledge, 
or  the  state  of  facts  be  not  such  that  knowledge  ought  to  be 
inferred  of  the  breach  of  condition  or  neglect  of  duty,  there 
can  be  no  waiver  of  matter  of  estoppel,  as  no  one  can  be  pre- 
sumed to  have  waived  that  the  existence  of  which  he  has  not 
known. ° 

§  507.  No  Estoppel  where  Insured  has  not  been  prejudiced.  — 
An  estoppel  arises  where  the  insurer,  having  knowledge  of  the 
facts  to  which  he  has  a  right  to  take  exceptions,  or  which  would 
constitute  a  defence  against  any  claim  under  the  policy,  if  he 
chose  to  avail  himself  of  them,  so  bears  himself  thereafter  in 
relation  to  the  contract  as  fairly  to  lead  the  assured  to  believe 
that  the  insurer  still  recognizes  the  policy  to  be  in  force,  and 
to  constitute  for  him  a  valid  protection.     Under  such  circum- 

1  Rockford  Ins.  Co.  v.  Nelson,  Sup.  Ct.  111.,  2  Ins.  L.  J.  341. 

2  Black  V.  Columbian  Ins.  Co.,  42  N.  Y.  893. 

2  Armstrong  v.  Turquand,  9  Irish  Law,  n.  s.  32. 

*  Ante,  §  498  et  seq. 

^  Finley  v.  Lycoming  County  Mut.  Ins.  Co.,  30  Penn.  St.  311 ;  Forbes  v.  Aga- 
wam  Mut.  Fire  Ins.  Co.,  9  Cush.  (Mass.)  470;  Allen  v.  Vermont  Mut.  Fire  Ins. 
Co.,  12  Vt.  366. 


WAIVER   AND   ESTOPPEL.  621 

stances  the  courts  refuse  to  allow  the  insurer  to  take  an  unfair 
advantage  of  the  acts,  declarations,  or  omissions  of  the  insured 
to  his  prejudice.^  It  is  not  the  intention  of  the  insurer,  but 
the  effect  upon  the  insured,  which  gives  vitality  to  the  estop- 
pel, and  therefore  if  the  circumstances  are  such  that  the 
insured  could  by  no  possibility  be  prejudiced,  it  is  doubtful 
whether  the  insurer  can  be  fairly  brought  within  the  scope  of 
an  estoppel.  The  insured  must  be  misled  to  his  prejudice. 
The  waiver  that  is  spoken  of  in  these  cases  is  another  term 
for  estoppel.  It  does  not  arise  by  implication  alone,  except 
from  some  conduct  by  one  party  which  leads,  or  justly  may 
lead,  in  reliance  upon  it,  another  party  to  believe  a  certain 
course  of  action  or  non-action  on  his  part  will  fulfil  all  his 
obligations  to  the  first  party,  so  that  to  allow  the  first  party  to 
disappoint  the  expectation  or  belief  founded  upon  and  induced 
by  his  conduct  would  be  a  fraud.  To  constitute  an  estoppel 
there  must  be  such  conduct  on  the  part  of  the  insurers  as 
would,  if  they  were  not  estopped,  operate  as  a  fraud  on  the 
party  who  has  taken,  or  neglected  to  take,  some  action  to  his 
own  prejudice  in  reliance  upon  it.  Where  nothing  has  been 
done  or  neglected  by  their  authority,  and  where  no  act  has 
been  done  or  left  undone  by  the  insured,  in  reliance  upon  the 
act  or  non-action  of  the  insured,  there  can  be  no  estoppel.^ 

§  508.  Silence  and  Intent.  —  Mere  silence,  it  has  been  some- 
times said,  is  never  a  waiver  ;^  but  it  is  conceived  that  the  true 
doctrine  on  this  point  is,  that  while  mere  silence  in  some  cases, 
where  that  silence  has  no  effect  upon  the  insurer,  may  not 
operate  as  a  waiver,  yet  in  others,  where  it  has  the  effect 
to  mislead  the  insurer,  it  will  so  operate.  And  so  it  is  also 
sometimes  said  that  a  waiver  never  occurs  unless  intended, 
or  where  the  act  relied  on  as  a  waiver  is  such  that  it  ought  in 
equity  to  estop  the  party  from  denying  it.  Thus  an  assess- 
ment, by  mistake  of  the  treasurer  of  a  mutual  insurance  com- 
pany, on  a  premium  note,  upon  a  vote  to  assess  ''  all  policies 
in  force  "  after  the  policy  has  been  declared  forfeited  for  breach 

1  Viele  V.  Germania  Fire  Ins.  Co.,  26  Iowa,  9. 

'  Security  Ins.  Co.  v.  Fay,  22  Mich.  467. 

*  Ayres  v.  Hartford  I'ire  Ins.  Co.,  17  Iowa,  176. 


622  INSURANCE:    FIRE,   LIFE,    ACCIDENT,    ETC. 

of  condition,  though  the  assessment  be  paid,  is  no  waiver. 
The  assessment,  not  being  by  the  authority  of  the  company, 
is  not  their  act,  and  of  course  they  can  intend  nothing  by  it. 
They  have  no  knowledge  of  the  act,  and  to  constitute  waiver 
there  must  be  not  only  knowledge  of  the  thing  waived,  but 
the  act  of  waiver  must  be  knowingly  done.^  But  this  also,  it 
will  be  observed,  limits  the  knowledge  or  intention  to  the  act 
that  constitutes  the  waiver,  and  with  this  limitation  is  no 
doubt  the  law.  The  waiver  may  be  actually  unintentional, 
though  if  the  act  out  of  which  it  comes  be  intentional,  the 
waiver  is  constructively  so. 

§  509.  Agent  acting  under  undisclosed  Instructions.  —  The 
energetic  language  of  the  court  in  a  very  recent  case  in  Illi- 
nois,^ not  only  leaves  no  doubt  as  to  the  position  of  that  court, 
but  well  expresses  the  spirit  of  the  modern  decisions  touching 
the  responsibility  of  insurance  companies  for  the  acts  of  their 
agents  in  violation  of  instructions.  "  We  desire  it  to  be  under- 
stood," is  the  language  of  the  court,  "  in  this  jurisdiction,  at 
least,  when  an  insurance  company  has  appointed  an  agent, 
known  and  recognized  as  such,  and  he,  by  his  acts,  known 
and  acquiesced  in  by  them,  induces  the  public  to  believe  that 
he  is  vested  with  authority  to  do  the  act,  and  nothing  to  the 
contrary  is  shown  or  pretended  at  the  time  of  doing  the  act, 
public  policy  and  the  safety  of  the  people  demand  that  the 
company  should  be  liable  for  such  acts  as  appear  on  their  face 
to  be  usual  and  proper  in  and  about  the  business  in  which  the 
agent  is  engaged.  It  is  the  fault  of  the  companies  in  sending 
out  agents  among  the  people,  gaining  public  confidence  by  the 
seeming  acquiescence  of  their  constituents  in  the  conduct  of 
their  business.  When  a  loss  happens,  they  should  not  be  permit- 
ted to  say  in  any  case  that  their  agent  acted  beyond  the  scope 
of  his  authority,  unless  it  shall  be  made  to  appear  that  the 
insured  was  informed  of  and  knew  the  precise  extent  of  the 
authority  conferred.  Any  other  principle  in  its  operation 
would  be  turning  loose  upon  an  unsuspecting,  honest,  and 

1  Diehl  V.  Adams  County  Mut.  Ins.  Co.,  58  Penn.  St.  443 ;  Beatty  v.  Lycom- 
ing County  Mut.  Ins.  Co.,  66  Penn.  St.  9. 

2  ^tna  Ins.  Co.  v.  Maguire,  51  111.  342. 


WAIVER    AND    ESTOPPEL.  623 

confiding  people  a  horde  of  plunderers,  against  which  no  ordi- 
nary vigilance  could  guard," — language  which,  if  it  savors 
somewhat  more  of  the  fervor  of  the  advocate  than  is  accus- 
tomed to  be  heard  from  the  bench,  it  must  be  confessed,  ought 
to  find  its  full  justification  in  the  indignation  which  must  at 
times  be  felt  at  the  pertinacity  with  which  insurers  seek  to 
shelter  themselves  behind  instructions,  the  existence  of  which 
is  not  only  not  known  to  others,  but  in  point  of  fact  is  practi- 
cally denied  by  the  daily  conduct  both  of  themselves  and  their 
agents. 

§  510.  Estoppel  -where  the  Act  is  prohibited  by  the  Charter.  — 
We  have  already  seen  that  by  the  general  current  of  the 
authorities  insurance  companies  may  waive  a  compliance  with 
the  provisions  of  their  charters  and  by-laws,^  though  in  Massa- 
chusetts and  in  some  other  States  this  doctrine  is  not  admit- 
ted as  applicable  in  mutual  insurance  to  the  essentials  of  the 
contract,  but  only  as  to  such  matters  as  pertain  to  its  enforce- 
ment after  a  loss.^  And  a  quite  recent  case  in  Connecticut, 
upon  full  consideration,  adopts  and  approves  the  doctrine  of 
the  Massachusetts  cases,  in  an  opinion,  which,  as  it  presents 
some  novel  views,  we  give  at  length  :  — 

"  The  twelfth  section  of  the  charter  of  the  defendants  pro- 
vides that,  '  If  there  shall  be  any  other  insurance  upon  the 
■whole  or  any  part  of  the  property  insured,  by  any  policy  issued 
by  said  company,  during  the  whole  or  any  part  of  the  time 
specified  in  such  policy,  then  every  such  policy  shall  be  void, 
unless  such  double  insurance  shall  exist  by  consent  of  said 
company,  indorsed  upon  the  policy,  under  the  hand  of  the  sec- 
retary.' There  was  such  double  insurance  in  this  case,  at  the 
time  this  policy  was  issued,  and  the  consent  of  the  company 
thereto  was  not  indorsed  upon  the  policy.  The  charter,  there- 
fore, declares  the  policy  void,  and  it  is  void,  unless  the  twelfth 
section  is  of  such  a  character  that  its  provisions  can  be  waived 
by  the  defendants. 

"  If  this  provision  was  made  solely  for  the  benefit  of  the 
defendants,  there  might  be  force  in  the  claim  of  the  i)laintiifs 
that  it  could  be  waived,  on  the  ground  that  what  is  exclusively 

1  Ante,  §§  62,  143,  601.  2  Ante,  §  147. 


624  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

for  tlie  benefit  of  a  person,  either  natural  or  artificial,  is  for 
him  to  enjoy  or  not,  as  he  pleases,  and  if  he  chooses  to  forego 
the  benefit,  he  has  a  right  to  do  so,  as  no  one  but  him  is  inter- 
ested in  the  matter.  But  we  think  that  the  defendants  are  not 
solely  interested  in  this  provision  of  the  charter.  It  was  made 
to  guard  against  the  danger  of  over  insurance.  It  is  well  known 
that  over  insurance  encourages  incendiary  fires  ;  and  insurers 
are  therefore  extremely  careful  not  to  insure  property  to  the 
full  amount  of  its  value,  but  leave  the  assured  to  be  himself 
the  insurer  of  a  part  thereof,  that  he  may  have  a  common  inter- 
est with  tliem  in  the  preservation  of  the  property, 

"  The  eleventh  section  of  the  defendants'  charter,  as  well  as 
the  one  under  consideration,  shows  what  solicitude  the  legis- 
lature entertained  upon  this  subject,  and  the  great  care  they 
exercised  to  prevent  this  evil, 

"  Such  being  the  tendency  of  over  insurance,  it  is  manifest 
that  it  endangers  not  only  the  welfare  of  insurers,  but  the 
welfare  of  all  their  policy  holders,  who  have  a  deep  interest  in 
their  solvency  in  case  of  loss  by  fire.  Insurance  companies 
insure  property  to  an  amount  many  times  their  capital,  and  it 
may  easily  happen  tliat  a  few  fraudulent  incendiary  fires,  scat- 
tered over  the  country,  should  involve  them  and  their  policy 
holders  in  heavy  and  perhaps  ruinous  losses.  But  the  evil  of 
over  insurance  does  not  stop  here.  Everywhere  insured  prop- 
erty is  mingled  indiscriminately  with  property  not  insured. 
The  burning  of  the  insured  property  burns  the  other  also,  and 
every  year  vast  amounts  of  property  not  insured  go  to  destruc- 
tion in  consequence  of  the  over  insurance  of  property  in  its 
neighborhood.  Surely  the  welfare  of  such  owners  should  be 
considered  by  legislatures,  and  provision  should  be  made  for 
them  when  corporations  like  these  are  created.  It  is  to  be  con- 
sidered, also,  that  the  welfare  of  the  State,  which  has  an  inter- 
est in  all  the  property  of  the  State,  requires  that  this  should  be 
done. 

"  One  great  source  of  this  evil  is  the  insurance  of  the  same 
property  by  different  companies,  when  each  company  is  not 
aware  of  the  act  of  the  other.  To  prevent  this  evil  as  far  as 
may  be,  in  the  present  case  we  think  the  legislature  inserted 


WAIVER   AND    ESTOPPEL.  625 

the  twelfth  section  in  the  defendants'  charter,  intending  thereby 
to  put  it  out  of  the  power  of  the  defendants  to  insure  property 
otherwise  than  is  provided  therein. 

"  The  evil  could  not  be  successfully  reached  by  merely  re- 
quiring the  consent  of  the  company  to  such  further  insurance. 
There  would  be  no  security  from  misunderstanding,  misremem- 
brance,  and  fraud.  The  difference  is  great  between  leaving 
the  consent  of  the  company  to  be  proved  by  the  vagueness  and 
uncertainty  of  parol  evidence,  and  requiring  it  to  be  shown  by 
a  formal  indorsement  upon  the  policy  by  the  hand  of  their  sec- 
retary, which  could  not  be  made  without  consideration  and 
deliberation  on  the  one  hand,  and  certainty  of  the  fact  on  the 
other. ^  This  difference  is  all-important  in  a  case  like  this,  and 
indeed  if  mere  consent  was  all  that  the  legislature  intended  by 
the  twelfth  section  of  this  charter,  then  no  object  was  accom- 
plished, or  could  be  accomplished,  by  inserting  it  in  the  char- 
ter ;  for  if  the  defendants  should  make  an  absolute  contract  of 
insurance,  without  any  condition  that  it  should  become  void  if 
there  was  or  should  be  further  insurance  on  the  property  by 
any  other  company,  during  the  whole  or  any  part  of  the  time 
covered  by  the  policy,  they  would  be  taken  by  jurors  as  having 
given  consent  in  advance  to  such  further  insurance  ;  or  the  mere 
fact  of  such  absolute  contract  would  be  sufficient  evidence  with 
them  of  a  waiver  of  the  condition.  It  would  be  urged  that  the 
plaintiff  was  ignorant  of  the  provisions  of  the  charter,  and  if 
the  defendants  intended  to  make  it  a  part  of  the  contract,  they 
would  have  informed  the  plaintiff  by  inserting  it  in  the  policy. 

"  Thus,  in  order  to  make  it  a  part  of  the  contract,  it  would 
have  to  be  inserted  in  the  policy  of  insurance,  whether  it  was 
embodied  in  the  charter  or  not ;  and  if  inserted  in  the  policy  it 
would  have  all  the  effect  that  the  charter  could  give  it,  if  the  leg- 
islature intended  no  more  by  this  provision  than  mere  consent. 
We  think,  therefore,  that  the  legislature  had  more  than  this  in 
view,  and  intended  to  limit  the  power  of  the  company  in  the 
matter,  and  that  it  was  not  competent  for  the  plaintiffs  to  prove 
the  consent  of  the  defendants  to  the  double  insurance  on  the 
plaintiffs'  property  by  any  other  evidence  than  an  indorsement 

1  Hale  V.  Mechanics'  Mut.  Fire  Ins.  Co.,  6  Gray,  169. 
40 


626  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

of  such  consent  on  the  policy,  under  tlie  hand  of  the  secre- 
tary of  the  company,  and  that  the  jury  should  have  been  so 
instructed."  i 

§  511.  Waiver  —  Express  Stipulation  against.  —  A  clause  in  a 
policy  of  insurance  that  "  nothing  but  a  distinct  specific  agree- 
ment, clearly  expressed  and  indorsed  on  the  policy,  shall  ope- 
rate as  a  waiver  of  any  printed  or  written  condition,  warranty, 
or  restriction  thereon,"  refers  to  those  conditions  and  provi- 
sions of  the  policy  which  enter  into  and  form  a  part  of  the 
contract  of  insurance,  and  are  essential  to  make  it  a  bind- 
ing contract  between  the  parties,  and  which  are  properly  des- 
ignated as  conditions,  and  not  to  those  stipulations  which  are 
to  be  performed  after  a  loss  has  occurred,  such  as  giving  notice 
and  furnishing  preliminary  proof  of  the  loss.^ 

§  512.  Estoppel  —  Notice  from  Stranger.  —  If  the  object  of 
requiring  notice  of  increased  risk,  or  of  a  change  of  circum- 
stances calculated  to  produce  such  increase,  be  stated  to  be 
that  the  insurer  may  exercise  or  not  an  option  reserved  to  him 
to  cancel  the  policy,  which  he  reserves  the  right  to  do  at  pleas- 
ure, and  without  assigning  any  reason  therefor,  and  he  obtains 
notice  from  other  sources  of  such  facts,  since  this  accomplishes 
the  purpose  for  which  the  condition  is  made,  and  to  all  intents 
and  purposes  places  the  insurers  in  as  good  a  position  as  if  the 
facts  had  been  notified  to  them  by  the  insured  himself,  this 
knowledge,  so  obtained  by  tlie  insurers  from  other  sources,  will 
inure  to  the  benefit  of  the  insured,  and  excuse  his  default,  if 
any,  in  failing  to  give  notice.  Or,  at  all  events,  if  the  insurer, 
when  these  facts  come  to  his  knowledge,  do  not  thereupon 
elect  to  cancel  his  policy,  but  allows  it  to  remain,  he  will  not 
be  permitted  afterwards  to  set  up  such  default  in  defence.^ 

§  513.  Collusion  between  Agent  and  Insured.  —  Insurers,  how- 
ever, will  not  be  estopped  to  set  up  a  misrepresentation  or  con- 
cealment or  a  breach  of  warranty  in  defence  to  an  action,  if  it 
shall  appear  that  there  was  a  want  of  good  faith  on  the  part  of 
the  insured,  as  where  it  is  known  to  the  insured  that  the  agent 

1  Couch  V.  City  Fire  Ins.  Co.,  38  Conn.  181. 

2  Franklin  Fire  Ins.  Co.  v.  Chicago  Ice  Co.,  36  Md.  102. 

3  Eclipse  Ins.  Co.  v.  Schoener,  2  Cincinnati  Superior  Court  Reporter,  474. 


WAIVER   AND   ESTOPPEL.  627 

is  violating  Jiis  instructions  in  taking  the  insurance,  and  espe- 
cially, if  there  be  collusion  between  them,  to  falsely  describe 
the  property  in  order  to  bring  it  into  the  category  of  insurable 
subjects,  npon  which  the  agent  is  permitted  to  take  risks.  If, 
for  instance,  it  is  known  to  both  that  the  company  will  not 
insure  hotels,  and  for  the  purpose  of  evading  this  restriction 
it  is  agreed  between  them  to  describe  the  insured  property  as  a 
boarding-house,  under  such  circumstances  the  insurers  would 
not  be  estopped  to  set  up  the  fraud.  If  they  were,  then  the 
insured  would  derive  advantage  from  his  own  fraud.  And 
this  would  be  counter  to  the  whole  purpose  and  object  of  an 
estoppel,  which  is  to  discountenance  and  circumvent  fraud. 
And  it  is  only  when  its  enforcement  will  operate  to  this  end, 
that  it  can  properly  be  invoked.  Besides,  the  knowledge  of  the 
agent  is  imputable  to  the  principal,  on  the  presumption  that 
the  agent,  in  the  honest  discharge  of  his  duty,  communicates 
to  his  principal  all  the  material  facts,  touching  the  negotia- 
tion, which  come  to  his  knowledge,  —  a  presumption  which  can 
hardly  have  place,  when  the  facts  to  be  communicated  would 
convict  him  of  a  dereliction  of  duty.^ 

1  Rockford  Ins.  Co.  v.  Nelson,  Sup.  Ct.  of  111.,  2  Ins.  L.  J.  341. 


628  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 


CHAPTER  XXIII. 

OF   ACCIDENT   INSURANCE. 

§  514.  Definition  of  Accident  —  Injury  causing  Death  —  Strain. 
—  What  is  an  accident  ?  This  question  arises  at  the  very 
threshold  in  the  consideration  of  this  branch  of  insurance,  and 
has  been,  and  is  likely  to  continue  to  be,  a  fruitful  source  of 
discussion.  No  satisfactory  definition  seems  yet  to  have  been 
given  by  the  courts,  though  numerous  cases  have  occurred 
vrhere  they  have  been  called  upon  to  decide  whether  death  or 
injury  from  particular  causes  was,  or  was  not,  accidental.  In 
a  recent  case  in  the  Supreme  Court  of  Pennsylvania,^  it 
appeared  that  while  the  insured  was  pitching  hay  the  handle 
of  the  pitchfork  slipped  through  his  hands  and  struck  him  on 
the  bowels,  inflicting  an  injury  which  produced  peritoneal 
inflammation,  in  consequence  of  which  he  died,  and  this  was 
held  to  be  an  accidental  death.  And  the  same  would  have 
been  the  case,  say  the  court,  if  a  strain*  had  been  the  cause  of 
the  inflammation  which  produced  death.  Death  by  accident 
was  defined  to  be  "  death  from  any  unexpected  event  which 
happens  as  by  chance,  or  which  does  not  take  place  according 
to  the  usual  course  of  things."  So  a  sprain  of  the  muscles 
of  the  back,  caused  by  lifting  heavy  weights  in  the  course  of 
business,  is  injury  by  accident  or  violence  "  occasioned  by 
external  or  material  causes  operating  on  the  person  of  the 
insured."  ^ 

§  515.  Accident  —  Rupture  from  Jumping.  —  On  the  Other 
hand,  it  has  been  said  by  a  learned  judge,  sitting  as  arbitrator, 
that  "  rupture  caused  by  jumping  from  the  cars  while  in 
motion,  and  afterwards  running  to  accomplish  certain  busi- 
ness purposes,  done  voluntarily,  and  in  the  ordinary  way,  and 
without   any  necessity  therefor,  and  with   no  unforeseen  or 

1  North  American  Ins.  Co.  v.  Burroughs,  69  Penn.  St.  43. 

2  Martin  v.  Travellers'  Ins.  Co.,  1  F.  &  F.  505. 


ACCIDENT   INSURANCE.  629 

involuntary  movement  of  the  body,  such  as  stumbling  or  slip- 
ping or  falling,  is  not  by  violent  and  accidental  means.  It 
might  be  otherwise  if,  in  jumping,  the  insured  should  lose 
his  balance  and  fall,  or  strike  against  some  unforeseen  object, 
or  in  running  should  stumble  or  slip."  ^  The  learned  arbi- 
trator based  his  award  upon  the  following,  amongst  other 
reasons :  — 

"  The  policy  is  one  of  indemnity  against  '  bodily  injuries, 
efifected  through  violent  and  accidental  means,  within  the 
meaning  of  this  contract  and  the  conditions  hereto  annexed.' 
Had  the  terms  of  the  contract  stopped  at  the  words  '  violent 
and  accidental  means,'  there  would  'be  no  dilSculty,  in  my 
judgment,  in  disposing  of  the  questions ;  for  there  was  no 
accident,  strictly  speaking,  in  the  means  through  which  the 
bodily  injury  was  effected.  It  would  not  help  the  matter  to 
call  the  injury  itself,  that  is,  the  rupture,  an  accident.  That 
was  the  result,  and  not  the  means,  through  which  it  was 
effected.  The  jumping  off  the  cars,  or  the  running,  was  the 
means  by  which  the  injury  was  caused.  Both  were  done  by 
the  claimant  voluntarily,  in  the  ordinary  way,  with  no  unfore- 
seen, accidental,  or  involuntary  movement  of  the  body  what- 
ever. There  was  no  stumbling  or  slipping  or  falling.  There 
was  nothing  accidental  in  his  movements,  any  more  than  there 
was  in  his  passing  down  the  steps  of  his  hotel,  or  in  his  walk- 
ing on  the  street,  during  each  of  which  he  might  have  had  a 
stroke  of  apoplexy,  or  a  hemorrhage,  a  rupture  of  a  blood- 
vessel in  the  head  or  the  lungs.  True,  in  jumping  from  the 
cars  and  running  there  was  more  violence,  or,  properly  speak- 
ing, more  force ;  but  there  was  no  more  accident  than  in  any 
ordinary  movements  of  the  human  body.  How,  then,  admit- 
ting the  rupture  to  have  been  effected  by  jumping  from  the 
cars,  or  by  running  to  see  if  they  were  coming,  can  it  be  said 
that  it  was  caused  by  accidental  as  well  as  violent  means  ? 
All  the  accident  there  was,  was  the  result  of  ordinary  means, 
voluntarily  employed,  in  a  not  unusual  way. 

"  But  the  words  '  violent  and  accidental  means '   are  fol- 

1  Southard  v.  The  Railway  Passengers'  Ass.  Co.,  34  Conn.  574,  per  Shipman, 
Judge  of  the  District  Court  of  the  United  States,  acting  as  arbitrator. 


630  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC. 

lowed  ill  the  policy  by  the  words  '  within  the  intent  and  mean- 
ing of  this  contract    and  the   conditions   hereunto  annexed.' 
Now  we  are  to  consider  how  far  the  former  words  are  quali- 
fied by  the  otlier  parts  of  the  contract,  or  by  the  conditions 
thereto  annexed.     I  have  cited  from  the  policy  all  tliat  can 
have  any  bearing  on  the  question.    Tiie  provision  which  I  have 
cited  from  the  policy  excludes  from  indemnity  death  or  injury 
when  caused  by  '  duelling,  concealed  weapons,  when  carried 
by  the  insured,  fighting,  wrestling,  over-exertion,  and  lifting 
(except  in  case  of  perilous  necessity),  suicide,  sunstroke;' 
and  also  '  death  or  injury  happening  in  consequence  of  war, 
riot,  invasion,  riding  or  driving  races,  unnecessary  exposure 
to  danger  or  peril,  or  violation  of  the  rules  of  any  company 
or  corporation.'     It  also  excludes  '  death  or  injury  happening 
while  the  insured  is,  or  in   consequence   of  his  having  been, 
under  the  influence  of  intoxicating  drinks,  or  engaged  in  any 
unlawful  act.'     Now  it  may  be  said  that  this  specific  exclusion 
from  the  scope  of  indemnity  of  death   or  injury  happening 
from   causes    and   under    circumstances    expressly   set  forth, 
leaves,  by  fair  implication,  death  or  injury  from  all  other  causes, 
and  under  all  other  circumstances,  included  in  the  contract 
of  indemnity ;  thus  logically  inverting  or  complementing  the 
maxim,  expressio  unius  est  exclusio  alterius.     But  in  applying 
this  well-known  rule  of  construction,  reference  must  be  had  to 
the  main  body  of  the  contract  and  to  its  sulyect-matter.     It  is 
not,  nor  does  it  purport  to  be,  a  contract  of  indemnity  against 
death  or  injury  effected  by  all  means.     The  cause  of  the  death 
or  injury  must  in  all  cases  be  'violent  and  accidental,'  or  the 
event  is  without  the  scope  of  the  contract.     The  instrument 
by  its  terms  embraces  only  cases  where  the  elements  of  force 
and  accident  concur  in  effecting  tlie  injury.     The  cases  ex- 
cluded are  only  those  which  belong  to  the  same  class.     The 
contract  declares  to  the  insured  that  though  lie  may  be  killed 
or  injured  through  violent  and  accidental  means,  yet  if  the 
calamity  occurs  under  certain  circumstances,  the  insurers  will 
not  be  liable.     Violent  and  accidental  death  or  injury  might 
occur,  and  often   does  occur,  under  the  circumstances  enu- 
merated in  the  excluding  clause. 


ACCIDENT   INSURANCE.  631 

"  Tlie  contract,  as  I  have  already  intimated,  in  its  broadest 
scope  only  embraces  within  its  indemnity  personal  injuries 
effected  through  forcible  and  accidental  means ;  and  the  pro- 
viso simply  excludes  from  this  class  of  injuries  all  that  occur 
under  the  circumstances  enumerated.  All  others  of  this  class 
are  included.  The  degree  of  violence  or  force  is  not  mate- 
rial, and  had  the  insured  in  this  case  in  jumping  from  the  car 
lost  his  balance  and  fell,  or  struck  upon  some  unseen  object 
and  veounded  himself,  or  in  running  had  stumbled  or  slipped 
on  the  ice,  his  injury  might  be  attributed  to  accidental  as  well 
as  violent  means,  and  assuming  that  there  was  no  want  of  due 
diligence  on  his  part,  his  misfortune  would  have  been  covered 
by  the  policy.  But,  as  I  have  already  stated,  the  injury  which 
he  received  was  in  no  sense  the  result  of  accident.  He 
jumped  from  the  car  with  his  eyes  open,  for  his  own  conven- 
ience, and  not  from  any  perilous  necessity.  He  encountered 
no  obstacle  in  doing  so.  He  alighted  erect  on  the  ground  just 
as  he  intended  to  do.  So  in  running,  he  ran  from  no  peril  or 
necessity,  but  for  his  own  convenience,  voluntarily,  and,  from 
all  that  appears,  without  stumbling,  slipping,  or  falling.  In 
both  cases  he  accomplished  just  what  he  intended  to,  in  the 
way  he  intended  to,  and  in  the  free  exercise  of  his  choice. 
No  accident  of  any  kind  interfered  with  his  movements,  or  for 
an  instant  relaxed  his  self-control.  All  that  he  claims  is,  that, 
some  hours  after,  it  was  discovered  a  muscle  in  the  walls  of 
the  abdomen  had  given  way  under  the  strain  to  which  he  had 
voluntarily  put  it,  under  circumstances  free  from  all  peril  or 
necessity.  Assuming  that  this  rupture  was  caused  either  by 
his  jumping  or  running,  or  both,  does  not  help  the  matter, 
unless  we  call  running  and  jumping  accidents.  1  therefore  am 
of  opinion  that  the  alleged  injury  did  not  result  from  an  acci- 
dent, within  the  meaning  of  the  contract." 

§516.  Accident  —  Drowning — Secondary  Cause-  —  In  Trew 
V.  Railway  Passengers'  Assurance  Company,^  the  question 
arose  whether  a  man  who  was  drowned  while  bathing,  nothing 
being  known  of  the  particular  circumstances  under  which  the 
drowning  happened,  came  to  his  death  by  "  accident  or  vio- 

1  5  H.  &  N.  (Excli.)  211. 


632  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

lence,"  and  the  conclusion  of  the  court  seemed  to  be  that 
whether  such  death  was  accidental  or  not  would  depend  upon 
the  circumstances.  These  the  plaintiff  could  not  show,  and 
as  the  burden  of  proof  was  upon  him  he  must  fail,  as  there 
was  nothing  by  which  the  jury  or  the  court  could  determine 
one  way  or  the  other.  All  the  evidence  there  was,  was  as  con- 
sistent with  the  theory  that  he  died  of  natural  causes  as  from 
accident.  "If  a  person,"  said  Martin,  B.,  by  way  of  illustra- 
tion, "  mistook  the  depth  of  the  water,  and  in  plunging  into  it 
struck  his  head  against  a  rock  and  was  killed,  that  would  be 
a  death  from  injury  caused  by  accident ;  but  death  from  apo- 
plexy would  not."  "This  case,"  said  Watson,  B.,  "ranges 
within  that  class  where,  if  the  state  of  facts  is  consistent 
with  one  view  or  the  other,  there  is  no  evidence  for  the  jury. 
Here  there  is  no  evidence  how  the  assured  died  (except  that 
there  was  some  evidence  that  he  was  drowned  while  bathing)  ; 
he  may  have  died  from  apoplexy,  or  he  may  have  been  struck 
by  a  boat.  If  a  man  was  found  dead  in  a  railway  carriage, 
we  could  not  assume  that  he  died  from  an  accident ;  but  if  he 
was  found  with  marks  of  violence  upon  his  person,  the  case 
would  be  different.  There  is  nothing  to  lead  to  tlie  suppo- 
sition that  the  assured  died  in  the  one  way  rather  than  the 
other."  But  this  decision  was  reversed  in  the  Exchequer 
Chamber,  Cockburn,  C.  J.,  delivering  the  opinion  of  the  court. 
"We  are  all  of  the  opinion,"  said  the  learned  Chief  Justice, 
"  that  this  nonsuit  was  wrong,  and  that  the  judgment  of  the 
Court  of  Exchequer  in  refusing  to  set  it  aside  was  erroneous. 
It  is  said  that,  assuming  the  deceased  died  by  drowning,  drown- 
ing is  not  one  of  the  cases  comprehended  in  this  policy  of  as- 
surance. Mr.  Lush  ingeniously  argued  that  the  policy  only 
applies  to  cases  where,  from  accident  or  violence,  some  injury 
occurs,  from  which  death  may,  or  may  not,  ensue  ;  and  if  it 
ensues  within  three  months,  the  sum  assured  is  payable.  But 
he  contended,  in  effect,  that  where  the  cause  of  death  produces 
immediate  death  without  the  intervention  of  any  external 
injury,  the  policy  does  not  apply  ;  and,  whereas  from  the  action 
of  the  water  there  is  no  external  injury,  death  by  the  action 
of  the  water  is  not  within  the  meaning  of  this  policy.     That 


ACCIDENT   INSURANCE.  633 

argument,  if  carried  to  its  extreme  length,  would  apply  to 
every  case  where  death  was  immediate.     If  a  man  fell  from 
the  top  of  a  house,  or  overboard  from  'a  ship,  and  was  killed, 
or  if  a  man  was  suffocated  by  the  smoke  of  a  house  on  fire, 
such  cases  would  be  excluded  from  the  policy,  and  the  effect 
would  be  that  policies  of  this  kind,  in  many  cases  where  death 
resulted  from  accident,  would  afford  no  protection  whatever 
to  the  assured.     We  ought  not  to  give  to  those  policies  a  con- 
struction which  will  defeat  the  protection  of  the  assured  in  a 
large  class  of  cases.     We  are,  therefore,  of  opinion  that,  if 
there  was  evidence  for  the  jury  that  the  deceased  died  by 
drowning,  that  was  a  death  by  accident  within  the  terms  of 
this  policy.     The  next  question  is  whether  there  was  evidence 
for  the  jury  that  the  assured  met  with  his  death  by  drowning. 
It  appears  that  he  went  to  Brighton  for  recreation,  and  there 
is  no  reason  to  suppose  that  he  intended  to  commit  suicide. 
He  left  his  lodgings  for  the  purpose  of  bathing,  and  his  clothes 
were  found  by  tlie  water-side,  but  he  himself  was  not  after- 
wards seen.     A  body  was  found  in  the  water  at   a  distance 
from  the  place   where   he  went  to  bathe,  but  not  at  such  a 
distance  that    it   might   not   have   been  carried  there  by  the 
waves.     There  was  some  evidence  that  this  was  the  body  of 
the  assured,  and  assuming  that  it  was,  the  question  ought  to 
have  been  submitted  to  the  jury  whether  he  met  with  his  death 
by  drowning.     If  they  found  that  he  died  in  the  water,  they 
might  reasonably  presume  that  he  died  from  drowning.     It  is 
true  that  death  occurs  in  the  water  in  some  instances  from 
natural  causes,  as  apoplexy,  or  cramp  in  the  heart,  but  such 
cases  are  rare,  and  bear  a  small  proportion  to  the  number  of 
deaths  which  take  place  from  the  action  of  the  water.     We 
think  it  ought  to  be  submitted   to  the  jury  to  say  whether  the 
deceased  died  from  the  action  of  the  water,  or  natural  causes. 
If  they  are  of  opinion  that  he  died  from  the  action  of  the 
water,  causing  asphyxia,  that  is  a  death  from  external  vio- 
lence within  the  meaning  of  this  policy,  whether  he  swam  to 
a  distance  and  had  not  strength  enough  to  regain  the  shore, 
or  on  going  into  the  water  got  out  of  his  depth." 

§  517.  Accident  —  Drowning.  —  In    Mallory   v.   Travellers' 


634  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

Insurance  Company,^  it  appeared  that  the  insured  disappeared 
on  Sunday  evening,  when  he  was  seen  walking  on  a  raih'oad 
track,  and  his  body,  with  a  cut  on  the  back  of  the  head,  was 
found  in  a  creek  which  passed  under  the  railroad  through  a 
culvert.  A  motion  was  made  for  a  nonsuit,  on  the  ground  that 
there  was  no  evidence  to  go  to  the  jury  of  death  by  accident. 
But  this  motion  the  court  refused  to  allow,  and  left  it  to  the 
jury  to  find  whether  the  death  was  by  accident  or  not,  charg- 
ing them  that  the  injury  on  the  head  need  not  be  the  cause  of 
the  death,  but  that  if  it  lead  to  other  results,  accidental,  from 
which  death  ensued,  the  company  would  be  liable.  On  appeal, 
it  was  held  that  the  circumstances  attending  the  finding  of  the 
body  were  sufficient  to  require  the  submission  to  the  jury  of 
the  question  whether  the  death  of  the  insured  was  the  result 
of  accident  or  of  disease,  or  some  other  cause  not  insured 
against.  The  actual  cause  of  death  was  not  certainly  proved 
by  the  evidence  in  the  case  ;  but  when  considered  in  connec- 
tion with  the  presumption  that  sane  persons  do  not  ordinarily 
commit  acts,  the  probable  consequence  of  which  will  be  self- 
destruction,  it  was  sufficient  to  justify  the  inference  that  the 
deceased  fell  off,  or  was  hurled  off  by  a  violent  blow,  from  the 
culvert  into  the  stream  below,  and  was  drowned.  The  policy 
provided  for  the  payment  of  a  gross  sum  in  case  of  death  from 
accident,  and  also  for  the  payment  of  a  fixed  rate  per  week  iu 
case  of  injury  not  fatal  but  disaUing.  It  also  provided  that 
no  claim  should  be  made  under  the  policy,  in  respect  of  any 
injury,  unless  the  same  shall  be  caused  by  some  "  outward 
and  visible  means."  And  it  was  held  that  this  last  provision 
applied  only  to  non-fatal  injuries.- 

§  518.  Accident —  "Cause  of  Death  arising  •within  the  System  " 
—  "Secondary  Cause."  —  In  the  case  of  Fitton  v.  The  Accidental 
Death  Insurance  Company,-^  the  deceased  met  with  a  violent 
fall,  by  which  he  immediately  became  ruptured  in  the  bowels, 
and  afflicted  with  strangulated  hernia  in  the  abdomen,  for 

1  Decided  at  the  General  Term  of  the  Xew  York  Supreme  Court,  2d  Dist., 
on  appeal,  and  not  yet  reported,  but  cited  in  Bliss  on  Life  Insurance,  p.  707. 

2  This  case  was  affirmed  in  the  Ct.  of  App.,  47  N.  Y.  52. 

3  17  C.  B.  N.  s.  122;  s.  c.  34  L.  J.  28  (C.  P.). 


ACCIDENT   INSURANCE.  635 

which  a  surgical  operation  was  necessarily  performed,  in  con- 
sequence of  which,  and  the  hernia,  he  died.  The  question  was 
whether  this  was  a  death  within  the  exception  of  a  policy  which 
provided  that  the  company  did  not  insure  against  death  or  dis- 
ability arising  from  rlieumatlsm,  gout,  hernia,  erysipelas,  or 
any  other  disease  or  cause  arising  within  the  system  of  the 
insured,  before,  or  at  the  time,  or  following  such  accidental 
injury,  whether  causing  such  death  or  disability  directly  or 
jointly  with  such  accidental  injury.  And  it  was  held  that  such 
a  death  did  not  arise  from  a  cause  within  tiie  system,  and  so 
was  not  within  the  exception.  In  Smith  v.  The  Accident  Insur- 
ance Company,^  where  the  facts  were  that  death  followed  from 
erysipelas,  caused  by  and  expressly  found  to  be  the  result  of 
an  accidental  incised  wound,  and  supervening  four  days  after 
the  wound  was  received,  and  the  provisions  of  the  policy  were 
identical  with  those  in  tlie  case  last  cited,  except  that  the  word 
cause  was  qualified  by  the  word  "  secondary,"  three  of  the 
judges  held  this  to  be  within  the  exception,  and  distinguished 
it  from  Fitton  v.  The  Accidental  Death  Insurance  Company ,2 
on  the  ground  that  there  the  accident  caused  the  hernia  at  the 
very  moment  the  accident  happened,  and  was  part  and  parcel 
of  it,  while  here  the  erysipelas  supervened  only  after  a  lapse 
of  four  days, and  so  was  a  "secondary"  cause  within  the  mean- 
ing of  the  policy.^  In  other  words,  hernia  supervening  imme- 
diately to  the  accidental  violence  would  not  be  within  the 
exception  of  the  policy,  while  erysipelas  supervening  to  the 
same  accidental  violence  four  days  afterwards  would,  —  a  dis- 
tinction which  seems  to  rest  not  on  the  question  whether  the 
disease  was  caused  by  the  violence,  but  on  the  lapse  of  time 
intervening  between  the  violence  and  the  appearance  of  the 
disease  caused  thereby,  and  would  therefore  seem  to  be  unsat- 
isfactory, if  for  no  other  reason,  because  it  is  impracticable. 
The  contract  might  make  a  limitation  as  to  time,  but  as  it  does 

1  22  L.  T.  861.  2  Ubi  supra. 

2  In  Harris  v.  Travellers'  Ins.  Co.,  Superior  Ct.  Chicago,  1868,  cited  in  Ameri- 
can Law  Eeview,  July,  1873,  p.  589,  it  was  held  that  death  by  suicide,  three 
months  after  an  accident,  by  an  insane  person,  whose  insanity  was  caused  by  an 
accident,  was  not  covered  by  the  policy,  as  the  accident  was  not  the  proximate 
cause. 


636  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

not,  it  is  difficult  to  see  how  the  courts  can  say  violence  pro- 
ducing fatal  disease  at  one  time  is  within  the  exception,  while 
producing  it  at  another  time  it  is  not.  What  is  the  limited 
time  which  takes  the  case  out  of  or  brings  it  within  the  excep- 
tion ?  But  Kelley,  C.  B.,  dissented,  and  thought  that  the  de- 
fendants were  liable  on  the  policy ;  the  effect  of  the  condition 
being  to  exempt  the  company  from  liability  only  in  respect  of 
a  death  from  erysipelas,  where  the  erysipelas  "arose  within  the 
system,"  and  was,  as  it  were,  collateral  to,  and  not  caused  by, 
the  accident  to  the  insured  ;  and  that  where  an  insurance  com- 
pany think  fit  to  introduce  an  exception  to  the  liability  for 
which  they  have  contracted  under  the  policy  of  insurance,  they 
are  bound  to  express  that  exception  in  clear  and  unambiguous 
language,  so  as  to  leave  no  reasonable  doubt  upon  the  subject ; 
and  if  tliere  is  any  ambiguity,  that  is  enough  to  lake  the  case 
out  of  the  exception,  and  the  construction  should  be  against 
the  company.  As  death  under  similar  circumstances  is  very 
likely  to  happen,  presenting  a  like  case  for  the  decision  of  other 
courts,  the  views  of  the  learned  Chief  Baron,  so  clearly  and 
ably  presented,  are  here  presented  in  full :  — 

"  This  is  unquestional)ly  a  doubtful  and  difficult  case,  and, 
after  listening  to  the  opinions  of  my  learned  brethren,  I  cannot 
but  in  some  measure  mistrust  my  own  judgment;  but  I  am  of 
opinion  that  the  plaintiff  is  entitled  to  recover.  The  facts,  as 
found  by  the  arbitrator,  are  clear.  The  deceased,  who  was 
insured  by  the  defendants  against  accidents  generally,  whilst 
washing  his  feet  in  an  earthenware  bath  sustained  an  injury, 
by  cutting  one  of  them  near  the  ankle  on  the  ragged  edge  of 
the  bath.  For  that  wound  a  surgeon  attended  him,  and  he  was 
taken  to  a  hospital.  Five  days  after  the  accident  erysipelas 
supervened,  and  in  two  days  more  he  died  of  that  disease.  It 
is  expressly  found  that  the  erysipelas,  which  was  the  immedi- 
ate cause  of  death,  resulted  from  the  wound,  and  that  unless 
he  had  been  wounded  he  would  not  have  had  erysipelas. 

"  The  question  is  whether  tliis  death,  thus  occasioned,  is 
within  the  meaning  of  the  defendants'  policy.  Now,  I  entirely 
agree  with  the  observations  of  Willes,  J.,  in  Fitton's  case,  that 
it  is  extremely  important,  with  reference  to  insurances,  that 


ACCIDENT   INSURANCE.  637 

there  should  be  a  tendency  rather  to  hold  for  the  assured  than 
for  the  company,  where  any  ambiguity  arises  on  the  face  of 
the  policy  ;  and  I  will  add  that  it  appears  to  me  to  be  equally 
important  that  where  an  insurance  company  think  fit  to  intro- 
duce an  exception  to  a  liability  which  they  have  contracted  to 
bear,  they  should  express  that  exception  in  clear,  unambiguous 
terms.  But  when  I  read  this  condition,  I  cannot,  especially 
having  regard  to  the  principles  of  construction  laid  down,  and 
the  decision  arrived  at  in  Fitton's  case,  see  that  the  exception 
as  to  erysipelas  is  so  worded  as  to  protect  the  defendants  here. 
The  Court  of  Common  Pleas,  in  the  case  referred  to,  put  a 
judicial  construction  on  this  very  clause,  save  that  the  words 
'  secondary  cause '  have  been  introduced  since  their  decision. 
There,  Williams,  J.,  in  his  judgment,  says :  '  Looking  at  the  lan- 
guage of  tlie  policy,  and  taking  the  first  condition  altogether, 
upon  the  best  interpretation  I  can  put  upon  it,  I  am  of  opinion 
that  it  means  to  exempt  the  company  from  liability  only  where 
the  hernia  arises  within  the  system  ; '  and  I  am  of  opinion,  in 
conformity  with  the  opinion  there  delivered  by  Williams,  J.,  that 
it  is  the  effect  of  the  condition  to  exempt  the  company  from  lia- 
bility only  in  respect  of  death  from  erysipelas,  where  the  erysip- 
elas arises  within  the  system  and  is  collateral  to  the  accident. 

"  But  let  us  proceed  to  look  a  little  more  closely  at  the  words 
of  the  condition.  After  stating  the  accidents  or  causes  of  death 
that  are  insured  against,  it  goes  on  to  specify  those  causes 
which  are  not,  including  '  rheumatism,  gout,  hernia,  erysipe- 
las,' and  then  come  the  words  which  have  been  so  fully  dis- 
cussed, '  or  other  disease  or  secondary  cause  or  causes  arising 
within  the  system  of  the  assured  before,  or  at  the  time,  or  fol- 
lowing such  accidental  injury.'  Now,  according  to  the  view 
taken  by  the  rest  of  the  court,  erysipelas  is  for  all  purposes 
expressly  excepted  from  the  series  of  events  which  create  a  lia- 
bility in  the  defendants.  But  if  this  be  the  true  view,  why  not 
have  stopped  at  the  word  '  erysipelas,'  and  have  added  '  however 
caused,  whether  by  an  accident  or  otherwise  ?  '  Moreover,  it 
should  be  remarked  tiiat  this  unqualified  and  unlimited  con- 
struction is  inconsistent  with  the  decision  in  Fitton's  case, 
where  the  death  of  the  insured  was  from  hernia  caused  by  the 


638  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

accident.  It  is  clear  to  me,  therefore,  that  we  must  construe 
these  words  with  reference  to  those  which  follow,  and  place 
some  limitation  upon  them. 

"  To  revert  once  more  to  the  language  actually  used,  let  us 
contrast  for  a  moment  what  the  defendants  have  said  with 
what  they  might  have  said.  Instead  of  excepting  rheumatism, 
hernia,  &c.,  whether  causing  death  'directly  or  jointly'  with 
the  injury,  they  might  have  excepted  them  in  unambiguous 
terms,  '  whether  produced  by  the  accident  or  otherwise,'  and 
in  the  same  manner  they  might  have  gone  through  a  whole 
catalogue  of  consequences  likely  to  supervene  on  a  cut  or  a 
bruise,  such,  for  instance,  as  mortification  or  hemorrhage,  and, 
by  excepting  them  expressly,  have  really  rendered  the  policy 
almost  nugatory.  Indeed,  they  might  effect  this  purpose  under 
the  present  words,  if  my  learned  brethren  are  right,  by  merely 
increasing  the  diseases  specified  by  name.  But  could  it  be  con- 
tended that  by  an  express  mention,  say  of  hemorrhage  or  mor- 
tification, the  defendants  could  exonerate  themselves  where 
death  had  ensued  from  mortification  or  hemorrhage  superven- 
ing on  a  cut  ?  The  death  would  still  be  from  the  cut,  and  the 
policy,  in  my  judgment,  would  be  available ;  for  the  general 
effect  and  true  construction  of  such  a  document  seems  to  me 
to  be,  that  it  covers  not  only  the  actual  injury  itself,  but  any 
disease,  like  lockjaw,  mortification,  or  erysipelas,  which  is  caused 
by  and  may  be  regarded  as  the  natural  and  probable  conse- 
quence of  the  injury. 

"  It  remains  to  be  considered  whether  the  words  of  the  con- 
dition, which  have  been  introduced  since  the  decision  in  Fit- 
ton's  case,  make  any  difference  in  the  extent  of  the  defendants' 
liability.  Without  these  words,  I  think  that  decision  is  a  clear 
authority  for  the  plaintiff  here.  But  it  is  by  them  provided 
that  the  policy  does  not  insure  against  death  from  the  enumer- 
ated disorders,  or  '  any  other  disease  or  secondary  cause  arising 
within  the  system  of  the  insured.'  Now  I  pause  upon  the  word 
'  secondary,'  because  it  certainly  does  introduce  doubt  as  to 
the  true  construction  of  the  sentence.  If  it  means  that  when- 
ever tiie  hernia  or  erysipelas,  causing  death,  is  the  secondary 
consequence  of  the  accident,  the  defendants  are  not  to  be  lia- 


ACCIDENT   INSURANCE.  639 

ble,  then  the  present  case  would  be  within  the  exception.  But 
I  do  not  think  it  can  be  taken  in  this  unqvialified  sense.  It 
appears  to  me  to  be  no  more  than  a  general  word,  descriptive 
of  the  character  of  the  previously  enumerated  maladies,  and 
that  it  must  be  read  with  reference  to  the  words  immediately 
following. 

"  The  whole  sentence  thus  read  bears  to  my  mind  a  plain 
and  intelligible,  and,  but  for  the  opinion  of  my  learned  breth- 
ren, I  should  have  said  an  obvious  meaning.  It  enumerates  a 
certain  class  of  maladies  which  are  of  a  secondary  character, 
and  which  may  all  of  them  arise  within  the  system,  and  con- 
tinue collaterally  to  and  parallel  with  the  injury  sustained  ;  and 
it  provides  that  where  death  is  caused  by  any  of  these  second- 
ary diseases  arising  within  the  system,  then  the  policy  shall  not 
attach,  even  though  the  disease,  unless  aggravated  by  or  con- 
jointly with  the  injury,  would  not  have  been  fatal.  I  do  not 
see  how  it  is  possible  to  reject  these  words,  '  arising  within  the 
system,'  from  our  consideration.;  and  I  find  no  words  in  the 
condition  capable  of  being  construed  to  except  the  secondary 
disease  of  erysipelas  altogether,  in  such  a  case  as  this,  where 
it  did  not  '  arise  '  at  all  within  the  system,  —  where  (as  the 
arbitrator  finds)  it  never  would  have  arisen  but  for  the  ac- 
cident, and  where  it  was  the  direct  consequence  of  that  acci- 
dent. My  conclusion  as  to  this  construction  of  the  condition 
is  strengthened  by  the  remaining  words  of  the  condition.  The 
company  are  not  to  be  liable  for  a  secondary  cause  arising 
within  the  system  '  before,  or  at  the  time  of,  or  following  such 
accidental  injury,  whether  causing  such  death  directly  or 
jointly  with  such  accidental  injury.'  The  very  use  of  this 
word  'before'  is  an  additional  reason  for  construing  the  whole 
condition  as  I  do.  It  shows  that  tlie  real  intention  was  to 
provide  against  secondary  diseases  arising  within  the  system, 
and  which  might  and  probably  would,  therefore,  be  before  the 
accident,  in  point  of  time,  and  wholly  independent  of  and 
collateral  to  it,  and  not  against  those  which,  like  the  erysipelas 
here,  were  the  direct  consequence  of  the  accident,  and  but  for 
that  would  never  have  existed  at  all.  And  the  last  material 
words  of  the  condition,  '  whether  causing  such  death  directly 


640  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

or  jointly  with  such  injury,'  also  seem  to  mo  applicable  to  a 
class  of  diseases  causing  death  either  directly  or  jointly  with 
the  injury,  but  being  in  their  nature  wholly  collateral  to  it- 
Taking,  then,  the  condition  as  a  whole,  I  am  of  opinion  that 
it  points  to  a  particular  class  of  diseases  which  arise  within  the 
system,  either  before,  at,  or  after  the  injury,  and  exempts  the 
defendants  from  liability  when  death  is  caused  by  any  of  them, 
either  directly  or  jointly  with  the  injury,  but  that  it  does  not 
apply  to  any  of  these  diseases  when  they  supervene  on  the 
injury,  are  caused  solely  by  it,  and  are  its  natural  consequence. 
In  my  judgment,  this  construction  is  the  one  which  is  the  more 
reasonable  and  natural  of  the  two  contended  for  ;  but  even  if 
I  were  in  doubt,  I  should  still  think  that  the  ambiguity  of  the 
language  used  is  such  as  to  warrant  me  in  acting  on  the  well- 
known  principle  of  construction  applicable  to  policies  of  insur- 
ance, and  in  giving  the  benefit  of  that  ambiguity  to  the  assured. 
As, however,  my  learned  brethren  are  of  a  contrary  opinion,  the 
judgment  of  the  court  must  be  for  the  defendants."  ^ 

1  The  clause  of  the  policy  which  comes  under  discussion  in  the  above  case 
was  as  follows:  "This  policy  insures  against  all  forms  of  cuts,  stabs,  tears, 
bruises,  concussions,  crushings,  gunshot  wounds,  poisoned  wounds,  sprains,  rup- 
tured tendons,  broken  bones,  dislocations,  burns  and  scalds;  the  effects  of  explo- 
sions and  chemicals,  frost-bites,  bites  of  mad  dogs,  serpents,  or  insects ;  the  action 
of  lightning,  suffocation  by  choking,  drowning,  hanging,  when  accidentally  occur- 
ring from  material  and  external  cause  (operating  upon  the  person  of  the  assured), 
where  such  accidental  injury  is  the  direct  and  sole  cause  of  death  to  the  insured, 
or  disability  to  follow  his  avocations  :  but  it  does  not  insure  against  death  or  dis- 
ability arising  from  rheumatism,  gout,  hernia,  erj'sipelas,  or  any  other  disease 
or  (secondary)  cause  (or  causes)  arising  within  the  system  of  the  insured,  before,  or 
at  the  time,  or  following  such  accidental  injury,  whether  causing  such  death  or 
disability  directly  or  jointly  with  such  accidental  injury  ;  nor  against  death  or  dis- 
abilitj'  arising  from  fighting,  duelling,  the  hands  of  justice,  from  intentional  self- 
injury,  whether  under  the  influence  of  insanity  or  not;  nor  from  injuries  sustained 
on  a  railway  whilst  travelling,  otherwise  than  in  a  passenger  carriage  (nor  whilst 
getting  into  or  alighting  from  any  carriage  in  motion),  or  whilst  acting  in  vio- 
lation of  the  by-laws  of  a  railway  company ;  nor  from  injuries  received  in  the 
exposure  of  himself  to  obvious  and  unnecessary  risk  or  injury ;  nor  from  injuries 
received  whilst  the  insured  shall,  by  intoxicating  liquors,  be  rendered  less  capa- 
ble than  usual  of  taking  care  of  himself,  or  whilst  performing  any  unlawful  act; 
nor  against  death  or  disability  arising  accidentally  from  any  thing  administered, 
or  from  any  act  performed  for  the  treatment  of  disease,. whether  surgical,  medi- 
cal, or  otherwise,  except  from  surgical  operations  performed  for  the  treatment 
of  injuries  enumerated  in  the  first  part  of  this  clause,  for  which  compensation 


1 


ACCIDENT   INSURANCE.  641 

In  a  still  later  case,  in  England,  where  the  insured  went  in  to 
bathe,  and  while  in  a  shallow  pool  was  seized  with  a  fit  whereby 
he  became  insensible,  and  fell  with  his  face  downwards,  so 
that  his  face  was  partially  submerged,  and  he  was  suffocated  by 
the  access  of  water  to  his  lungs,  tiiis  was  held  to  be  a  deatii  by 
accident,  and  occasioned  by  an  "  external  and  material  cause 
operating  upon  the  person  of  the  insured."  Death  here  was 
the  result  of  the  action  of  the  water  on  the  lungs,  and  the  con- 
sequent interference  with  respiration,  and  the  fact  of  falling 
into  the  water  from  sudden  insensibility  was  an  accident.^ 

§  519.  Accident  —  Sunstroke.  —  In  a  case  involving  the 
question  whether  death  by  sunstroke  was  a  death  by  "•  acci- 
dent "  within  the  meaning  of  the  policy,  it  was  said  that  in 
the  term  "  accident "  some  violence,  casualty,  or  vis  major  is 
necessarily  involved,  and  that  disease  produced  by  a  known 
natural  cause,  as  in  the  case  of  sunstroke,  cannot  be  consid- 
ered as  accidental,  any  more  than  disease  or  deatli  engendered 
by  exposure  to  heat,  cold,  damp,  the  vicissitudes  of  climate, 
or  atmospheric,  influences  ;  unless,  perhaps,  in  cases  where 
the  exposure  is  actually  brought  about  by  circumstances  which 
may  give  it  the  character  of  accident.  Thus,  by  way  of  illus- 
tration, if,  from  the  effects  of  ordinary  exposure  to  the  ele- 
ments, such  as  is  common  in  the  course  of  navigation,  a 
mariner  should  catch  cold  and  die,  such  deatli  would  not  be 
accidental ;  although  if  being  obliged  by  shipwreck  or  other 
disaster  to  quit  the  ship  and  take  to  the  sea  in  an  open  boat, 
he  remained  exposed  to  wet  and  cold  for  some  time,  and  death 
ensued  therefrom,  the  death  might  properly  be  held  to  be  the 
result  of  accident.  It  is  true  that  in  one  sense  disease  or 
death  through  the  direct  effect  of  a  known  natural  cause,  such 
as  we  have  referred  to,  may  be  said  to  be  accidental,  inasmuch 
as  it  is  uncertain  beforehand  whether  the  effect  will  ensue  in 
any  particular  case.     Exposed  to  the  same  malaria  or  infec- 

under  this  policy  would  be  otherwise  payable ;  nor  against  injury  occurring  by 
any  (attack  or  assault  made  upon  him  by  any  other  party  or  parties,  or  any) 
invasion,  foreign  enemy,  civil  commotion,  popular  riot,  or  any  military  or  usurped 
power  whatever ;  and  in  no  case  against  death  or  disability  occurring  beyond  the 
period  of  three  months  from  the  date  of  the  injury." 

1  Reynolds  v.  The  Accidental  Ins.  Co.,  22  L.  T.  n.  s.  820. 

1 


642  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

tion,  one  man  escapes,  another  succumbs.  Yet  diseases  thus 
arising  have  always  been  considered  not  as  accidental,  but  as 
proceeding  from  natural  causes. 

"  In  the  present  instance  the  disease,  called  sunstroke, 
although  the  name  would  at  first  seem  to  imply  something 
of  external  violence,  is  an  inflammatory  disease  of  the  brain, 
brought  on  by  exposure  to  the  too  intense  heat  of  the  sun's 
rays.  It  is  a  disease  to  wbich  persons  exposing  themselves 
to  the  sun  in  a  tropical  climate  are  more  or  less  liable,  just  as 
persons  exposed  to  the  other  natural  causes  above  referred  to 
are  liable  to  disastrous  consequences  therefrom."  ^ 

§  520.  Accident  —  Death  by  Robbers.  —  In  Ripley,  Adminis- 
trator, V.  The  Railway  Passengers'  Insurance  Company,  where 
it  appeared  that  a  man  was  waylaid  and  killed  by  robbers,  the 
question  arose,  and  was  discussed,  but  without  result,  whether 
this  was  death  by  violent  and  accidental  means,  the  court 
inclining,  however,  to  the  opinion  that  it  was ;  and  to  define 
an  accident  as  "  any  event  which  takes  place  without  the  fore- 
sight or  expectation  of  the  person  acted  upon  or  affected  by 
the  event,"  in  accordance  with  the  common  acceptation  of  its 
meaning  amongst  those  who  seek  insurance,  rather  than  with 
the  more  restricted  limits  of  lexicographical  definition.^ 

§  521.  Railway  Accident.  —  A  railway  accident  is  one  occur- 
ring in  the  course  of  travelling,  and  arising  out  of  the  fact  of 
the  journey.  It  does  not  necessarily  depend  on  any  accident 
to  the  railway  or  machinery  connected  with  it.^  It  is  an  acci- 
dent which  is  attributable  to  the  fact  that  the  injured  party  is 
a  passenger  on  the  railway,  and  arises  out  of  an  act  immedi- 
ately connected  with  his  being  such  passenger.'^  It  is  difticult 
to  lay  down  any  more  specific  rule,  because  of  the  multiplicity 
of  circumstances  under  which  these  accidents  may  occur. 
Much  is  to  depend  upon  the  circumstances  of  each  particular 

1  Sinclair  v.  The  Maritime  Passengers'  Ass.  Co.,  7  Jur.  n.  s.  369. 

2  District  Court  of  tlie  United  States  for  tlie  Western  District  of  Michigan, 
1870,  2  Bigelow,  Life  and  Accident  Lis.  Rep.  738;  s.  c.  U.  S.  Sup.  Ct.,  2  Ins. 
L.  J.  538. 

3  Per  Alderson,  B.,  Theobald  v.  The  Eailway  Passengers'  Ass.  Co.,  26  Eng.  L. 
&  Eq.  432 ;  s.  c.  10  Exch.  44, 

*  Per  Pollock,  C  B.,  ibid. 


ACCIDENT   INSURANCE.  643 

case.  The  case  last  above  cited  was  one  where  a  passeii<rer, 
in  alighting  at  his  journey's  end,  slipped  from  the  carriage- 
step,  without  negligence  on  iiis  part,  and  was  injured.  This 
was  held  to  be  an  accident  covered  by  the  policy.  After  takino- 
time  to  consider,  the  court,  by  Pollock,  C.  B.,  say :  — 

"  The  plaintiff,  who  was  about  to  take  a  journey  by  means 
of  two  distinct  railways,  had  insured  himself  with  the  defend- 
ants against  death  or  personal  injury  arising  from  railway 
accident  whilst  travelling,  the  contract  fixing  the  damage  in 
the  former  event  at  one  thousand  pounds.  In  getting  out 
from  one  of  the  carriages  on  a  rainy  morning,  his  foot  slipped, 
whereby  he  was  severely  injured.  It  was  conceded  by  the 
defendant's  counsel  that  there  was  no  negligence  on  the  part 
of  the  plaintiff  in  reference  to  the  accident.  And  the  first 
question  is,  whether  this  is  a  railway  accident  within  the 
meaning  of  the  policy.  We  are  of  opinion  that  it  is.  How- 
ever much  the  company  may  desire  that  we  should  lay  down  a 
general  rule  as  to  what  is  a  railway  accident,  I  do  not  know 
that  we  are  called  on,  or  should  be  doing  our  duty,  were  we 
to  lay  down  any  rule  beyond  what  is  necessary  to  decide  the 
actual  case  before  us.  Considering  the  great  number  of  par- 
ticulars that  may  enter  into  the  decision  of  questions  of  tliis 
nature,  and  the  very  complicated  character  they  may  assume 
under  circumstances  that  at  present  we  may  not  anticipate,  I 
think  (and  I  believe  the  rest  of  the  court  concur  with  me  in 
thinking)  that  in  the  single  instance  brought  before  us,  under 
certain  circumstances,  some  of  which  are  not  of  a  general 
nature,  it  would  be  assuming  too  much  to  lay  down  a  rule  to 
govern  all  cases.  On  the  present  occasion,  it  is  quite  plain 
that  the  plaintiff  was  a  traveller  on  the  railway  ;  it  is  quite 
plain  that  though,  at  the  time  of  the  accident,  his  journey  had 
in  one  sense  terminated,  by  the  carriage  having  stopped,  he 
had  not  ceased  to  be  connected  with  the  carriage,  for  he  was 
still  on  it.  Tlie  accident  also  happened  without  negligence 
on  his  part,  and  while  doing  an  act  which,  as  a  passenger,  he 
must  necessarily  have  done ;  for  a  passenger  must  get  into  the 
carriage,  and  get  out  of  it  when  the  journey  is  at  end,  and 
cannot  be  considered  as  disconnected  with  the  carriage  and 


644  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

railway,  and  with  the  machinery  of  motion,  until  the  time 
he  has,  as  it  were,  safely  landed  from  the  carriage  and  got 
upon  the  platform.  Tlie  accident  is  attributable  to  his  being 
a  passenger  on  the  railway,  and  it  arises  out  of  an  act  imme- 
diately connected  with  his  being  such  a  passenger.  Under 
these  circumstances  we  think  this  was  a  railway  accident 
within  the  meaning  of  the  policy,  and  consequently  the  action 
is  in  our  judgment  maintainable,  and  so  much  of  this  rule  as 
prays  for  a  nonsuit  must  be  discharged." 

And,  by  way  of  illustration  at  the  argument,  said  Pollock, 
C.  B.  :  "  Suppose  a  person  suddenly  rose  from  his  seat  and 
struck  his  head  with  great  violence  against  the  top  of  the  car- 
riage so  as  to  cause  a  contusion  of  the  brain  ;  would  that  be 
a  railway  accident  ?  "  "  Or  suppose,"  said  Parke,  B.,  "  a  per- 
son on  getting  out,  not  observing  that  the  window  was  closed, 
pushed  his  head  through  the  glass  ?  "  "  As  to  railway  acci- 
dents," said  Alderson,  B.,  "my  notion  of  a  railway  accident 
is  an  accident  occurring  in  the  course  of  travelling  by  a  rail- 
way, and  arising  out  of  the  fact  of  the  journey.  It  does  not 
necessarily  depend  on  any  accident  to  the  railway  or  machin- 
ery connected  with  it." 

§  622.  Accident  —  Total  Disability.  —  Total  disability  from 
the  prosecution  of  one's  usual  employment,  means  inability  to 
follow  his  usual  occupation,  business,  or  pursuits  in  the  usual 
way.  Though  he  may  do  certain  parts  of  his  accustomed 
work,  and  engage  in  some  of  his  usual  employments,  he  may 
yet  recover,  so  long  as  he  cannot  to  some  extent  do  all  parts, 
and  engage  in  all  such  employments.  Thus,  a  farmer  who 
cannot  attend  to  his  other  ordinary  duties,  though  he  may 
milk  his  cows ;  and  a  merchant  who  cannot  get  about  to  look 
after  his  business  as  he  ordinarily  does,  though  he  may  be  able 
to  keep  his  books, —  are  totally  disabled  within  the  meaning  of 
such  a  provision.^     And  in  another  case,^  a  substantially  simi- 

1  Sawyer  v.  The  United  States  Casualty  Co.  (Superior  Court  of  Mass.,  per 
Eeed,  J.),  8  Law  Reg.  n.  s.  233  ;  s.  c.  1  Bigelow,  Life  and  Accident  Ins.  Eep. 
289. 

2  Hooper  v.  Accidental  Death  Ins.  Co.,  5  H.  &  N.  (Exch.)  545 ;  s.  c.  aflarmed 
in  Exch.  Ch.,  6  H.  &  N.  839. 


ACCIDENT   INSURANCE.  645 

• 

lar  conclusion  was  reached  as  to  the  meaning  of  the  words 
"  wholly  disabled."     In  that  case,  said  Pollock,  C.  B. :  — 

"  The  action  is  upon  a  policy  of  insurance  against  injury  by 
accident  or  violence,  effected  with  the  defendants,  the  Acci- 
dental Death  Insurance  Company,  and  the  question  turns  upon 
the  meaning  of  the  conditions  in  this  policy,  '  that  in  case  such 
accident  or  violence  shall  not  cause  the  death  of  the  insured 
immediately,  but  shall  cause  any  bodily  injury  to  the  insured 
of  so  serious  a  nature  as  wholly  to  disable  him  from  following 
his  usual  business,  occupation,  or  pursuits,  a  compensation 
shall  be  paid.'  The  plaintiff  met  with  a  serious  sprain  of  the 
ankle,  in  consequence  of  which  he  was  unable  to  teave  his 
room  for  some  weeks,  and  was  confined  to  the  house  for  some 
time  longer.  During  that  time  it  was  clear  that  he  was  '  disa- 
bled from  following  his  usual  business,  occupation,  or  pur- 
suits.' Was  he  '  wholly  '  disabled  ?  In  the  course  of  the 
argument,  Mr.  Chambers  admitted  that  if  the  plaintiff  had 
been  a  dancing-master  he  would  have  been  within  the  mean- 
ing of  this  policy.  There  is  no  sound  distinction  between  the 
case  of  a  dancing-master  and  that  of  the  plaintiff,  who  is  an 
attorney.  For  though  a  dancing-master  with  a  sprained  ankle 
cannot  dance,  he  may  play  upon  an  instrument  and  instruct 
other  people  how  to  use  their  limbs  in  dancing.  In  the  case 
of  an  attorney,  even  if  he  were  prostrate  on  his  bed,  deprived 
of  sense  and  motion ;  if  he  had  lost  all  consciousness  and 
power  of  interference,  in  one  sense,  and  to  some  extent  he 
might  carry  on  his  usual  business  and  occupation,  for,  even  if 
he  were  without  a  partner,  the  business  would  not  necessarily 
be  stopped,  but  might  be  carried  on  by  his  clerks.  It  cannot 
have  been  contemplated  that  in  such  a  case  no  compensation 
should  be  paid.  We  must,  therefore,  endeavor  to  find  out 
what  is  the  true  meaning  of  the  language  used  in  the  policy. 
It  may  well  be  that  the  sense  intended  to  be  conveyed  was, 
that  if  the  person  insured  should  be  wholly  disabled  from  car- 
rying on  his  business  as  he  usually  carried  it  on,  the  company 
would  be  liable.  That  is  the  case  here ;  the  plaintiff  might 
and  could  have  done  something  which  he  was  in  the  habit  of 
doing  before,  but  he  was  wholly  incapable  of  doing  that  which 


646  INSURANCE  :   FIRE,  LIFE,   ACCIDENT,   ETC. 

he  usually  did  before.  If  a  man  is  so  incapacitated  from  fol- 
lowing his  usual  business,  occupation,  or  pursuits  as  to  be 
unable  to  do  so,  he  is  '  wholly  disabled  '  from  following  them. 
His  '  usual  business  and  occupation '  embrace  the  whole  scope 
and  compass  of  his  mode  of  getting  his  livelihood.  If  it  be 
objected  that  this  construction  would  lead  to  the  result  that  a 
person  slightly  incapacitated  would  get  the  same  compensation 
as  one  entirely  incapacitated  from  doing  any  thing  whatever, 
that  is  the  fault  of  the  defendants  in  using  language  of  a 
vague  and  perplexing  character.  It  appears  to  us  they  in- 
tended that  when  the  insured  was  wholly  incapable  of  perform- 
ing a  very  considerable  part  of  his  usual  business,  he  should 
receive  a  compensation  in  respect  of  that  disablement.  If  it 
"were  necessary  to  resort  to  such  a  rule  of  construction  (which 
I  think  it  is  not)  in  construing  this  policy,  that  construction 
must  be  adopted  which  is  most  advantageous  to  the  insured. 
I  think,  however,  that  putting  a  reasonable  construction  on 
the  language  used,  the  parties  must  have  meant  that  if  the 
insured  was  so  disabled  as  to  be  incapable  of  following  his 
usual  business,  occupation,  or  pursuits,  he  would  be  '  wholly 
disabled  from  following  his  usual  business,  occupation,  or 
pursuits,'  and  entitled  to  the  stipulated  compensation.  Our 
judgment  must  therefore  be  for  the  plaintiff." 

"  Wholly  disabled  "  is  equivalent  to  quite  disabled,  and  a 
man  is  so  unless  he  can  do  what  he  is  called  upon  to  do  in  the 
ordinary  course  of  his  business.  It  is  not  the  same  thing  as 
"  unable  to  do  any  part  of  his  business."  ^ 

§523.  Accident  —  Total  Disability. — A  case  was  recently 
presented  in  New  York  where  there  was  a  succession  of  acci- 
dents. The  insured  sprained  his  knee,  not,  however,  so 
severely  that  it  compelled  him  to  suspend  his  usual  work, 
which  he  continued  for  some  two  weeks,  when  a  wrenching  of 
the  same  knee  compelled  him  to  quit  labor  and  totally  disabled 
him  for  some  time,  and  it  was  held  that  though  if  it  had  ap- 
peared from  the  nature  of  the  first  injury  that  the  insured 
would  at  some  time  become  incapable  of  labor  from  it,  he 
might  perhaps  have  recovered  notwithstanding  the  superven- 

1  Per  Wilde,  B.,  in  Hooper  v.  Accidental  Death  Ins.  Co.,  6  H.  &  N.  646. 


ACCIDENT   INSURANCE.  647 

tion  of  the  second  injury.  Yet  as  he  actually  continued  his 
work  after  the  first  injury  for  sixteen  days,  and  until  the  hap- 
pening of  the  second  injury,  it  could  not  be  said  that  he 
became  totally  disabled  by  the  first. ^ 

§  524.  Accident  —  Travelling  —  Alighting  —  On  Foot  —  Con- 
veyance. —  A  person  may  be  said  to  be  travelling  in  a  carriage 
while  aligliting  therefrom,  until  he  has  completely  discon- 
nected himself  and  landed.  And  an  accident  happening  to 
the  insured  after  the  train  has  stopped  at  the  station  by  slip- 
ping off  the  step  of  the  car,  is  a  railway  accident  in  a  carriage 
on  a  line  of  railway."  -  And  so  one  is  "  travelling  in  a  con- 
veyance "  provided  for  the  transportation  of  passengers,  if, 
while  in  the  prosecution  of  the  journey  had  in  view  when  the 
insurance  was  procured,  he  elects  to  go  on  foot,  this  being 
a  usual  mode  of  making  the  transit  from  the  steamboat  wharf 
to  the  railroad  station,  although  a  conveyance  by  means  of 
public  hack  may  be  had  for  hire  by  travellers  so  desiring  to 
make  the  transit,  wliich  he  might  have  taken.^  In  this  case 
the  plaintiff  was  in  the  prosecution  of  his  journey,  and  while 
proceeding  on  foot  in  the  evening  slipped  and  fell.  The  court 
below  held  that  the  plaintiff  could  not  recover,  but  seemed  to 
be  of  the  opinion  that  if  he  had  taken  a  liack,  and  the  acci- 
dent had  happened  during  the  transit,  he  could  have  recov- 
ered. The  case  was  distinguisiied  from  that  of  Theobald  v. 
The  Railway  Passengers'  Assurance  Company,*  by  the  fact  that 
in  that  case  the  passenger  was  in  the  carriage,  while  in  this 
case  he  was  not.  But  the  Appellate  Court  did  not  recognize 
the  distinction  ;  and  held  that  the  distance  walked,  if  in  the 
prosecution  of  the  journey,  and  a  usual  mode  of  such  prose- 
cution, was  immaterial.  It  may  be  added,  that  if  accident  in 
such  a  transit  is  not  covered  by  the  policy  on  the  ground  of 
the  distinction  attempted  between  the  Englisli  and  American 
cases,  and  on  the  ground  that  iu  the  latter  case  there  was  no 

1  Rhodes  v.  Railway  Passengers'  Ass.  Co.,  5  Lansing  (N.  T.),  71. 

2  Theobald  v.  Railway  Passengers'  Ass.  Co.,  26  Eng.  L.  &  Eq.  432;  s.  c.  10 
Exch.  44. 

3  Northrup  v.  The  Railway  Passengers'  Ass.  Co.,  43  X.  Y.  516,  reversing  8.  c. 
2  Lansing  (N.  Y.),  166. 

*  Ubi  supra. 


648  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

actual  connection  with  the  carriage  at  the  time  of  the  acci- 
dent, it  would  seem  that  the  plaintiff  could  not  recover,  even 
had  he  taken  a  hack ;  if  the  accident  had  happened  during  the 
transit  on  foot  from  the  deck  of  the  steamer  to  the  hack,  such 
a  rule  would  exclude  all  accidents  while  the  passenger  is  on 
foot,  though  these  perhaps  are  of  most  frequent  occurrence, 
and  even  though  they  might  liappeh  in  changing  cars,  or  in 
passing  to  or  from  the  cars  at  a  station  where  a  passenger 
may  have  alighted  to  obtain  refreshment.  Construing  the  pol- 
icy so  as  to  carry  into  effect  the  intention  of  the  parties,  infer- 
rible from  the  language  used  as  interpreted  by  the.  light  of 
extrinsic  facts  presumably  well  known  to,  and  taken  into  consid- 
eration by,  both  the  parties,  these  incidental  and  necessary  parts 
of  the  journey  must  be  considered  as  covered  by  the  policy.^ 

§  525.  Accident  —  Travelling  in  Public  Conveyance  —  Alight- 
ing —  Limit  of  Journey  —  Negligence.  —  Upon  the  questions 
whether  the  insured  is  actually  a  traveller,  and  in  a  convey- 
ance, the  very  recent  and  interesting  case  of  Tooley  v.  Railway 
Passengers'  Assurance  Company  ^  is  also  precisely  in  point. 
In  that  case  the  policy  provided  that  tlie  insurers  should  be 
liable  for  injuries  "  when  accidentally  received  by  the  assured 
while  actually  travelling  in  a  public  conveyance,  provided  by 
common  carriers  for  the  transportation  of  passengers."  The 
assured  took  passage  from  Chicago,  having  purchased  a  ticket 
for  Kankakee.  The  train  stopped  at  that  place,  and  he  alighted, 
standing  in  the  door  of  the  depot  while  the  engine  took  water, 
until  the  train  started,  moving  slowly  to  the  coal-liouse  for  the 
purpose  of  taking  fuel,  when  he  walked  rapidly  or  ran  to  the 
train,  and  reaching  the  forward  platform  of  the  rear  car,  threw 
out  his  hand  as  if  attempting  to  get  on  board,  when  he  fell 
between  the  cars  and  was  run  over,  receiving  injuries  from 
which  he  soon  after  died.  It  was  claimed  that  this  was 
not  an  accident  within  the  view  of  the  policy,  because  it  was 
not  in  a  conveyance.  But  the  court  instructed  the  jury  that 
"travelling  in  a  public  conveyance"  could  not  be  literally  con- 
strued, and  that  if  the  accident  happened  while  the  insured  was 

1  Northrup  v.  Railway  Passengers'  Ass.  Co.,  43  N.  Y.  516. 

2  U.  S.  C.  Ct.,  Southern  Dist.  111.,  2  Ins.  L.  J.  275. 


ACCIDENT   INSURANCE.  649 

either  getting  on  or  off  the  train,  or  attempting  to  do  so  for  any- 
reasonable  purpose  incident  to  railway  travel,  it  came  within 
the  terms  of  the  policy.  As  the  point  is  one  now  undergoing 
discussion,  we  give  the  most  important  parts  of  the  charge, 
which  was  by  Drummond,  J. 

"  There  are  some  general  facts  which  cannot  be  controverted. 
John  Tooley,  on  the  24th  day  of  January,  1871,  took  from  the 
agent  of  the  defendant,  at  Quincy,  Illinois,  two  policies  of  insur- 
ance at  three  thousand  dollars  each  ;  that  amount  was  to  be 
paid  on  each  policy  in  case  of  the  death  of  Tooley  within  two 
days.  It  was  provided  that  the  liability  should  not  exist  unless 
while  he  was  actually  travelling  in  a  public  conveyance  of  com- 
mon carriers,  and  in  compliance  with  the  rules  and  regulations ; 
and  besides,  he  was  not  to  neglect  the  use  of  due  diligence  for 
self-protection. 

"  Tooley,  on  the  afternoon  of  the  25th  of  January,  took  the 
Champaign  accommodation  train  at  Chicago,  and  proceeded  to 
Kankakee,  where  the  train  arrived  shortly  after  seven  o'clock. 
It  seems  the  practice  was  for  the  train  to  stop  at  the  station, 
and  then  pass  on  to  the  coal-bin,  provided  they  took  the 
entire  train  beyond  Kankakee.  Accordingly,  on  this  evening 
the  train  stopped  at  the  station,  and  several  persons  left  the 
cars,  Tooley  among  otliers.  Tiie  train  remained  at  the  station 
several  minutes  and  took  in  water.  The  bell  was  then  rung, 
the  conductor  signalled  with  his  light,  and  the  train  went  on 
to  take  in  coal.  There'  was  a  platform  extending  from  the 
station-house,  alongside  of  the  railroad  track,  toward  the  water- 
tank  and  coal-bin.  When  the  train  moved  on,  Tooley,  who  was 
standing  by  a  door  of  the  station-house,  started  forward  on  this 
platform  to  overtake  the  train.  When  he  reached  the  train,  he 
extended  his  hands  to  grasp  the  car-rails,  and  fell  between  the 
two  passenger  cars, —  the  train  consisting  of  an  engine,  tender, 
baggage  car,  and  two  passenger  cars.  A  car  passed  over  him, 
and  he  was  killed.  The  first  question  is.  What  was  the  meas- 
ure of  responsibility  of  the  defendant  under  these  policies  of 
insurance  ?  The  language  of  the  policies  is,  '  provided  always 
that  this  insurance  shall  only  extend  to  bodily  injuries,  fatal 
or  non-fatal,  as  aforesaid,  when  accidentally  received  by  the 


650  insurance:  fire,  life,  accident,  etc. 

insured  while  actually  travelling  in  a  public  conveyance,  pro- 
vided by  common  carriers  for  the  transporting  of  passengers  in 
the  United  States  or  the  dominion  of  Canada,  and  in  compli- 
ance with  all  rules  and  regulations  of  such  carriers ;  and  not 
neglecting  to  use  due  diligence  for  self-protection.' 

"  These  are  the  only  conditions  material  to  be  considered  in 
the  examination  of  this  case.  Tooley  must  have  been  actually 
a  traveller  in  or  upon  the  train  ;  but  it  cannot  be  said  that  the 
responsibility  ceased  whenever  he  stepped  out  of  the  car  to 
alight  at  a  station,  and  that  it  never  became  operative  again 
until  his  foot  entered  the  car  to  resume  his  journey.  That 
would  be  giving  too  narrow  a  measuring  to  the  clause  of  the 
policy.  We  think  that  the  fair  construction  of  the  liability 
assumed  by  the  defendant  in  this  respect  was,  that  it  included 
injuries  received  by  Tooley  while  necessarily  getting  on  or  off 
the  train  as  a  traveller  upon  it. 

"  Secondly,  and  it  is  a  question  of  fact,  to  be  determined 
by  the  jury,  was  Tooley,  at  the  very  time  that  the  injury  was 
received  by  him,  a  traveller  on  the  train  ?  And  this  will 
depend  upon  the  fact  whether  his  journey  terminated  at  Kan- 
kakee. It  is  claimed  on  the  part  of  the  defence  tliat  that  was 
the  termination  of  his  journey ;  and  if  so,  then  he  was  not  a 
traveller  on  this  train  at  the  time  of  the  accident. 

"  I  will  call  your  attention  to  some  of  the  facts  having  a  bear- 
ing on  this  question.  The  conductor  states,  in  his  evidence, 
that  when  he  took  up  the  tickets  of  the  passengers,  Tooley's 
ticket  was  only  for  Kankakee.  That  is  a  fact  proper  to  be 
considered  by  the  jury,  in  order  to  determine  whether  or  not 
his  journey  extended  beyond  Kankakee,  —  not  conclusive,  of 
course,  because,  as  a  matter  of  experience,  we  know  that  wliere 
men  commence  a  journey,  they  do  not  always  buy  their  ticket 
to  the  termination  of  the  journey,  and  various  circumstances 
may  liappen  during  the  progress  of  a  journey  which  change  the 
purpose  of  the  traveller.  He  may  start  with  the  intention  of 
only  proceeding  to  a  certain  point.  During  the  journey  he  may 
change  his  mind  and  proceed  further  on.  Tliere  are  many  rea- 
sons, to  which  it  is  unnecessary  to  call  your  attention,  which 
indicate  that  this  is  only  one  incident  having  a  bearing  upon 


ACCIDENT   INSURANCE.  651 

the  main  fact  of  this  part  of  the  case,  whether  or  not  his  jour- 
ney terminated  at  Kankakee. 

"  Mr.  Merwin  states  in  his  evidence  —  the  truth  of  which  is 
a  question  for  the  jury  —  that,  in  a  conversation  he  had  with 
Tooley,  he  said  that  he  intended  or  expected  to  go  to  Mattoon, 
which  was  south  of  Champaign,  where  the  train  stopped.  The 
way  that  arose  was  this  :  it  was  in  relation  to  the  seats  ;  he 
wanted  two  seats,  as  he  said,  so  that  he  could  sleep,  as  he 
*  thought  or  expected  to  go  to  Mattoon.' 

"  Now  as  qualifying  this,  perhaps,  and  to  some  extent  incon- 
sistent with  the  statement  of  Merwin,  is  that  of  the  conductor. 
The  conductor  says  that  twice,  just  before  they  arrived  at  Kan- 
kakee, he  woke  up  Tooley,  and  told  him  that  the  next  station 
was  Kankakee  ;  and  there  was  no  remark  made  by  him  inti- 
mating in  any  way  that  he  intended  to  go  further  than  Kanka- 
kee, and  therefore  it  was  not  necessary  for  him  to  be  disturbed. 
It  is  for  you  to  say  how  much  bearing  this  may  have  upon  the 
question  whether  his  journey  terminated  at  Kankakee,  and 
how  far  it  may  affect  the  statement  of  Merwin.  There  is  this 
other  fact,  that  when  the  train  started  at  Kankakee,  Tooley  at- 
tempted to  get  on  it.  That  is  claimed  to  be  conclusive  evidence 
of  his  purpose  to  proceed  further.  It  is  for  you  to  say  what 
bearing  that  may  have  upon  this  particular  question  that  we 
are  now  considering.  Then,  again,  in  relation  to  whether  or 
not  he  had  any  baggage  with  him.  It  is  said  that  there  was 
a  satchel  or  valise  there,  and  that  it  was  not  found  after  his 
death.  How  far  this  may  have  any  bearing  upon  the  question 
is  a  matter  to  be  determined  by  the  jury.  The  only  light  in 
which  it  is  material  this  question  should  be  considered  is,  how 
far  it  may  affect  the  conduct  of  Tooley  on  the  general  question 
of  negligence.  If  his  journey  ceased  at  Kankakee,  then  it  can- 
not be  claimed,  under  the  undisputed  facts  of  this  case,  that 
the  defendant  would  be  liable,  because,  on  the  assumption  that 
he  was  going  no  further  than  Kankakee,  in  attempting  to  get 
on  the  train  as  he  did,  it  was  at  his  own  risk. 

"  If  he  was  going  beyond  Kankakee  on  the  train,  then  there 
are  other  considerations  which  may  affect  the  question  of  neg- 
ligence.    According  to  the  view  which  we  take  of  the  contract 


652  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

between  the  parties,  if  he  were  a  passenger  proceeding  beyond 
Kankakee  on  the  train,  he  had  the  right  to  leave  the  car  at 
Kankakee  and  return  to  it ;  that  is  to  say,  he  had  the  right 
to  get  off  of  the  train,  —  he  was  not  bound,  in  other  words,  to 
remain  inside  of  the  car  all  the  time.  Tliere  is,  perliaps,  one 
circumstance  which  I  ought  to  refer  to  in  connection  with  the 
question  of  the  termination  of  the  journey  at  Kankakee,  and  it 
is  this  :  that  he  did  not  purchase  a  ticket  at  Kankakee,  and 
it  is  in  evidence  that  the  train  stopped  there  several  minutes  ; 
and  if  you  believe  the  testimony  on  this  point,  he  certainly  had 
ample  time  to  purchase  a  ticket  before  the  train  started  on  to 
obtain  coal.  Still  that,  of  course,  is  not  conclusive.  He  had 
the  right,  I  suppose,  under  the  practice  and  management  of  the 
train,  to  pay  his  fare  on  the  cars.  It  is  only  a  circumstance 
to  be  taken  into  consideration  by  the  jury.  One  of  the  condi- 
tions of  these  policies  is,  as  has  been  stated,  that  Tooley  should 
comply  with  all  the  rules  and  regulations  of  common  carriers. 
We  are  not  prepared  to  say  that  it  was  incumbent  on  him,  un- 
der the  circumstances  of  the  case,  to  make  himself  acquainted 
with  all  the  rules  which  might  be  contained  upon  the  time-card. 
We  must  give  this  clause  of  the  policy  a  reasonable  construc- 
tion. A  policy  was  issued,  we  suppose,  to  any  applicant.  It 
is  what  is  called  an  accident  policy,  and  we  are  to  infer  that 
the  meaning  of  this  clause  was  that  the  traveller  should  only 
make  himself  acquainted  with  those  general  rules,  as  to  the 
management  of  the  trains,  and  the  conduct  of  railroads,  which 
are  presumed  to  be  known  to  travellers,  under  these  circum- 
stances. For  instance,  Tooley,  as  far  as  we  know,  was  a, stran- 
ger on  this  road.  We  cannot  say  that  when  he  went  on  the 
train  he  was  obliged,  because  of  this  clause  in  the  policy,  to 
examine  the  time-card  and  ascertain  all  the  minutiae  connected, 
with  the  management  of  trains,  but  only  such  rules  as  a  gen- 
eral traveller  might  be  presumed  to  know  and  ought  to  know. 
Any  other  construction  than  this  would  operate  as  a  snare 
upon  travellers.  To  hold  that  the  traveller  must  become 
acquainted  with  every  minute  rule  which  may  be  prescribed 
on  the  back  of  a  time-card,  we  think  cannot  be  said  to  be  the 
true  meaning  of  this  clause  of  the  policy.     But  perhaps  if  he 


ACCIDENT  INSURANCE.  653 

did  not  know  the  time  the  train  stopped  at  a  particular  place, 
there  might  be  a  question  whether  it  was  not  his  duty  to  make 
some  inquiry  of  the  employes  of  the  train,  the  conductor,  or 
others. 

"  It  is  to  be  observed,  in  deciding  this  question  of  the  negli- 
gence of  Tooley,  which  is  the  last  question  to  be  considered, 
and  to  which  I  call  the  attention  of  the  jury,  that  this  is  not  an 
action  between  the  representative  of  Tooley  and  the  railroad, 
but  between  the  representative  of  Tooley  and  the  underwriters 
upon  this  clause  in  the  policy,  '  not  neglecting  to  use  due  dili- 
gence for  self-protection.'     And  perhaps  there  can  be  no  better 
rule  stated  than  that  which  was  agreed  upon  by  tlie  counsel, 
namely,  that  it  was  his  duty  to  use  that  degree  of  caution  and 
diligence  which  a  prudent  man  would  use  under  the  circum- 
stances in  which  he  was  placed  ;  we  think,  also,  in  order  to 
determine  this  question  of  diligence  on  the  part  of  Tooley,  it 
is  proper  to  take  into  consideration  wiiether  or  not,  when  he 
alighted  at  Kankakee,  which  he  had  a  right  to  do,  any  notice 
was  given  of  the  movement  of  the  train.     That  may  be  an  ele- 
ment which  may  have  a  bearing  upon  the  question  whether  he 
was  negligent  or  not.     Was  there  any  notice  given,  either  by 
tlie  ringing  of  a  bell,  or  by  word  of  mouth  from  the  conductor 
or  any  of  the  employes  of  the  company  ?     If  a  person,  having 
a  right  to  leave  a  train  at  a  station,  is  informed  or  notified  in 
any  way  that  the  train  is  going  to  start,  and  an  opportunity 
given  to  him  to  take  his  place  again  upon  the  train,  and  he 
chooses  to  remain  until  the  train  is  put  in  motion,  and  then  is 
injured  in  getting  on  the  train,  it  may  be  said  that  he  is  negli- 
gent,—  in  other  words,  that  he  takes  the  risk  of  getting  on  the 
train  while  thus  in  motion.     But  if,  having  alighted  at  a  sta- 
tion, he  has  no  notice  given  to  him  of  the  movement  of  the 
train,  or  he  has  not  the  opportunity,  after  notice  is  given,  to 
get  on  the  train,  and  intending  to  go  further  he  attempts  to  get 
on  the  train  and  is  injured,  we  think  there  is  not  the  same 
measure  of  responsibility  upon  him,  —  in  other  words,  that  the 
question  of  negligence  is  not  to  be  tried  by  the  same  tests  pre- 
cisely, because  we  must  make  some  allowance  under  some 
circumstances.     It  would  be  natural  for  a  man,  —  for  even  a 


654  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

prudent  man,  —  intending  to  go  farther  on  the  train,  to  make 
an  effort,  even  when  the  train  is  in  motion,  to  regain  his  place 
on  the  train. 

"  But  while  that  is  so,  it  is  to  be  understood  he  must  use 
due  diligence  in  trying  to  get  on  the  train,  and  to  that  question 
I  will  now  direct  your  attention  for  a  few  moments,  on  the 
supposition  that  he  intended  to  go  farther,  and  he  had  not  an 
opportunity  to  get  on  the  train,  or  he  was  not  notified  that  the 
train  was  about  to  move.  It  was  after  seven  o'clock  in  the 
evening.  Tooley  proceeded  along  the  platform.  There  has 
some  question  been  made  whether  the  bell  was  rung.  We 
think  it  perhaps  ought  to  be  assumed  in  this  case  that  that 
fact  has  been  established.  It  is  proved  that  was  the  practice 
of  the  engineer  just  before  the  train  started  ;  that  it  was  a  sig- 
nal to  the  conductor  that  the  engineer  was  ready  to  proceed. 
It  is  also  distinctly  sworn  to  by  the  conductor  that  the  bell  was 
rung,  and  it  is  a  fact  stated  by  one  or  two  of  the  witnesses  that 
the  remark  was  made,  '  the  bell  is  ringing,'  which,  under  the 
circumstances,  of  course  is  a  very  material  fact.  This  is  not 
otherwise  contradicted  than  by  the  statements  of  several  wit- 
nesses that  they  did  not  hear,  or  do  not  recollect  that  they 
heard,  the  bell.  However,  we  leave  this  question  to  be  deter- 
mined by  the  jury.  Of  course,  negative  testimony  is  not  so 
material  or  important  as  positive  testimony,  if  you  believe  that 
these  witnesses  stated  the  truth.  There  is  some  controversy 
as  to  the  character  of  the  night.  Several  of  the  witnesses  say 
that  it  was  a  clear  night ;  some  'that  it  was  moonlight ;  and 
some  state  that  it  had  been  snowing  or  storming.  There  is  no 
doubt  of  this  fact,  or  [  think  we  may  assume  it,  that  the  intent 
of  Tooley  was,  when  he  heard  the  bell,  or  an  intimation  was 
given  in  that  way,  or  by  the  movement  of  the  cars,  to  get  on 
the  train.  He  proceeded  rapidly  along  the  platform.  He  tried 
to  get  on  the  train.  Now  did  he  act  prudently,  as  a  prudent 
man,  in  getting  on  the  train  ?  Mr.  Lawrence  says,  when  he 
came  around  the  corner  of  the  station-house,  and  he  saw  a  man 
running  or  walking  fast,  that  he  called  out  to  him  that  the 
train  was  only  going  to  coal  up,  or  something  to  that  effect. 
Now  it  is  true  that  Mr.  Tooley  was  not  bound  to  take  any  dec- 


ACCIDENT   INSURANCE.  656 

laration  made  by  an  outsider  or  an  indifferent  person  as  true, 
in  relation  to  the  train  or  its  motions.  Tlie  only  effect  of  that 
is  this  :  that  it  changes  the  measure  of  liis  responsibility,  and 
gives  color  to  his  conduct,  to  his  action.  And  you  are  to 
treat  it  in  a  different  manner  from  what  you  would  provided 
he  had  no  intimation  whatever  given  to  him  ;  because,  if  a  man, 
after  being  notified  of  a  particular  fact,  which  should  govern  or 
rule  his  conduct,  chooses  to  act  in  such  a  way  as  to  encounter 
risk  or  danger,  you  will  see  that  the  rule  of  diligence  is  differ- 
ent. It  is  material  for  the  jury  to  consider  this  in  that  light 
alone.  And  then  it  will  be  a  question,  as  far  as  it  bears  upon 
the  conduct  of  Tooley,  whether  or  not  he  heard  what  was  said 
by  Mr.  Lawrence,  and  of  course  it  is  simply  a  matter  of  infer- 
ence whether  or  not  he  did  hear ;  positively  we  cannot  know. 
Tliis  seems  to  be  certain,  that  words  or  the  sound  attracted 
his  attention,  as  he  turned  round  ;  and  it  is  for  you  to  say 
whether  he  heard,  in  such  a  way  as  to  give  him  warning,  that 
the  train  was  not  to  go  farther  than  the  coal-bins, — whether 
or  not  he  heard  the  language,  or  whether  he  heard  a  sound 
merely,  without  distinguishing  or  understanding  what  was  said. 
All  these  are  to  some  extent  matters  of  conjecture,  and  it  is 
for  the  jury  to  determine  how  far  they  may  affect  this  question. 
He  passed  by  the  rear  platform  of  the  rear  car ;  we  think  that 
is  a  fact  to  be  taken  into  consideration  by  the  jury  in  deter- 
mining whether  he  did  or  did  not  act  as  a  prudent  man,  if  he 
believed  that  the  train  was  going  on,  and  wanted  to  get  on  the 
train  to  resume  his  journey.  Of  course  you  will  understand 
that  the  danger  was  much  less  in  getting  on  the  rear  platform 
than  on  the  forward  platform  of  the  car.  The  fact  is,  that  he 
did  not  attempt  to  get  on  the  rear  platform  of  the  car.  The 
train  was  moving  slowly.  It  does  not  appear  that  he  was  actu- 
ally running,  although  walking  very  fast.  He  attempted  to 
get  on  to  the  cars,  either  on  to  the  forward  platform  of  the  rear 
car,  or  between  the  two  cars.  If,  in  point  of  fact,  wiien  he 
slipped  and  fell  he  was  attempting  to  get  on  between  the  cars, 
it  is  difficult  to  reconcile  it  with  our  ideas  of  prudence  on  the 
part  of  any  man  under  such  circumstances.  That  may  be  an 
important  fact  for  you  to  inquire  into,  —  whether  that  is  so  or 


656  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

not,  as  I  believe  it  is  stated  by  one  of  tbe  witnesses.  It  is  very 
mncb  a  question  for  the  jury,  under  these  rules  which  the  court 
has  laid  down,  whether  this  man,  under  the  circumstances, 
conceding  that  he  was  going  further,  acted  prudently ;  whether 
or  not  he  was  guilty  of  negligence.  It  is,  perhaps,  natural  that 
the  sympathies  of  a  jury  should  be  enlisted  in  favor  of  the  man, 
or  his  representatives,  or  family ;  but  this  case,  like  every  other, 
has  to  be  decided  under  the  law  and  facts,  and  you  are  to  apply 
your  best  judgment  and  intelligence  to  the  facts,  taking  the  law 
from  the  court,  and  drawing  your  conclusions  upon  those  facts, 
without  being  influenced  or  biased  by  the  relative  positions  of 
the  parties.  This  is  your  imperative  duty,  and  if  you  do  any 
less  than  this  you  do  not  come  up  to  the  measure  of  your 
responsibility.  It  is  not  a  question  of  sympathy  or  feeling,  but 
of  law  and  evidence.  I  will  dismiss  the  case  with  one  further 
remark.  There  has  not  been  any  light  thrown  upon  the  mo- 
tives of  the  journey  of  Tooley  from  Chicago  to  Kankakee.  We 
were  left  in  ignorance  of  that  when  we  tried  this  case  before, 
and  we  are  now  just  as  ignorant.  It  may  be  that  there  is  an 
impenetrable  mystery  hanging  over  this  journey.  It  is  said 
that  he  was  going  to  Nokomis,  in  Montgomery  County,  which 
was  his  residence.  In  point  of  fact,  when  he  was  required  to 
give  his  residence,  as  a  memorandum  on  the  policy  demanded, 
he  gave  it  as  Topeka,  Kansas,  not  Nokomis,  Montgomery 
County,  Illinois.  Of  course  this  is  no  further  material  than  as 
it  may  have  a  bearing  upon  the  journey  of  Tooley.  It  is  in 
one  sense  no  matter  of  ours,  or  of  these  defendants,  where  he 
was  going.  That  was  not  the  question.  He  was  insured  for 
the  two  days,  wherever  he  might  go.  Tliere  is  nothing  stated 
in  these  policies  as  to  the  proof  of  loss  or  damage,  as  the  case 
might  be,  or  as  to  the  time  within  which  the  payment  would  be 
made  if  there  were  damage.  It  has  been  admitted  that  notice 
was  given  ;  so  as  to  that  there  is  no  controversy.  The  policy 
required  that  notice  should  be  given.  Then  we  understand  that 
the  true  construction  of  it  would  be  that,  if  notice  were  given, 
it  was  the  duty  of  the  company  to  pay  within  a  reasonable  time, 
and  interest  would  run  from  the  expiration  of  that  time  when 
the  payment  ought  to  be  made." 


ACCIDENT   INSURANCE.  657 

§  526.  Accident  —  Travelling  —  Conveyance  —  Engineer.  —  A 
railway  passengers'  insurance  company  which  insures  against 
"  any  accident  while  travelling  by  public  or  private  convey- 
ance," is  liable  for  the  death  of  an  engineer  actually  engaged  in 
running  trains,  by  an  accident  occurring  on  the  railroad  upon 
which  he  is  employed.  So  it  was  held  in  Brown  v.  The  Railway 
Passengers'  Assurance  Company.^  "  The  main  point,"  say  the 
court  in  giving  the  opinion,  "  is  whether  the  intestate,  Brown, 
was  killed  by  an  accident  which  is  covered  by  the  policy.  The 
clause  insuring  him  provides  that  the  death  must  be  "  caused 
by  an  accident  while  travelling  by  public  or  private  convey- 
ance provided  for  the  transportation  of  passengers."  It  is 
strongly  contended  that  a  locomotive  or  engine  is  not  a  con- 
veyance provided  for  the  transportation  of  passengers.  This 
is  certainly  true ;  and  if  the  ticket  applies  solely  and  exclu^ 
sively  to  passengers  or  travellers,  the  position  that  the  company 
is  not  liable  cannot  be  controverted.  A  passenger  would  have 
no  right  to  go  upon  an  engine,  and  if  he  was  so  indiscreet  as 
to  venture  on  such  a  place,  and  injury  ensued,  he  would  not 
be  protected.  But  this  ticket  was  designed  to  include  and 
serve  something  more  than  the  ordinary  risk  incurred  by  tlie 
passenger  or  traveller.  The  locomotive  is  a  necessary  part  of 
the  conveyance.  The  ticket  was  a  general  ticket,  as  contra- 
distinguished from  a  mere  passenger  or  travelling  ticket.  The 
premium  on  one  is  double  what  it  is  on  the  other.  When  the 
ticket  was  sold  it  was  known  tliat  Brown  was  an  engineer, 
and  the  conclusion  is  unquestionable  that  he  believed  that  he 
■was  insured  while  pursuing  his  employment  or  occupation. 
The  company  so  thought ;  for  it  gave  no  instructions  against 
insuring  railroad  employes  till  after  the  disastrous  accident 
happened.  ...  As  Brown  was  not  insured  as  a  passenger  or 
traveller,  but  against  all  accidents  without  regard  to  the  capac- 
ity in  which  he  was  acting,  the  reasonable  inference  is,  that 
the  ticket  was  intended  to  cover  the  risk  and  accident  by  which 
he  met  his  death.  If  it  be  conceded  that  the  meaning  of  the 
ticket  is  doubtful  or  ambiguous,  still  the  question  must  be 
decided  for  the  plaiuti£f,  as  the  promisor  could  not  fail  to 

45  Mo.  221. 
42 


658  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC, 

apprehend  that  the  promisee  labored  under  the  impression 
that  he  was  indemnified,  and  where  such  is  the  case,  the  con- 
struction must  be  most  favorable  to  the  insured." 

§  527.  The  case  cited  in  the  last  section  has  been  criticised  ^ 
as  founded  upon  an  obvious  misapprehension,  the  court  having 
mistaken  a  "  traveller's  risk,"  which  this  was,  for  a  "  general 
accident "  risk,  which  it  was  not.  However  this  may  be,  it 
seems  well  decided  upon  the  contract  itself.  The  insured 
was  clearly  travelling  by  a  conveyance  provided  for  the  trans- 
portation of  passengers,  unless  it  be  said  that  a  person  whose 
business  requires  him  to  travel  all  the  time  is  less  a  traveller 
than  one  whose  business  requires  him  to  travel  only  occasion- 
ally. He  may  not  have  been  a  passenger,  but  he  clearly  was  a 
traveller,  liable  to  all  accidents  which  threaten  travellers,  and 
presumably  purchasing  under  the  same  contract  the  same  pro- 
tection. Would  it  be  pretended  that  a  stage-driver  purchasing 
a  like  ticket  at  the  same  time  with  the  passengers  is  not  entitled 
to  the  same  protection  ?  The  suggestion  of  the  court  that  the 
engineer  had  greater  rights  under  such  a  contract  than  a  pas- 
senger would  have,  seems  more  open  to  criticism.  Though 
the  court  seems  to  have  conceded,  inadvertently,  perhaps,  that 
a  locomotive  is  not  a  conveyance,  it  almost  immediately  adds, 
what  is  obviously  true,  that  a  locomotive  is  a  necessary  part  of 
the  conveyance.  Certainly  cars  without  a  locomotive  could  not 
be  said  to  be  a  conveyance  provided  for  the  transportation  of 
passengers,  any  more  than  a  carriage  without  a  horse,  or  a 
steamboat  without  an  engine.  No  doubt  all  the  parts  of  a  train 
of  cars  constitute  the  conveyance,  and  unless  the  insured  is 
restricted  by  the  terms  of  the  contract  to  some  particular  part, 
it  would  seem  that  whoever  holds  a  ticket  may  recover  with- 
out reference  to  the  particular  part  of  the  conveyance  he  may 
have  been  on  at  the  time  of  the  accident.  If  he  be  anywhere 
on  the  conveyance  —  even  though  negligently,  yet  without 
misconduct  or  fraud  ^  —  at  the  time  of  the  accident  he  is 
within  the  terms  of  the  contract ;  so  that  whether  the  passen- 
ger be  on  the  engine,  or  the  engineer  on  some  other  part  of 

1  See  American  Law  Review,  July,  1873,  art.  Accident  Insurance. 

2  See  atUe,  §§  408-411,  and  post,  §  52y. 


ACCIDENT   INSURANCE.  659 

the  train  for  the  time  being,  tlieir  rights  and  obligations  under 
the  contract  being  the  same,  would  be  questions  of  no  moment. 
There  seems,  therefore,  to  be  no  ground  for  the  distinction 
suggested  between  the  rights  of  a  passenger  and  those  of  the 
engineer,  unless  there  is  something  in  the  contract  to  require 
it.  Even  under  the  very  doubtfuP  doctrine  of  contributory 
negligence,  thougii,  perhaps  the  passenger  might  fail  to  re- 
cover, so  also  might  the  engineer  if  the  accident  happen  by 
reason  of  his  being  somewhere  else  than  upon  the  engine. 
Certainly  an  insurance  company  ought  not  to  be  allowed  to 
issue  such  a  ticket  to  an  engineer,  known  to  be  such,  and  then 
to  say  if  he  stays  upon  the  engine  and  attends  to  his  duties 
he  is  not  within  the  terms  of  the  policy,  but  if  he  does  not 
stay  upon  the  engine  tlien  the  accident  happens  througli  his 
neglect,  and  therefore  he  cannot  recover,  unless  the  policy 
which  they  have  issued  gives  them  such  advantages  in  terms 
so  clear  and  unequivocal  as  to  admit  of  no  other  possible 
construction. 

§  528.  Accident  —  Travelling  on  Foot  —  Conveyance. —  On 
the  other  hand,  it  has  been  held  that  travelling  on  foot  is  not 
travelling  by  private  conveyance  within  the  meaning  of  a  policy 
insuring  against  accidents  while  "  travelling  by  public  or  pri- 
vate conveyance."  In  this  case  the  plaintitf  had  completed 
the  greater  part  of  his  journey  by  steamer,  and  there  being  no 
public  conveyance,  was  proceeding  on  foot  to  his  home  some 
few  miles  distant  from  the  port  where  he  left  the  steamer.^ 
Conveyance,  as  a  mode  of  travelling,  in  its  ordinary  and  popu- 
lar acceptation,  it  was  said  in  that  case  means  a  vehicle  or 
instrument  of  conveyance  other  and  different  from  the  person 
or  thing  to  be  conveyed ;  and  it  cannot  properly  be  said  that  a 
man  walking  on  foot  is  a  private  conveyance  to  himself.  And 
this  case  was  affirmed  in  the  Supreme  Court  of  the  United 
States,^  Chase,  C.  J.,  giving  the  opinion,  which,  after  stating 
the  case,  concluded  as  follows :  — 

1  See  post,  §  529. 

2  Ripley  et  al.  Adm.  v.  Railway  Passengers'  Ass.  Co.,  U.  S.  Dist.  Ct.  Western 
Michigan,  1870,  1  Dillon  (U.  S.  C.  Ct.,  8th  Circuit),  403. 

3  15  Wall.  (U.  S.)  580. 


660  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC, 

"  The  question  is  whether,  when  he  (the  plaintiff)  received 
tlie  injuries,  he  was  travelling  by  public  or  private  convey- 
ance. That  he  was  travelling  is  clear  enough  ;  but  was  travel- 
ling on  foot  travelling  by  public  or  private  conveyance  ?  The 
contract  must  receive  the  construction  which  the  language 
used  fairly  warrants.  What  was  the  understanding  of  the 
parties  ?  or,  rather,  what  understanding  must  naturally  have 
been  derived  from  the  language  used  ?  It  seems  to  us  that 
walking  would  not  naturally  be  presented  to  the  mind  as  a 
means  of  public  or  private  conveyance.  Public  conveyance 
naturally  suggests  a  vessel  or  vehicle  employed  in  the  general 
conveyance  of  passengers.  Private  conveyance  suggests  a 
vehicle  belonging  to  a  private  individual.  If  this  was  the 
sense  in  which  the  language  was  understood  by  the  parties, 
the  deceased  was  not,  when  injured,  travelling  within  the 
terms  of  the  policy.  There  is  nothing  to  show  that  it  was 
not." 

§  529.  Such,  undoubtedly,  is  the  logical  consequence  of  a 
strict  interpretation  of  the  letter  of  the  contract,  and  the  exact 
point  made  was  doubtless  well  decided.  But  we  venture  to 
suggest  the  inquiry  whether  the  construction  is  not  too  literal 
and  narrow.  Upon  the  principle  of  the  cases  cited  in  the  last 
two  sections,  the  plaintiff  being  engaged  in  the  actual  prosecu- 
tion of  his  journey,  and  by  tlie  appropriate  and  usual  means, 
might  have  been  held  to  be  travelling  by  public  conveyance, 
for  it  was  by  public  conveyance  that  the  journey  was  accom- 
plished. And  this  is  strictly  in  accordance  with  the  ordinary 
use  of  language.  A  man  who  goes  on  a  journey  is  said  to  be 
travelling.  IF  he  goes  by  rail  or  steamer,  he  is  travelling  by 
public  conveyance.  More  or  less  travel  on  foot  is  necessary 
to  this  mode  of  travel  in  changing  cars,  or  passing  from 
steamer  to  railway,  or  in  getting  to  and  from  the  stations. 
But,  in  a  general  sense,  all  this  is  travelling  by  public  convey- 
ance. It  would  seem  to  be  immaterial  whether  the  walking 
be  done  in  the  middle  or  at  one  of  the  termini  of  the  journey, 
provided  it  be  incidental  to,  and  part  of,  the  journey  ;  nor  can 
the  distance  walked  make  any  difference,  provided  it  also  is  a 
part  of  the  journey.     By  the  same  literalness  of  construction 


ACCIDENT   INSURANCE.  661 

a  passenger  sitting  still  in  a  train  stopping  at  a  station,  and 
not  under  motion,  might  be  injured  by  a  train  in  motion,  and 
yet  have  no  claim,  because  he  was  not  actually  travelling, — 
for  sitting  still  is  not  literally  travelling.  So  a  passenger 
required  to  leave  one  car  and  to  get  into  another,  or  to  go 
from  one  train  to  another  at  the  same  station,  or  going  to,  or 
returning  from,  the  refreshment-room,  being  on  foot  during 
the  process,  is  certainly  not  literally  "  in  a  conveyance."  But 
is  he  not  travelling  all  the  while,  in  a  general  and  substantial 
sense,  in  the  prosecution  of  his  journey,  in  and  by  a  public 
conveyance?  Is  not  .one  who  stands  upon  the  platform  at 
a  way  station,  having  left  the  car  for  refreshments,  and  is 
knocked  down  and  injured  by  the  rushing  throng,  within  the 
protection  of  such  a  policy,  although  at  the  moment,  in  a  lit- 
eral sense,  he  is  neither  travelling  by  a  conveyance,  nor  in 
any  other  way  ?  May  not  a  man  be  said  to  be  travelling 
by  public  conveyance,  who  is  actually  engaged  in  and  about 
doing  certain  acts  which  are  fairly  incidental  to,  and  necessary 
for,  the  prosecution  or  completion  of  the  journey  ?  The 
bare  question  whether  a  man  going  on  foot  is  going  by  convey- 
ance must  undoubtedly  be  answered  in  the  negative.  But  the 
broader  question  whether  a  man  who  is  prosecuting  a  journey 
by  railway  and  steamboat,  while  engaged  in  what  is  incidental 
to  the  journey,  whether  he  is  sitting  still  in  a  motionless  car, 
or  standing  still  on  the  station  platform,  or  walking  to  and 
fro  thereon,  waiting  for  a  start,  or  going  into  the  station  for 
refreshments,  or  returning  therefrom  after  having  obtained 
them,  may  not  in  a  reasonable  and  substantially  accurate 
sense  be  said  to  be  "  travelling  by  public  conveyance,"  may, 
perhaps,  require  an  affirmative  answer. 

§  530.  Accident  —  Negligence  —  "Wilful  Exposure.  —  It  has 
been  held  that  if  the  injury  is  attributable  to  the  insured's 
own  negligence,  it  is  not  accidental,  as  when  a  passenger  inad- 
vertently, but  needlessly,  puts  his  arm  out  of  the  car  window 
while  the  train  is  running  with  its  usual  velocity,  whereby  his 
hand  is  injured  by  contact  with  a  post  standing  near  the  track.^ 
And  the  case  of  Theobald  v.  Railway  Passengers'  Assurance 
1  Morel  V.  The  Mississippi  Valley  Life  Ins.  Co.,  4  Bush  (K7.),  535. 


662  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 

Company  ^  has  been  supposed  to  support  the  same  doctrine. 
But  the  point  was  not  decided,  the  court  merely  adverting  to 
the  fact  that  the  plaintiff  was  without  negligence.  In  Brown 
V.  Railway  Passengers'  Insurance  Company ,2  it  was  also  sug- 
gested that  the  negligence  of  a  passenger  having  a  "  traveller's 
ticket "  might  defeat  his  recovery.  But  that  was  not  a  point 
in  the  case ;  and  the  case  from  Kentucky  stands  alone,  with- 
out the  support  of  any  authority,  and  is  based,  it  is  conceived, 
upon  a  mistaken  application,  in  an  action  upon  contract,  of  the 
doctrine  of  contributory  negligence  as  it  is  applied  in  actions 
upon  tort.  Indeed,  there  is  no  reason  for  supposing  that  pro- 
tection from  loss  or  injury  from  negligence  is  not  one  of  the 
motives  which  operate  in  accident,  as  well  as  in  fire  and  life 
insurance.  And  unless  there  are  stipulations  to  the  contrary 
in  the  policy,  in  accident  insurance,  as  in  life  and  fire  insur- 
ances, injury  by  negligence  is  covered  by  the  contract ;  ^  nor 
will  ordinary  negligence  vitiate  a  policy  which  stipulates  that 
the  company  will  not  be  liable  for  wilful  and  wanton  exposure 
to  unnecessary  danger,  as  this  stipulation  affords  a  reasonable 
inference  that  ordinary  negligence  is  not  excepted.*  In  this 
case  the  plaintiff  attempted  to  get  upon  a  train  of  cars  while 
they  were  in  slow  motion,  and  fell  under  them  and  was  killed. 
The  opinion  of  the  court  we  give  at  some  length,  as  involv- 
ing an  interesting  discussion  of  the  relation  of  negligence 
to  insurance  against  accidental  injury  and  death,  the  scope 
and  meaning  of  the  word  "  accident,"  and  the  grounds  upon 
which  the  doctrine  of  contributory  negligence,  as  applied  in 
actions  of  tort,  is  not  applicable  in  cases  of  insurance.  The 
opinion  was  by  Paine,  J.  :  — 

"  The  position  most  strongly  urged  by  the  respondent's 
counsel  in  this  court  was,  that  inasmuch  as  the  negligence  of 
the  deceased  contributed  to  produce  the  injury,  therefore  the 
death  was  not  occasioned  by  an  accident  at  all,  within  the 
meaning  of  the  policy.  I  cannot  assent  to  this  proposition. 
It  would  establish  a  limitation  to  the  meaning  of  the  word 

1  10  Exch.  44 ;  s.  c.  26  Eng.  L.  &  Eq.  432.  2  45  Wis.  221. 

'^  See  ante,  §  408  et  seq. 

*  Sclineider  v.  The  Provident  Life  Ins.  Co.,  24  Wis.  28. 


ACCIDENT   INSURANCE.  663 

'  accident,'  which  has  never  been  established  either  in  law  or 
common  understanding.  A  very  large  proportion  of  those 
events  which  are  universally  called  accidents  happen  through 
some  carelessness  of  the  party  injured,  which  contributes  to 
produce  them.  Thus  men  are  injured  by  the  careless  use  of 
firearms,  of  explosive  substances,  of  machinery,  the  careless 
management  of  horses,  and  in  a  thousand  ways  where  it  can 
readily  be  seen  afterward  that  a  little  greater  care  on  their 
part  would  have  prevented  it.  Yet  such  injuries  having  been 
unexpected,  and  not  caused  intentionally  or  by  design,  are 
always  called  accidents,  and  properly  so.  Nothing  is  more 
common  than  items  in  the  newspapers  under  the  heading, 
'  accidents  through  carelessness.' 

"  There  is  nothing  in  the  definition  of  the  word  that  ex- 
cludes the  negligence  of  the  injured  party  as  one  of  the  ele- 
ments contributing  to  produce  the  result.  An  accident  is 
defined  as  '  an  event  that  takes  place  without  one's  foresight 
or  expectation  ;  an  event  which  proceeds  from  an  unknown 
cause,  or  is  an  unusual  effect  of  a  known  cause,  and  therefore 
not  expected.' 

"  An  accident  may  happen  from  an  unknown  cause.  But  it 
is  not  essential  that  the  cause  should  be  unknown.  It  may  be 
an  unusual  result  of  a  known  cause,  and  therefore  unexpected 
to  the  party.  And  such  was  the  case  here,  conceding  that  the 
negligence  of  the  deceased  was  the  cause  of  the  accident. 

"  It  is  true  that  accidents  often  happen  from  such  kinds  of 
negligence.  But  still  it  is  equally  true  that  they  are  not  the 
usual  result.  If  they  were,  people  would  cease  to  be  guilty  of 
such  negligence.  But  cases  in  which  accidents  occur  are  very 
rare  in  comparison  with  the  number  in  which  there  is  the 
same  negligence  without  any  accident.  A  man  draws  his 
loaded  gun  toward  him  by  the  muzzle,  the  servant  fills  the 
lighted  lamp  with  kerosene  a  hundred  times  without  injury. 
The  next  time  the  gun  is  discharged,  and  the  lamp  explodes. 
The  result  was  unusual,  and  therefore  as  unexpected  as  it  had 
been  in  all  the  previous  instances.  So  there  are,  undoubtedly, 
thousands  of  persons  who  get  on  and  ofi"  from  cars  in  motion 
without  accident,  where  one  is  injured.     And,  therefore,  when 


664  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

an  injury  occurs,  it  is  an  unusual  result,  and  unexpected,  and 
strictly  an  accident.  There  are  not  many  authorities  on  the 
point.  The  respondent's  counsel  cites  Theobald  v.  The  Rail- 
way Passengers'  Assurance  Company,^  not  as  a  direct  authority, 
but  as  containing  an  implication  that  the  negligence  of  the 
injured  party  would  prevent  a  recovery.  I  do  not  think  it  can 
be  construed  as  conveying  any  such  intimation.  The  insur- 
ance there  was  against  a  particular  kind  of  accident,  —  that 
was  a  railway  accident ;  and  the  only  question  was,  whether 
the  injury  was  occasioned  by  an  injury  of  that  kind.  The 
court  lield  that  it  was,  and  although  it  mentions  the  fact  that 
there  was  no  negligence  on  the  part  of  the  assured,  that  can- 
not be  considered  as  any  intimation  what  would  have  been  the 
effect  of  negligence,  if  it  had  existed. 

"  The  general  question  as  to  what  constitutes  an  accident 
was  considered  in  two  subsequent  cases  in  England.  The  first 
was  Sinclair  v.  The  Maritime  Passengers'  Assurance  Company ,2 
in  which  the  question  was,  whether  a  sunstroke  was  an  accident 
within  the  meaning  of  the  policy.  The  court  held  that  it  was 
not,  but  was  rather  to  be  classed  among  diseases  occasioned  by 
natural  causes,  like  exposure  to  malaria,  &c. ;  and  while  ad- 
mitting the  difficulty  of  giving  a  definition  to  the  term  '  acci- 
dent '  which  would  be  of  universal  application,  they  say  they 
may  safely  assume  '  that  some  violence,  casualty,  or  vis  major 
is  necessarily  involved.'  There  could  be  no  question  in  this 
case,  of  course,  but  that  all  these  were  involved. 

"  In  the  subsequent  case  of  Trew  v.  Railway  Passengers' 
Assurance  Company,^  the  question  was  whether  a  death  by 
drowning  was  accidental.  The  counsel  relied  on  the  language 
of  the  former  case,  and  urged  that  there  was  no  external  force 
or  violence.  But  the  court  held  that  if  the  death  was  occa- 
sioned by  drowning,  it  was  accidental,  within  the  meaning  of 
the  policy.  And  in  answer  to  the  argument  of  counsel,  they 
said :  '  If  a  man  fell  from  a  housetop,  or  overboard  from  a 
ship,  and  was  killed  ;  or  if  a  man  was  suffocated  by  the  smoke 
of  a  house  on  fire,  such  cases  would  be  excluded  from  the 

1  26  Eng.  L.  &  Eq.  432.  ^  107  E.  C  L.  478. 

3  6  H.  &  N.  839. 


ACCIDENT  INSURANCE.  665 

policy,  and  the  effect  would  be,  that  policies  of  this  kind,  in 
many  cases  where  death  resulted  from  accident,  would  afford 
no  protection  whatever  to  the  assured.  "We  ought  not  to  give 
to  these  policies  a  construction  which  will  defeat  the  protection 
of  the  assured  in  a  large  class  of  cases.' 

"  There  was  no  suggestion  tliat  there  was  any  question  to  be 
made  as  to  tlie  negligence  of  the  deceased  ;  and  yet  the  court 
said :  '  "We  think  it  ought  to  be  submitted  to  the  jury  to  say 
whether  the  deceased  died  from  the  action  of  the  water,  or 
natural  causes.  If  they  are  of  the  opinion  that  he  died  from 
the  action  of  the  water,  causing  asphyxia,  that  is  a  death  from 
external  violence,  within  the  meaning  of  this  policy,  ivhether 
he  swam  to  a  distance  and  had  not  strength  enou(jh  to  regain  the 
shore,  or,  on  going  into  the  water,  got  out  of  his  depth.'' 

"  Now,  either  of  these  facts  would  seem  to  raise  as  strong 
an  Inference  of  negligence,  as  an  attempt  to  get  upon  cars  in 
slow  motion.  Yet  the  court  said  that  altliough  the  drowning 
was  occasioned  by  either  one  of  them,  it  would  have  been  an 
accidental  deatli  within  the  meaning  of  the  policy,  and  the 
plaintiffs  entitled  to  recover.  I  cannot  conceive  that  it  would 
have  made  such  a  remark,  except  upon  the  assumption  that  the 
question,  whether  the  injured  party  was  guilty  of  negligence 
contributing  to  the  accident,  does  not  arise  at  all  in  this  class 
of  cases.  I  think  that  is  the  true  conclusion,  both  upon  prin- 
ciple and  authority,  so  far  as  there  is  any  upon  the  subject ; 
and  the  only  questions  are,  first,  whether  the  death  or  injury 
was  occasioned  by  an  accident  within  the  general  meaning  of  the 
policy,  and,  if  so,  whether  it  was  witliin  any  of  the  exceptions. 

"  This  conclusion  is  also  very  strongly  supported  by  that 
provision  of  the  policy  under  which  the  plaintiff  was  non- 
suited. That  necessarily  implies  that  any  degree  of  negli- 
gence, falling  short  of  '  wilful  and  wanton  exposure  to 
unnecessary  danger,'  would  not  prevent  a  recovery.  Such  a 
provision  would  be  entirely  superfluous  and  unmeaning  in 
such  a  contract,  if  the  observance  of  due  care  and  skill  on 
the  part  of  the  assured  constituted  an  element  to  his  right 
of  action,  as  it  does  in  actions  for  injuries  occasioned  by  the 
negligence  of  the  defendant. 


6Q6  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

"  The  question  therefore  remains,  whether  the  attempt  of 
the  deceased  to  get  upon  the  train  was  within  this  provision, 
and  constituted  a  '  wilful  and  wanton  exposure  of  himself  to 
unnecessary  danger.'  I  cannot  think  so.  The  evidence  showed 
that  the  train,  having  once  been  to  the  platform,  had  backed 
so  that  the  cars  stood  at  some  little  distance  from  it.  While 
it  was  waiting  there,  the  deceased  was  walking  back  and  forth 
on  the  platform.  It  is  very  probable  that  he  expected  the 
train  to  stop  there  again  before  finally  leaving.  But  it  did 
not.  It  came  along,  and  while  moving  at  a  slow  rate,  not 
so  fast  as  a  man  would  walk,  he  attempted  to  get  on,  and  by 
some  means  fell  either  under  or  by  the  side  of  the  cars,  and 
was  crushed  to  death.  The  act  may  have  been  imprudent. 
It  may  have  been  such  negligence  as  would  have  prevented  a 
recovery  in  an  action  based  upon  the  negligence  of  the  com- 
pany, if  there  had  been  any.  But  it  does  not  seem  to  have 
contained  those  elements  which  could  be  justly  characterized 
as  wilful  or  wanton.  The  deceased  was  in  the  regular  prose- 
cution of  his  business.  He  desired  and  expected  to  leave  on 
that  train.  Finding  that  he  would  be  left  unless  he  got  on  the 
train  while  it  was  in  motion,  it  was  natural  enough  for  him 
to  make  the  attempt.  The  strong  disinclination  which  people 
have  to  being  left,  would  impel  him  to  do  so.  The  railroad 
employes  were  getting  on  at  about  the  same  time.  Impru- 
dent though  it  is,  it  is  a  common  practice  for  others  to  get 
on  and  off  in  the  same  manner.  He  had  undoubtedly  seen  it 
done,  if  he  had  not  done  it  himself,  many  times,  without 
injury.  I  cannot  regard  it,  therefore,  as  a  wilful  and  wanton 
exposure  of  himself  to  unnecessary  danger,  within  the  mean- 
ing of  the  policy." 

And  this  case  was  cited  and  approved  in  the  Providence 
Life  Insurance  and  Investment  Company  v.  Martin,^  where 
the  policy  provided  that  the  company  should  not  be  liable  in 
case  the  insured  received  injury  "  by  his  wilfully  exposing 
himself  to  any  unnecessary  danger  or  peril,"  and  where  the 
facts  were  that  tlie  assured  was  a  locomotive  engineer,  in  the 
employ  of  a  railroad  company,  whose  principal  business  was 

1  32  Md.  310. 


ACCIDENT  INSURANCE.  667 

the  transportation  of  coal,  and  whilst  backing  his  engine  upon 
a  down  grade,  with  a  car  in  front  as  a  precaution  to  check  the 
speed,  he  directed  the  fireman  to  run  it,  and  went  upon  and 
over  the  tender  to  get  into  this  car  to  draw  the  brakes,  and  in 
doing  so  slipped  and  fell  between  the  car  and  the  tender,  and 
was  instantly  killed  by  the  tender  passing  over  his  body.  The 
speed  at  the  time  was  about  eight  miles  per  hour,  on  a  descend- 
ing grade.  It  was  also  distinctly  asserted  in  this  case  that 
contributory  negligence  was  no  defence,  as  the  liability  rests 
upon  contract,  one  of  the  chief  objects  of  which  is  to  protect 
the  insured  against  his  own  mere  carelessness  or  negligence.^ 

§531.  Accident  —  Condition  to  be  Careful.  —  But  policies 
sometimes  contain  provisions  which  look  to  a  protection  from 
liability  for  injury  by  negligence,  as  the  stipulation  that  the 
insured  shall  be  careful  for  his  safety.  Wliat  amounts  to  the 
violation  of  a  stipulation  in  an  accident  policy  that  the  insured 
shall  "  use  all  due  diligence  for  his  personal  safety  and  pro- 
tection," is  to  be  deduced  from  all  the  facts  and  circumstances 
accompanying  the  accident,  and,  like  questions  of  negligence 
and  due  care  generally,  is  to  be  determined  by  the  jury.  The 
court  will  not  undertake  to  say,  as  matter  of  law,  whether  a 
particular  act,  or  series  of  acts,  constitutes  a  want  of  such  due 
diligence.^ 

1  And  see  also  ante,  §  301  and  §  408  et  seq.  In  Pratt  v.  Travellers'  Ins.  Co.,  a 
nisi  prius  case  tried  in  the  Supreme  Court  in  New  York,  in  Oct.  1871,  cited  by 
a  very  careful  writer  in  the  American  Law  Review,  for  July,  1873,  under  a  pol- 
icy which  exempted  the  insurers  from  liability  if  the  insured  was  guilty  of  a  vio- 
lation of  any  rule  of  any  company,  or  in  case  of  wilful  exposure  or  want  of  due 
care,  the  jury  were  charged  that  if  the  insured  was  standing  on  the  platform  in 
violation  of  the  rules  of  the  railway  company,  he  could  not  recover;  if  he  was 
passing  from  one  car  to  another,  it  was  for  them,  upon  all  the  circumstances,  to 
say  whether  he  used  due  care  or  not.  And  in  another  case  cited  by  tlie  same 
writer,  Hoffman  v.  Travellers'  Ins.  Co.,  in  the  same  court,  but  on  a  different  cir- 
cuit, the  court  held,  as  matter  of  law,  that  attempting  to  cross  a  railroad  track, 
when  an  approaching  train  was  within  fifty  to  one  hundred  feet,  was  a  violation 
of  a  condition  to  use  all  due  diligence  for  personal  safety.  It  was  "as  gross  neg- 
ligence," tlie  court  is  reported  to  have  said,  "as  if  the  man  had  hanged  himself." 
The  facts  were  no  doubt  such  as  to  have  justified  a  jury  in  finding  a  verdict  for 
the  defendant ;  though  upon  the  last  proposition  there  might  be  a  difference  of 
opinion.     The  doctrine  of  the  case  cited  in  the  next  section  seems  the  better. 

2  Adm'rs  of  Stone  v.  United  States  Casualty  Co.,  84  N.  J.  (5  Vroom)  371. 


668  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

§  532.  Accident  Insurance  —  Increase  of  Risk  —  Change  of 
Occupation.  —  A  change  of  occupation  on  the  part  of  a  person 
insured  against  injury  by  accident  does  not  mean  a  casual 
change,  such  as  most  men  do,  or  may  resort  to,  during  the 
intervals  of  time  when  their  usual  employment  does  not  en- 
gage them,  but  rather  "  engaging  in  another  employment  as 
a  usual  business."  An  unemployed  teacher,  therefore,  does 
not  forfeit  his  right  to  recover  because  he  meets  with  an  acci- 
dent while  superintending  the  erection  of  a  building  for  him- 
self.^ Nor  does  a  person  who,  while  on  a  visit  to  a  friend  who 
was  a  farmer,  meets  with  an  accident  while  casually  assisting 
him  in  getting  in  hay,  though  farming  is  not  his  usual  occupa- 
tion.^  A  statement  by  the  insured  in  his  application  as  to  his 
occupation  is  a  representation  of  the  then  existing  fact,  and 
not  a  covenant  or  warranty  that  there  sliall  be  no  change  in 
the  occupation  affecting  the  risk  during  the  currency  of  the 
policy.  And  a  change  in  the  occupation,  as,  for  instance, 
from  the  occupation  of  a  switchman  to  that  of  a  brakeman, 
whether  affecting  the  risk  or  not,  does  not  avoid  the  policy, 
unless  expressly  so  stipulated,  or  unless  liability  is  restricted 
to  accidents  occurring  in  the  course  of  the  occupation  specified 
in  the  application.^  And  for  the  same  reasons  an  engineer  on 
a  railway  train  may  temporarily  perform  the  duty  of  an  absent 
brakeman  without  forfeiting  his  riglit  to  recover.'^ 

§  533.  Accident  —  Increase  of  Risk  —  Classification  of  Risk. — 
In  Stone  v.  United  States  Casualty  Company,^  where  the  policy 
required  notice  of  change  of  occupation  "  to  a  more  hazardous 
exposure  under  the  company's  classification  than  is  named 
in  the  application,"  the  form  and  effect  of  the  following  in- 
dorsement upon  the  policy, —  "Policyholders  insured  under 
the  preferred  class  will  not  be  entitled  to  recover  for  injuries 
received  in  any  employment,  or  by  any  exposure  either  more 
hazardous  in  itself,  or  classified  by  the  company  as  more  haz- 

1  Adm'rs  of  Stone  v.  United  States  Casualty  Co.,  84  N.  J.  (5  Vroora)  371. 

2  North  American  Ins.  Co.  v.  Burrouglis,  69  Penn.  St.  43. 

3  The  Provident  Life  Ins.  Co.  v.  Fennell,  49  111.  180. 
*  Prov.  Life  Ins.  and  Inv.  Co.  v.  Martin,  32  Md.  310. 
5  34  N.  J.  371. 


ACCIDENT   INSURANCE.  669 

ardous  than  the  occupations  named  in  the  preferred  class," 
came  under  consideration,  and  the  conclusion  was,  first,  that 
the  language  has  respect  to  hazardous  employments,  and  not 
to  hazardous  individual  acts ;  and,  secondly,  that,  being  so  in- 
dorsed on   the  policy,  it  constitutes  no  part  of  the  contract. 
"  The  injuries  excluded  from  the  compensation  of  the  policy," 
say  the  court,  by  Beasley,  C.  J.,  "are  described  as  those  that 
are  '  received  in  any  employment,  or  by  any  exposure  either 
more  hazardous  in  itself,  or  classified  by  the  company  as  more 
hazardous.'     These  terms,  literally  rendered,  require  that  the 
assured,  to  come  within  their  effect,  must,  at  the  time  of  the 
injury,  be  in  an  employment  more  dangerous  than  his  own. 
The  language  has  respect  to  employments,  and  not  to  individ- 
ual acts.     It  is  true  that  a  certain  degree  of  ambiguity  is 
introduced  by  the  expression  '  other  exposure,'  but,  looking  at 
the  body  of  the  policy,  we  find  these  terms  used  in  the  sense 
of  the  risks  arising  from  a  business  or  occupation.     By  ad- 
hering to  the  literal  signification  of  the  terms  employed,  these 
indorsements  prefixed  to  the  several  classes  of  employments 
lose  all  force  as  independent  stipulations,  and  serve  the  simple 
purpose  of  graduating  such  employments  for  the   service  of 
that  provision  of  the  policy  which  prohibits  the  assured  from 
passing,  at  his  own  option,  from  one  business  to  another. 
Understood  in  this  view,  they  are  properly  a  part  of  the  classi- 
fication, but  if  they  are  to  be  received  as  containing  new  terms 
of  the  contract,  they  are  entirely  out  of  place.     If  the  com- 
pany intended  to  say  to  the  assured  that  if  he  did  any  act 
which  did  not  strictly  belong  to  his  own  occupation,  but  was 
embraced  more  properly  in  some  other  business,  and  if  thereby 
any  harm  to  him  accidentally  resulted,  that  in  such  event  he 
could  claim  nothing  under  his  policy,  it  was  easy  for  them  to 
do  so  in  plain  language.     Such  a  stipulation  would  obviously 
be  one  of  a  very  important  character,  and  we  would  expect  to 
find  it  in  the  body  of  the  instrument.     A  qualification  of  the 
agreement  so  restrictive  of  the  rights  of  tlie  party  insured 
ought  not  to  be  admitted,  unless  the  terms  of  this  indorse- 
ment will  bear  no  other  rational  interpretation.     If  the  terms 
used  are  imperfect  or  ambiguous,  it  is  the  fault  of  the  defend- 


670  INSURANCE  :   FIRE,   LIFE,    ACCIDENT,   ETC. 

ants ;  it  is  their  contract,  and  the  construction  of  it  must  be 
strongly  against  them,  contra  preferentes.  Nor  do  I  think  the 
liberal  interpretation  of  this  clause,  which  the  defence  con- 
tends for,  a  practical  one.  It  would  be  difficult  to  put  it  in 
practice;  for  who  can  say,  in  many  cases,  what  acts  are  prop- 
erly incident  to  one  occupation,  and  which  are  not  so  to  any 
other?  The  subdivisions  of  employments  are  so  numerous 
and  minute,  that  in  actual  life  it  is  impossible  to  separate 
them  by  any  visible  and  exact  line ;  for  instance,  in  the  first 
of  these  classifications  the  shopkeeper  is  placed,  and  in  the 
second  the  laborer.  The  employments  of  these  are  distinct ; 
but  with  respect  to  particular  acts  it  would  be  extremely  diffi- 
cult, if  not  impossible,  to  classify  tliem  into  those  which  are 
common  to  both  occupations,  and  into  those  which  are  peculiar 
to  each.  It  does  not  seem  to  me  proper  to  bring  into  this 
agreement  this  confusion  and  uncertainty  by  construction.  It 
certainly  is  not  necessary  for  the  reasonable  protection  of  the 
company,  for  there  are  other  restrictions  in  this  instrument 
which  are,  apparently,  sufficient  to  debar  a  party  insured  from 
doing  acts  appertaining  to  other  occupations,  which  are  of  a 
particularly  hazardous  nature.  I  refer  to  the  clauses  referring 
to  undue  exposure.  Even  the  case  put  of  an  attorney  driving 
a  steam-engine  would  probably  come  within  this  proliibition. 

"  But  there  is  still  another,  and,  as  it  seems  to  me,  a  decided 
objection  against  the  admission  of  this  indorsement,  as  consti- 
tuting in  itself  a  substantive  agreement.  That  objection  is 
this:  that  considered  in  this  light  it  cannot  be  received  as  any 
part  of  the  contract  between  these  parties.  As  I  have  stated, 
this  clause  is  a  prefix  to  the  classification  on  tlie  back  of  the 
policy,  and  such  prefix  is  not  referred  to  in  the  body  of  the 
instrument.  The  policy  itself  is  very  explicit  as  to  what  shall 
be  comprised  in  the  contract.  Its  language  is,  that  this  policy 
*  is  issued  and  accepted  subject  to  all  the  provisions,  condi- 
tions, limitations,  and  exceptions  herein  contained  or  referred 
to,  and  upon  the  express  agreement  that  the  statements  and 
declarations  of  the  insured  in  his  application  for  this  insurance 
are  warranted  to  be  true  in  all  respects,  and  that  said  applica- 
tion, together  with   tlie  company's  classifications  of  hazards 


ACCIDENT    INSURANCE.  671 

indorsed  hereon,  are  referred  to,  and  made  a  part  of,  this  con- 
tract. This  specification  of  the  parts  going  to  make  \ip  the 
agreement  is  clear,  and  it  does  not  embrace  this  prefix  in  ques- 
tion, if  such  prefix  is  to  be  taken  as  a  modification  of  the  body 
of  the  policy  in  a  most  material  respect.  On  these  various 
grounds  I  incline  to  the  view  that  the  indorsement  in  question 
does  not  constitute  a  substantive  stipulation,  but  is  merely  ex- 
planatory of  the  stipulations  to  the  extent  already  indicated." 

§  534.  Accident  —  Extent  of  Risk.  —  Insurance  against  in- 
jury by  accident  includes  all  accidents  not  excepted  by  the 
terms  of  the  policy. ^  A  general  insurance,  however,  against 
death  by  "  violent  and  accidental  means,"  followed  by  a  pro- 
viso that  the  insurers  will  not  be  responsible  for  death  caused 
by  certain  specified  means,  or  happening  in  certain  specified 
modes,  must  be  construed  as  covering  injuries  happening  by 
violent  and  accidental  means,  and  not  by  the  causes  and  modes 
specified  in  the  excluding  proviso.  The  exclusion  of  respon- 
sibility for  death  or  injury  in  certain  specified  ways  does  not 
enlarge  the  scope  of  the  general  clause  so  as  to  include  cases 
happening  otherwise  than  by  violent  and  accidental  means.^ 

§  535.  Accident  Insurance  —  Insurable  Interest  —  Amount  of 
Loss.  —  Every  person  is  presumed  to  have  an  insurable  interest 
in  his  own  life,  and  in  his  personal  safety  and  security  from 
injury.^  Where  a  policy  insures  for  a  stated  period  against 
two  classes  of  accidental  injuries,  namely,  those  which  occa- 
sion loss  of  life  within  ninety  days,  in  a  gross  sum,  and  those 
which  shall  not  prove  fatal,  in  a  certain  sum  per  week  for  a 
fixed  number  of  weeks,  the  two  provisions  are  to  be  construed 
together.  If  an  injury  happens,  it  is  insured  against  under 
one  class  or  the  other,  and  if  a  recovery  cannot  be  had  under 
the  first  class  for  the  gross  sum,  then  it  may  be  had  under  the 
second  class  for  the  weekly  allowance.  If  it  were  other- 
wise, an  injury  which  should  not  prove  fatal  in  ninety  days 
would  furnish  no  ground  of  action  till  it  should  be  made  to 

1  Trov.  Life  Ins.  Co.  v.  Fennell,  49  111.  ISO;  Same  v.  Martin,  32  Md.  310. 

2  Southard  v.  The  Railway  Passengers'  Ass.  Co,  34  Conn.  574, per  Shipman, 
Judge  of  the  District  Court  of  the  United  States,  acting  as  arbitrator,  ante, 
§515. 

3  Prov.  Life  Ins.  and  luv.  Co.  v.  Baum,  29  Ind.  236. 


672  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

appear  that  it  would  never  prove  fatal,  —  a  construction  which 
would  render  the  insurance  nugatory  in  such  cases.^  In  such 
a  case  the  lapse  of  the  ninety  days  is  to  be  determined  by 
including  the  day  when  the  accident  happened  as  one  of  the 
ninety  days,  in  accordance  with  the  rule  that  when  time  is 
reckoned  from  an  act  done,  it  includes  the  day  when  the  act 
is  done ;  but  when  it  is  reckoned  from  the  day  when  the  act  is 
done  the  day  is  excluded.  And  a  death  happening  within 
ninety  days  from  the  time  of  the  accident,  though  after  the 
expiration  of  the  period  covered  by  the  insurance,  if  the  acci- 
dental cause  be  within  that  period,  affords  ground  for  recov- 
ery.^ If  the  policy  stipulated  for  the  payment  of  a  fixed 
sum  in  the  case  of  death  by  accident,  and  for  a  proportion- 
ate sum  in  the  case  of  merely  personal  injury,  not  fatal,  the 
amount  to  be  recovered  is  not  to  be  estimated  by  the  propor- 
tion which  the  injury  bears  to  the  amount  payable  in  case  of 
death.  The  insured  may  recover  for  the  expense  and  suffer- 
ing occasioned,  but  not  for  loss  of  time  or  profits.  If  recov- 
ery could  be  had  for  a  consequential  loss  of  profits,  a  person 
whose  time  or  business  is  more  valuable  than  another's,  might, 
for  the  same  injury,  receive  a  greater  remuneration.  The 
insurers  indemnify  against  the  expense  and  pain  and  loss 
immediately  connected  with  the  accident,  and  not  against  re- 
mote consequences  that  may  follow,  according  to  the  business 
or  profession  of  the  insured.^ 

§536.  Accident  —  Notice  of  Death  —  Preliminary  Proof. — 
The  general  rules  heretofore  stated  as  to  preliminary  proof  in 
other  branches  of  insurance  are  also  applicable  here.*  "  Suffi- 
cient proof  of  the  injury "  does  not  include  the  mode  and 
manner  of  the  injury  or  its  cause.  Nor  will  a  statement  in  the 
preliminary  proofs  of  two  inconsistent  causes  of  the  injury, 
the  injury  itself  being  correctly  stated,  prejudice  the  right  of 
the  insured  to  recover.^     In  Gamble  v.  Accident  Assurance 

1  Perry  v.  Prov.  Life  Ins.  and  Inv.  Co.,  103  Mass.  242 ;  Same  v.  Same,  99 
Mass.  162.  2  Ibid. 

3  Theobald  v.  Railway  Passengers'  Ass.  Co.,  10  Exch.  45 ;  s.  c.  26  Eng.  L.  & 
Eq.  432. 

*  Ante,  Ch.  XX. 

5  North  American  Ins.  Co.  v.  Burroughs,  69  Penn.  St.  43. 


ACCIDENT   INSUEANCE.  673 

Company  ,1  a  stipulation  that  particulars  of  the  accident  should 
be  furnished  within  a  specified  time,  was  a  condition  precedent 
to  the  recovery,  and  a  non-compliance  therewith  was  not  ex- 
cused by  the  intervention  of  a  death  so  sudden  that  the  condi- 
tion could  not  be  complied  with.^  Notice  of  the  death,  required 
"  as  soon  thereafter  as  possible,"  must  be  within  a  reasonable 
time  ;  and  what  is  a  reasonable  time  is  for  the  jury,  if  any  facts 
from  which  the  reasonableness  of  the  time  is  to  be  inferred  are 
in  dispute,  otherwise  for  the  court.^ 

§  537.  Accident  —  Form  and  Completion  of  Contract.  —  From 
their  very  nature  such  contracts  are  made  with  the  ordinary 
despatch  of  a  purchase  and  sale.  A  passenger  about  to  take 
the  cars  buys  his  ticket  of  insurance  as  he  buys  his  ticket  for 
fare,  and  oftentimes  of  the  same  person.  In  each  case  the 
ticket  is  evidence  of  a  contract  completed  and  binding  on  both 
parties.  And  as  in  other  cases  a  parol  contract  to  insure  or 
to  issue  a  policy  is  enforceable,  the  former  at  law,  and  the  lat- 
ter in  equity,  so  here  a  promise  to  make  out  a  policy,  or  to  for- 
ward the  requisite  ticket,  may  be  enforced  by  the  appropriate 
remedy,  —  as  where  a  party  on  his  way  to  the  cars  meets  the 
agent  of  the  company,  pays  for  an  insurance  for  one  day,  and 
without  waiting  for  his  policy  or  ticket,  which  the  agent  prom- 
ises to  send  him,  proceeds  tg  the  cars  and  thence  on  his  journey 
without  having  received  eitlier.  The  contract  is  nevertheless 
complete  and  valid.^ 

§  638.  Accidents  to  Carriages.  —  In  France  there  has  been  for 
many  years  an  insurance  company,  L'Automedon,  which  takes 
risks  on  carriages,  indemnifying  tlieir  owners  against  civil  lia- 
bility and  loss  by  reason  of  the  negligence  of  their  drivers. 
In  L'Automedon  e.  Isot,^  it  appeared  that  one  of  the  defend- 
ant's drivers  had  wilfully  driven  against  and  upset  another 
carriage,  whereby  the  owner  was  thrown  out  and  injured. 
The  injured  party  sued  the  defendant  and  recovered  damages, 
for  the  reimbursement  of  which  Isot,  the  defendant,  brought 

1  Irish  Rep.  4  C.  L.  204.  2  But  see  ante,  §  465. 

3  Prov.  Life  Ins.  and  Inv.  Co.  v.  Baum,  29  Ind.  236.  And  see  also  ante, 
§  462,  and  post,  §  539. 

*  Rhodes  v.  Railway  Passengers'  Ass.  Co.,  5  Lansing  (N.  Y.),  7L 
5,Dalloz,  Jur.  du  Royaume,  1844,  pt.  2,  p.  128. 

43 


674  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

suit  against  the  insurers.  Tlie  main  ground  of  defence  was, 
that  as  it  would  be  against  public  policy  to  insure  against  the 
consequences  of  an  act  which  amounts  to  a  crime,  such  an 
accident  could  not  be  considered  as  within  the  scope  of  the 
policy ;  and  such  was  the  view  taken  by  the  departmental 
court ;  but  on  appeal  to  the  Court  of  Cassation  it  was  held 
that  such  accidents,  whether  delicta  or  quad  delicta,  were  prop- 
erly subjects-matter  of  insurance.  The  temptation  to  perpe- 
trate a  public  wrong,  said  the  court,  is  counteracted  by  the  fact 
that  nothing  can  be  recovered  by  tlie  insured  beyond  the  dam- 
ages which  he  is  compelled  to  pay. 

§  539.  Accident — Notice  of  Injury.  —  Where  the  policy  stipu- 
lates that  immediately  upon  the  happening  of  the  accident,  which 
may  result  in  death,  a  surgeon  shall  be  called,  and  notice 
of  the  accident  shall  be  given  within  a  limited  time,  a  failure 
to  do  either  will  not  affect  the  right  to  recover,  unless  it 
amounts  to  negligence ;  as  where  a  laborer  receives  a  fall,  the 
serious  nature  of  the  consequences  of  wliich  is  not  at  first 
revealed,  and  which  is  of  such  an  apparently  trivial  character 
as  not  at  first  to  interrupt  his  work.^ 

1  D^cUeance  et  aut.  c.  Comp.  d'ass.  La  Securite  Generale,  Dalloz,  Jur.  du 
Eoyaume,  1870,  pt.  3,  p.  63. 


Note.  —  Since  this  chapter  was  printed,  the  case  of  Charaplin  v.  Travellers' 
Passenger  Ins.  Co.,  6  Lansing  (N.  Y.),  71,  has  come  to  hand,  in  which  it  is  ex- 
pressly decided  that  the  doctrine  of  contributory  negligence  on  the  part  of  the 
plaintiff  does  not  apply  as  a  defence  in  actions  on  policies  of  insurance.  In  the 
same  case,  it  appearing  that  the  insured  attempted  to  jump  on  to  an  omnibus  — 
a  public  conveyance  used  for  carrying  passengers  —  while  it  was  in  motion,  that 
he  succeeded  in  getting  on  to  the  steps,  which  were  at  the  rear  of  the  omnibus, 
but  was  unable,  by  reason  of  the  jar  of  the  vehicle,  to  maintain  his  footing,  and 
received  injuries  of  a  serious  nature,  from  hitting  his  knee  against  the  wheel,  it 
was  also  held  that  the  insured  was  travelhng.  "  It  would  be  a  very  strained 
construction,"  say  the  court,  "  of  a  contract  like  this  to  hold  that  he  was  not  trav- 
elling. If  he  was  not  travelling,  it  is  difficult  to  say  what  he  was  doing.  We 
think  that  as  he  was  actually  going  from  one  place  to  another,  he  was  travel- 
ling." 


GUARANTEE   AND   OTHER   KINDRED   INSURANCES.  675 


CHAPTER   XXIV. 

OF   GUARANTEE   AND   OTHER   KINDRED   INSURANCES. 

§  540.  Guarantee  Insurance.  —  What  is  termed  guarantee 
insurance,  whicli  seems  to  be  merely  a  mode  of  compensated 
suretyship,  has  not,  as  a  distinct  business  of  incorporated  com- 
panies, had  much  vogue  in  this  country,  although  companies  have 
been  incorporated  with  a  view  to  the  acceptance  of  such  risks. 
Nor,  indeed,  in  England,  where  efforts  have  been  made  to  estab- 
lish it  as  a  branch  of  insurance  business,  has  it  made  much 
progress.  And  there  it  has  been  made  applicable,  for  the  most 
part,  to  the  indemnification  of  parties  against  the  risk  from  wil- 
ful and  culpable  negligence,  infidelity,  fraud,  and  all  forms  of 
dishonesty.  Strictly  speaking,  the  term  "guarantee  insurance" 
is  tautological,  insurance  itself  having  for  its  purpose,  as  we 
have  seen,^  to  guaranty  against  all  forms  of  loss  or  pecuniary 
injury.  Of  the  principles  which  underlie  the  cofttract  of 
suretyship  generally  we  do  not  propose  to  speak, ^  But  as 
special  forms  of  suretyship  have  been  undertaken,  under  the 
general  title  of  insurance,  we  shall  state  such  points  in  the 
history  and  development  of  these  special  forms  as  have  come 
under  the  cognizance  of  the  courts.  The  statements  made  in 
the  application  or  proposal  may  be  warranties  or  representa- 
tions, as  in  other  kinds  of  insurance,  and,  unless  specially  con- 
trolled by  the  terms  of  the  contract,  are  subject  to  the  same 
construction  and  have  the  like  force  and  effect ;  though,  in  a 
mere  contract  of  guaranty,  the  concealment  or  non-communi- 
cation of  material  facts,  unless  fraudulent,  is  no  defence  to  an 

i  Ante,  §  2. 

2  The  cases  upon  tliis  subject  seem  to  have  been  carefully  collected  by  Bun- 
yon,  Life  Insurance,  p.  98  et  seq.,  and  are  reproduced  in  this  country  by  Bliss,  in 
the  chapter  on  Guarantee  Insurance,  contained  in  his  valuable  work  on  Life 
Insurance,  p.  722  et  seq.,  to  which  the  reader  interested  in  the  matter  is  referred. 


676  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

action  upon  the  contract  of  guaranty.^  And  where  the  con- 
tract is  substantially  one  of  suretyship,  the  insurers  will 
doubtless,  after  payment  of  loss,  in  accordance  with  the  rule 
which  obtains  under  the  relation  of  suretyship,  be  subrogated 
to  all  the  rights  of  the  insured  against  the  party  in  default, 
and  entitled  to  all  the  securities  which  he  may  hold  against 
him.2  The  form  of  the  contract  is  a  policy  describing  the 
subject-matter  of  the  risk,  setting  forth  the  consideration,  and 
pledging  the  funds  of  the  company  to  pay  in  case  the  event 
insured  against  happens,  subject  to  the  conditions  of  the  con- 
tract. It  is  in  these  special  conditions  that  the  policy  differs 
from  an  ordinary  bond  of  indemnity  with  sureties,  given  by  a 
clerk,  servant,  or  agent  to  secure  his  employers.  These  condi- 
tions refer,  as  in  other  kinds  of  insurance,  to  the  various  cir- 
cumstances which  attend  the  contract,  as  the  payment  of  the 
premiums  originally  and  in  case  of  renewal,  the  truth  of 
the  statements  in  the  proposal  or  application,  the  limitation 
of  the  risk  assumed  by  the  insurer,  the  notice  of  loss,  mode 
of  proof,  times  of  payment,  mode  of  adjustment,  limitation  of 
suit,  &c.,  according  to  the  special  views  and  experiences  of  the 
insurers,  and  with  such  modifications  as  the  peculiarity  of  the 
risk  assumed  demands.  And  the  proposal  contains  such  inqui- 
ries and  answers  as  are  calculated  to  enable  the  insurers  to 
determine  the  value  of  the  risk.  As  in  marine  and  fire  insur- 
ance the  interest  of  the  insured  in  the  preservation  of  the 
property  is  secured  by  limiting  the  indemnification  to  a  portion 
of  the  property  lost,  so  in  guarantee  insurance  the  interest  of 
the  insured  in  preventing  the  occurrence  of  the  event  insured 
against  is  secured  by  providing  that  in  case  of  loss  only  a  per- 
centage of  the  loss  will  be  paid.^  And  a  not  unusual  pro- 
vision, peculiar  to  this  form  of  insurance,  is  the  requirement 
that  in  case  of  loss  the  insurers  shall  be  entitled  to  the  ser- 
vices of  the  insured,  in  whatever  form  they  may  be  made 
available,  in  bringing  the  delinquent  to  justice. 

§  541.  The  advantages  of  public  or  incorporated  guarantee 

1  North  Brit.  Ins.  Co.  v.  Lloyd,  10  Exch.  523. 

2  Montague  v.  Tidcombe,  2  Vt.  518. 

»  Solvency  Mut.  Guar,  Co.  v.  York,  3  H.  &  N.  588. 


GUAEANTEE   AND    OTHER   KINDRED    INSURANCES.  677 

insurance  over  private  suretyship  are  held  out  to  be  that  it 
affords  to  the  exertions  of  all  classes  increased  facilities  for 
obtaining  occupations  of  responsibility  and  trust ;  that  it  en- 
courages good  character,  by  causing  that  alone  to  be  the  basis 
of  suretyship,  apart  from  the  influence  of  family  connections, 
private  interest,  or  pecuniary  resources ;  that  it  relieves  pri- 
vate individuals  from  the  necessity  of  becoming  sureties,  and 
from  the  consequent  liability  to  which  they  or  their  estates  may 
be  exposed  ;  and  that  it  offers  the  best  security  to  employers, 
because  free  from  the  uncertainty  and  anxiety  which  unavoid- 
ably attach  to  private  suretyship,  by  reason  of  unknown  death, 
insolvency,  and  the  many  casualties  to  which  such  sureties  are 
liable.  Tiie  union  of  guarantee  with  life  insurance  has  also 
been  attempted,  upon  the  principle  that  two  risks  rendered 
dependent  on  each  other  can  be  insured  at  a  lower  rate  than 
the  same  two  risks  separately.  The  life  insurance  becomes,  as 
it  were,  a  contingent  collateral  security  against  the  risk  under- 
taken for  the  guarantee,  inasmuch  as,  if  a  claim  be  substan- 
tiated by  the  employer  under  the  guarantee  policy,  the  life 
policy  is  forfeited.  While  such  a  system  appears  to  be  equita- 
ble, it  is  also  effective  in  the  protection  of  employers,  since  the 
self-interest  of  the  employed  is  involved  in  any  act  of  delin- 
quency. It  is  understood  that  the  public  authorities  in  Eng- 
land have  to  a  considerable  extent  resorted  to  this  form  of 
guaranty  in  lieu  of  private  bondsmen.^ 

§  542.  Guarantee  Insurance  —  "Warranty.  —  In  Benham  V. 
United  Guarantee  and  Life  Insurance  Company ,2  the  defend- 
ants granted  to  the  plaintiff,  the  treasurer  of  a  literary  insti- 
tution, a  policy  of  guarantee  against  loss  occasioned  by  the 
want  of  "  integrity,  honesty,  or  fidelity  "  of  the  secretary  of 
such  institution,  "  arising  out  of  his  employment  as  such 
secretary."  The  policy  set  forth  that,  as  the  basis  for  the  con- 
tract of  such  guarantee,  the  plaintiff  had  lodged  at  the  office 
of  the  defendants  a  certain  statement  containing  a  declaration, 
signed  by  the  plaintiff,  of  the  truth  of  the  answers  thereby 
given  to  the  questions  therein  contained.  This  statement  con- 
tained, amongst  others,  the  following  questions  and  answers : 
1  Bunyon,  Life  Insurance,  p.  119.  '^  7  Exch.  744. 


678  insurance:  fire,  life,  accident,  etc. 

"  First,  Is  the  applicant  at  present  in  your  employment,  and 
if  so,  in  what  capacity,  and  has  he  hitherto  performed  the 
duties  of  the  situation  faithfully  and  to  your  satisfaction  ?  — 
He  is  secretary.  .  .  .  Secondly,  Is  the  applicant  personally 
known  to  you,  or  any  of  your  firm,  or  by  whom  has  he  been 
introduced  or  recommended  to  you  ?  —  Only  as  above.  Thirdly, 
In  what  capacity  do  you  intend  to  employ  the  applicant? 
and  with  reference  to  this  question  state,  as  far  as  circum- 
stances will  permit :  (a)  The  nature  of  his  intended  duties  and 
responsibilities.  —  He  is  secretary  of  the  Marylebone  Literary 
Institution,  of  which  I  am  treasurer.  (6)  The  checks  which 
will  be  used  to  secure  accuracy  in  his  accounts,  and  when  and 
how  often  they  will  be  balanced  and  closed.  —  Examined  by 
finance  committee  every  fortnight,  (c)  The  salary  or  emolu- 
ment, and  when  it  will  be  paid  to  him,  and  how. —  <£oO  a  year 
at  present."  Upon  these  facts,  it  was  held  that  the  statement 
that  the  accounts  would  be  examined  by  the  finance  committee 
every  fortnight  did  not  amount  to  a  warranty,  but  was  a  mere 
representation  of  the  intention  of  the  plaintiff";  and  that  the 
insured  might  therefore  recover  for  a  loss  arising  from  a  want 
of  integrity  of  the  secretary,  although  such  loss  was  occa- 
sioned by  neglect  to  examine  the  accounts  in  the  manner 
stated.  The  application  in  this  case  was  by  the  secretary,  and 
the  questions  proposed  were  to  his  employer.  The  proposal 
contained  a  declaration  of  the  truth  of  the  statement  therein 
contained,  and  that  it  constituted  the  basis  of  the  contract. 
All  of  the  judges  agreed  that  the  answer  as  to  the  examina- 
tion of  accounts  was  nothing  more  than  a  declaration  of  the 
course  intended  to  be  pursued,  and,  i?  bona  fide,  was  not  other- 
wise to  be  objected  to.  Martin,  B.,  also  adverted  to  the  fact 
that  the  questions  were  put  to  the  employer  as  of  some  signifi- 
cance. 

§  543.  Guarantee  Insurance  —  Misrepresentation.  —  The  Na- 
tional Guardian  Life  Insurance  Society,  as  a  branch  of  their 
business,  issued  policies  called  guarantee  policies,  having  for 
their  object  the  insurance  of  employers  against  loss  by  reason 
of  the  want  of  honesty  or  fidelity,  or  on  account  of  the  wilful 
or  culpable  default  or  negligence  of  their  employes.     Upon 


GUARANTEE   AND    OTHER   KINDRED   INSURANCES.  679 

one  of  these  policies,  insuring  the  honesty  of  a  collector  of 
taxes,  defence  was  made  on  the  ground  of  misrepresentation  ; 
and  it  appeared  that  prior  to  issuing  the  policy  certain  ques- 
tions were  put  to  the  insured  'and  to  his  employers,  and 
amongst  others  inquiry  was  made  as  to  the  largest  amount  of 
money  which  would  come  into  his  hands  at  any  one  time  and 
be  retained  by  him,  and  what  checks  were  used  to  secure  accu- 
racy in  his  accounts.  It  was  replied  that  he  was  to  col- 
lect and  account  for  the  sums  collected  by  him  ;  that  the 
amount  of  money  which  he  was  to  receive  and  retain  in  his 
hands,  not  longer  than  a  week,  was  from  one  hundred  to  two 
hundred  pounds  sterling ;  that  his  accounts  would  be  checked 
weekly  by  the  surveyor  of  taxes ;  that  the  balance  each  week 
would  be  paid  over ;  and  that  such  balances  would  be  occa- 
sionally tested  by  his  employers.  It  also  appeared  that  his 
annual  collections  amounted  to  nine  thousand  pounds  sterling, 
and  he  arrived  at  his  answer  by  dividing  that  sum  by  fifty-two, 
the  number  of  weeks  in  the  year,  whereas  in  point  of  fact  in 
some  weeks  nothing  was  collected,  and  in  other  weeks  as  high 
as  one-quarter  part  of  the  whole  sum  of  nine  thousand  pounds 
was  collected.  And  it  also  appeared  that  this  want  of  uniform- 
ity in  the  weekly  collection  was  well  known  to  the  insured,  who 
was  familiar  with  the  course  of  business.  And  this  sum,  in  the 
ordinary  course  of  business,  came  into  his  possession  during 
the  first  week  of  his  service.  The  insurance  was  for  the  ben- 
efit of,  and  payable  in  case  of  loss  to,  the  employer,  and  the 
employe  became  a  defaulter.  Stuart,  V.  C.,^  seems  to  have 
entirely  disregarded  the  misrepresentation  as  to  the  largest 
amount  of  money  to  be  had  in  hand  at  any  one  time,  but  to 
have  given  judgment  for  the  plaintiff  on  the  ground  that  the 
answer  about  the  check  had  upon  the  employer  was  made  by 
the  overseer  of  taxes,  a  servant  of  the  commissioners,  to  the 
latter  of  whom  the  inquiry  was  addressed,  and  as  the  insurers 
accepted  this  answer,  it  could  not  be  fairly  considered  a  war- 
ranty by  the  commissioners,  but  was  rather  the  representation 

'  Towle  t'.  National  Guardian  Life  Ins.  Co.,  7  Jur.  n.  s.  618.  In  this  report 
may  be  found  the  form  of  the  policy,  with  the  accompanying  conditions,  which 
this  society  adopted. 


680  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

of  a  third  person  of  what  was  intended.  On  appeal,  however,^ 
before  Lords  Justices  Knight  Bruce  and  Turner,  while  the 
latter  seemed  to  agree  with  the  Yice-Chanceller  on  the  point 
upon  which  he  made  the  case  to  turn,  both  the  learned 
judges  held  the  statement  about  the  amount  of  money  re- 
ceived a  misrepresentation,  and  as  by  the  terms  of  the  policy 
it  was  made  void  by  misrepresentation,  gave  judgment  for  the 
defendant. 

§  54:4:.  Insurance  against  Loss  in  Trade  by  Bankruptcy  of  Pur- 
chasers.—  In  Solvency  Mutual  Guarantee  Company  v.  Froane,^ 
the  insurance  was  against  loss  on  the  gross  annual  returns  of 
their  business  for  two  years,  by  the  bankruptcy  of  purchasers 
of  goods,  and  unless  two  months'  notice,  prior  to  the  expira- 
tion of  the  original  contract,  be  given  by  one  of  the  parties  of 
an  intention  not  to  renew,  the  contract  was  to  be  regarded 
as  a  renewed  contract  of  the  like  nature  and  conditions.  This 
was  held  to  be  an  agreement  for  a  single  renewal,  if  there  was 
no  notice  to  the  contrary  ;  but  beyond  this  single  renewal  the 
contract  did  not  extend.  And  to  the  same  effect  was  the  case 
of  the  same  company  against  York.^  And  in  Towle  v.  National 
Guardian  Insurance  Company,*  Sir  G.  J.  Turner,  L.  J.,  was 
of  the  opinion  that  a  policy  had  lapsed  where  the  policy  pro- 
vided that  it  should  be  good  for  a  year,  "  and  for  every  sub- 
sequent year  that  the  society  shall  agree  to  renew,  and  the 
insured  to  pay  "  a  specified  sum,  and  the  society  had  given  no 
notice  nor  taken  any  action  whatever  touching  the  subsequent 
year.  In  the  case  of  the  same  company  v.  Freeman,^  the  insur- 
ance was  of  a  firm  against  loss  iii  respect  of  their  gross  annual 
returns,  subject  to  the  following  condition :  "  If  a  member  of 
the  company  shall  die,  or  if  any  member,  guaranteed  with 
respect  to  his  gross  or  particular  trade  debts,  shall  cease  to 
be  such  a  trader,  his  guarantee  or  contract  shall  become  void 
on  such  death,  or  (if  such  trader)  on  his  retiring  from  such 
trade; "  and  it  was  held  that  the  retirement  of  one  of  two  part- 
ners in  trade  was  an  event  by  which  the  condition  was  violated, 

1  Towle  V.  National  Guardian  Life  Ins.  Co.,  7  Jur.  n.  s.  1109. 

2  7  H.  &  N.  5.  8  3  H.  &  N.  588. 
*  7  Jur.  N.  s.  1109.                                       5  7  H.  &  N.  17. 


GUARANTEE   AND    OTHER   KINDRED   INSURANCES.  681 

and  the  guarantee  became  void.  And  here,  as  in  other  forms 
of  insurance,  if  a  party  has  taken  out  a  policy  which  is  not 
in  accordance  with  the  terms  of  the  agreement,  the  court  will 
reform  the  policy,  upon  a  proper  bill,  so  as  to  make  it  conform 
to  the  original  agreement,  but  will  not  allow  the  nonconformity 
to  be  pleaded  in  bar  to  an  action.^ 

§  545.  Insurance  of  the  prompt  Payment  of  a  Promissory  Note. 
—  In  the  Supreme  Court  of  Maryland,^  a  case  arose  upon  a 
policy  of  insurance  upon  a  promissory  note  guaranteeing  its 
prompt  payment  at  maturity.  By  the  statute,  the  insurance 
company  was  authorized  to  make  insurances  "  against  all  loss 
or  damage  from  any  cause,  hazard,  or  liability  whatsoever  on 
and  relating  to  factories,  &c.,  choses  in  action,  and  personal 
property  of  every  description."  The  form  of  this  policy  was 
an  agreement  under  seal,  in  consideration  of  the  premium  paid 
and  securities  deposited,  to  guarantee  to  the  bearer  the  pay- 
ment of  the  amount  of  the  note  on  the  day  it  should  fall  due, 
on  presentation  of  the  policy  at  the  office  of  the  company.  It 
was  held,  upon  the  peculiar  facts  of  the  case,  that  the  policy 
was  valid  and  was  negotiable,  and  therefore  available  in  the 
hands  of  a  third  person.  It  appears  that  the  note  was  surren- 
dered to  tlie  insurance  company  at  the  time  the  policy  was 
taken  out.  The  form  of  the  contract  was  declared  to  be  imma- 
terial. The  purpose  of  the  obligors  being  to  protect  the  holder 
of  the  notes  against  the  hazard  of  loss,  any  form  of  words 
effecting  that  purpose  the  law  will  adopt  and  enforce. 

§  546.  Insurance  against  the  Birth  of  Issue.  —  Insurance 
against  the  birth  of  issue  has  also  been  practised  to  some 
extent  in  England.  But  it  has  not,  so  far  as  we  are  aware, 
been  introduced  into  this  country  ;  and  indeed  in  England  but 
few  companies  have  the  authority  to  embark  therein.  "  The 
risk,"  says  Bunyon,^  "  may  be  either  coupled  or  not  with  some 
contingency  dependent  upon  the  duration  of  human  life,  such 
as  the  attainment  of  a  particular  age  by  the  issue.  The  more 
common  case  is  that  in  which  a  tenant  for  life,  under  a  settle- 

1  National  Guardian  Ins.  Co.  v.  Freeman,  7  H.  &  N.  17.     See  post,  p.  712. 
•i  EUicott  V.  United  States  Ins.  Co.,  8  Gill  &  Johns.  (Md.)  166. 
'  Life  Insurance;  98. 


682  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

ment,  is  entitled  to  the  reversion  in  fee-simple,  subject  to  an 
estate  tail  in  "  his  own  issue  (if  any)  by  the  particular  mar- 
riage, and  is  desirous  of  mortgaging  the  estate  without  burden- 
ing his  life  interest  with  the  premiums  on  insurances  of  his 
life.  .  .  .  The  chances  of  having  issue,  as  depending  upon  age, 
health,  and  other  circumstances  of  more  or  less  importance, 
are  tlie  elements  upon  which  the  value  of  the  risk  is  based. ^ 

§  547.  Insurance  of  Rents,  Titles,  against  Theft,  Hailstones,  and 
upon  the  Lives  of  Cattle.  —  Other  forms  of  guarantee  insurance 
are,  insurance  of  rents,  which  has  for  its  object  the  prompt 
payment  of  rent  to  landlords  or  others  interested  in  the  prof- 
its outcoming  from  real  estate,  or  to  insure  to  them  a  regular 
income  by  undertaking  the  management  of  the  property, —  to 
the  mortgagee  his  interest,  and  to  the  mortgagor  his  surplus 
rent ;  insurance  of  what  are  termed  holding  titles  to  real  prop- 
erty, or  interests  thereon,  in  contradistinction  to  marketable 
titles,  whereby  the  former  are  rendered  salable,  and  property 
otherwise  immovable  for  lack  of  a  good  legal  title,  becomes 
marketable ;  insurance  against  theft,  which  needs  no  explana- 
tion; insurance  against  the  ravages  of  hailstones;  cattle  insur- 
ance, or  insurance  against  the  loss  of  cattle  by  disease  ;  —  all  of 
which  have  been  practised  to  some  extent  in  England,  and  the 
last  two  especially  to  a  very  considerable  extent  on  the  conti- 
nent, particularly  in  Germany,  France,  and  Switzerland.  But 
no  adjudications  by  the  courts  of  England,  of  contested  points 
arising  under  tliese  several  forms,  have  yet,  so  far  as  we  are 
aware,  been  published,  though  on  the  continent,  especially  in 
France,  there  has  been  considerable  litigation.  These  are  not, 
however,  deemed  of  such  present  interest  in  this  country  as  to 
warrant  their  introduction  here.  In  this  country  the  lives  of 
horses  are  insured  to  some  extent.  In  Hartford  Live  Stock 
Insurance  Company  v.  Mathews,  a  question  arose  as  to  the  truth 
of  the  representation  that  the  horse,  whose  life  was  insured,  was 
sound,  and  of  a  certain  value,  when  in  fact  he  was  not  sound, 
and  was  of  much  less  value.  The  insurers  had  paid  the  loss, 
and  successfully  sued  to  recover  back  the  money  paid,  as  ob- 

1  See  Bunyon,  ubi  supra,  for  some  speculations  and  discussions  bearing  upon 
this  point. 


GUARANTEE   AND    OTHER   KINDRED   INSURANCES.  683 

tained  through  deceit  and  false  swearing  as  to  value  at  the 
time  of  the  loss.^  In  American  Horse  Insurance  Company  v. 
Patterson,^  which  was  also  an  insurance  upon  the  life  of  a 
horse,  the  only  question  in  dispute  was  whether  the  horse  was 
alive  when  the  policy  took  effect. 

1  xinte,  §  477.  2  Ante,  §  44. 


Note. —  There  was  also  an  incorporated  company  under  the  name  of  the 
Mta^  Live  Stock  Fire  and  Tornado  Insurance  Company.  But  we  believe  it 
was  not  successful,  and  has  ceased  to  be. 


684:  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,   ETC. 


CHAPTER   XXV. 

OF    MUTUAL     INSURANCE. 

§  548.  Mutuality  —  Membership  —  Capital.  —  We  have  already 
had  occasion  to  refer  to  some  of  the  distinctions  between  mutual 
and  stock  insurance,  especially  with  reference  to  their  respec- 
tive powers  to  enter  into  contracts,  and  to  waive  the  provisions 
of  their  charters  and  by-laws.^  Some  further  peculiarities  of 
mutual  insurance  will  be  made  the  subject  of  this  chapter. 
The  principle  which  lies  at  the  foundation  of  mutual  insur- 
ance, and  gives  it  its  name,  is  mutuality, —  in  other  words, 
the  intervention  of  each  person  insured  in  the  management  of 
the  affairs  of  the  company,  and  the  participation  of  each  mem- 
ber in  the  profits  and  losses  of  the  business,  in  proportion  to 
his  interest.  Each  person  insured  becomes  a  member  of  the 
body  corporate,  clothed  with  the  rights  and  subject  to  the  lia- 
bilities of  a  stockholder.  He  is  at  once  insurer  and  insured. 
In  New  York,  companies  have  been  chartered  to  do  business 
"  on  the  mutual  plan,"  with  authority  to  give  the  insured  an 
option  whether  to  pay  the  whole  premium  in  advance  in  cash, 
without  further  liability  to  assessments,  or  to  pay  part  in  cash 
and  part  in  an  assessable  premium  note.  And  it  was  contended 
that  this  option  was  inconsistent  with  the  principles  of  mutu- 
ality. But  the  courts  held  otherwise.  The  money  they  held  to 
be  in  lieu  of  the  note,  and  subject  to  the  same  appropriation, 
with  the  difference  that  it  must  be  first  applied,  and  no  part 
of  it  can  be  withdrawn  at  the  expiration  of  the  policy,  although 
it  may  not  have  been  all  expended.  The  principle  of  mutuality 
was  said  to  consist  not  in  the  fact  that  each  member  is  an 
insurer  as  well  as  the  insured,  but  in  the  fact  that  he  contrib- 
utes to  the  common  fund,  —  this  contribution  being  sufficient 
to  constitute  membership,  and  may  as  well  be  represented  by 

1  See  ante,  §§  62,  146  et  seq. 


MUTUAL  INSURANCE.  685 

cash  as  by  a  note.^  The  fact  that  there  is  no  further  liability 
oil  the  part  of  the  member,  if  the  possible  extent  of  his  lia- 
bility is  met  by  payment  of  cash  in  advance,  does  not  militate 
against  the  principle  of  mutuality.^  And  the  premium  notes 
so  held  are  liable  for  losses  under  cash  policies.^ 

§  549.  Mutual  Insurance  —  Capital.  —  Although  the  members 
of  a  mutual  company  are  not  usually  denominated  stockhold- 
ers, and  are  not  stockholders  in  the  usual  sense  of  the  word, 
yet  they  are  in  point  of  fact  stockholders,  and  in  many  of  the 
policies  are  recited  to  have  taken  a  portion  of  tlie  capital  stock. 
This  stock  is  usually  taken  by  paying  in  a  certain  amount  ot 
cash  premium,  and  the  balance  in  what  are  denominated  pre- 
mium notes ;  that  is,  notes  given  for  premiums,  to  form  the 
basis  of  assessments  for  losses  and  expenses,  and  constituting 
the  capital  or  funds  of  the  company.  The  capital  stock  of  a 
mutual  insurance  company  usually  consists  in  its  cash  assets, 
its  premium  and  deposit  notes,  assessable  to  pay  losses,  which 
are  usually  denominated  absolute  funds,  and  the  liability  to  a 
fixed  amount,  by  statute  or  charter,  over  and  beyond  these,  to 
be  resorted  to  after  the  first  are  exhausted,  and  usually  denom- 
inated conditional  funds.  Sometimes  notes  given  to  the  com- 
pany in  advance  for  premiums,  called  stock  notes,  and  expressly 
made  payable  by  insurance  from  time  to  time,  as  the  makers  of 
the  note  may  require,  constitute  a  portion  of  the  capital  stock. 
And  between  these  latter  notes  and  the  ordinary  deposit  notes, 
made  payable  from  time  to  time,  as  called  for  by  assessments 
for  losses,  the  distinction  is  to  be  observed  that  whereas  tlie 
former  are  payable  absolutely  and  at  all  events,  without  regard 
to  the  question  of  loss,*  and  are  therefore  subject  to  the  Statute 
of  Limitations,^  and  are  negotiable,'' the  latter  are  only  payable  at 

1  Mygatt  V.  N.  Y.  Prot.  Ins.  Co.,  21  N.  Y.  f>2 ;  Oluo  Mutual  Ins.  Co.  v.  Mari- 
etta Woollen  Factory,  3  Ohio  St.  n.  s.  348. 

2  Union  Ins.  Co.  v.  Hoge,  21  llow.  (U.  S.)  35.  The  three  cases  last  cited,  and 
especially  the  first  of  them,  are  referred  to  as  containing  a  very  elaborate  dis- 
cussion of  the  principle  which  underlies  mutual  insurance.  But  see  contra,  Hart 
V.  Achilles,  28  Barb.  (N.  Y.)  577. 

a  White  v.  Havens,  20  How.  Pr.  Rep.  177. 
*  Dana  v.  Munro,  38  Barb.  (N.  Y.)  628. 
5  Savage  v.  Medbury,  19  N.  Y.  32. 
«  Buckman  i;.  Metcalf,  32  N.  Y.  591. 


686  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

such  times  and  in  such  portions  as  may  be  necessary  to  meet 
losses  and  expenses,  are  not  negotiable,  because  payable  only 
upon  a  contingency  which  may  never  happen,  and  the  general 
Statute  of  Limitations  does  not  run  in  favor  of  the  note  as  a 
whole,  but  only  upon  so  much  as  may  be  called  for,  and  from  the 
time  of  the  call.^  And  a  premium  note,  absolute  on  its  face, 
cannot  be  treated  by  the  company  or  its  receiver,  or  by  any  one 
except  a  bona  fide  holder,  as  a  stock  or  capital  note,  so  that 
the  whole  may  be  collected  without  regard  to  losses  or  assess- 
ments.2  A  note  given  in  advance  for  premiums  to  be  earned, 
and  by  the  terms  of  the  charter  not  to  be  held  liable  for  any 
amount  beyond  tlie  premiums  earned,  is  a  premium  note,  and 
not  a  subscription  or  capital  stock  note,  and  is  collectible  only 
so  far  as  premiums  have  been  earned.^  And  a  note,  in  form  a 
premium  note,  may  be  shown  to  have  been  given  as  a  subscrip- 
tion or  stock  note,  and  used  as  such,  with  the  consent  of  the 
maker,  in  organizing  the  company  ;  in  which  case  the  whole 
amount  may  be  collected  without  assessment.'^ 

§  550.  Mutual  and  Stock  Companies.  —  In  some  instances  the 
stock  and  mutual  plans  of  insurance  are  authorized  by  tbe  char- 
ter, and  practised  by  the  same  insurance  company.  When  this 
is  the  case,  the  insured,  in  the  absence  of  any  statement  in  the 
contract  in  which  category  he  is  included,  will  be  deemed  to 
be  insured  under  the  stock  or  mutual  plan,  according  to  the 
circumstances  and  nature  of  the  particular  contract.^ 

§  551.  Mutual  Life  Insurance  —  Guaranty  Fund.  —  Under  its 
inherent  powers,  as  incidental  to  its  general  power  to  issue 
policies  of  insurance,  a  mutual  life  insurance  company  may,  by 
an  agreement  amongst  its  members,  establish  a  guaranty  fund, 
consisting  of  the  notes  of  the  several  members,  upon  which 
they  may  receive  a  commission  of  a  percentage  per  annum,  so 
long  as  the  notes  are  held  as  a  part  of  such  fund.    And  in  case 

1  Savage  v.  Medbury,  ut  supra ;  Howland  v.  Edmunds,  2i  N.  Y.  307,  reversing 
Bell  V.  Yates,  33  Barb.  (N.  Y.)  628,  contra;  Hope  Ins.  Co.  v.  Weed,  28  Conn.  51 ; 
Howland  v.  Cuykendell,  40  Barb.  (N.  Y.)  320. 

2  Bell  V.  Shilley,  33  Barb.  (N.  Y.)  610 ;  Mclntire  v.  Preston,  5  Gilm.  (111.)  48. 
»  Elwell  V.  Cruker,  4  Bosw.  (N.  Y.  Superior  Ct.)  22. 

*  Sands  v.  St.  John,  36  Barb.  (N.  Y.)  628. 
5  Illinois  Fire  Ins.  Co.  v.  Stanton,  67  111.  364. 


MUTUAL   INSURANCE.  687 

of  insolvency  of  the  company,  these  notes  may  be  assessed  to 
pay  losses  to  their  full  amount,  the  makers  standing  in  the 
position  of  general  creditors  as  to  their  claims  for  commission 
against  the  company.^  If  such  a  right  be  given  by  charter,  the 
notes  of  persons  not  members  cannot  be  substituted  under  this 
chartered  privilege.^ 

§  552.  Mutual  Insurance  —  Membership.  —  When  a  party  takes 
out  a  policy,  and  the  contract  is  complete,  he  becomes  a  mem- 
ber, and  is  bound  by  its  rules,  which  he  is  presumed  to  know.^ 
The  records  of  the  company  are  then  his  records,  and  evidence 
for  or  against  him ;  *  and  the  doings  of  the  officers,  within  the 
scope  of  their  authority,  are  binding  upon  him.^  But  he  is  not  a 
member  till  the  negotiations  are  complete,  and  is  not  presumed 
to  know  any  thing  of  the  rules  and  by-laws  pending  tlie  nego- 
tiations.^ After  he  becomes  a  member  he  cannot  deny  its  exist- 
ence, or  avail  himself  of  an  irregularity  in  the  proceedings  by 
which  it  became  a  corporation  or  acquired  its  powers  ;  ^  nor 
can  he  deny  the  acceptance  of  an  amendment  to  the  cbarter, 
after  he  has  given  a  note  in  accordance  with  the  provisions  of 
such  amendment  ;^  nor  can  he  set  up  a  want  of  insurable  in- 
terest as  a  defence  against  assessments.^  He  is  not,  however, 
bound  by  a  by-law  or  other  act  of  the  company  affecting  his 
contract  or  relation  to  the  company,  passed  without  his  con- 
sent,^'^  especially  if  in  contravention  of  the  charter.'^ 

1  Hope  Mut.  Life  Ins.  Co.  v.  Weed,  28  Conn.  51 ;  Same  v.  Perkins,  38  N.  Y. 
404,  affirming  s.  c.  4  Robt.  18. 

-'  ]Mut.  Ben.  Life  Ins.  Co.  v.  Davis,  12  N.  Y.  (2  Ker.)  569. 

3  Mitchell  V.  Lycoming  Mut.  Ins.  Co.,  51  Penn.  St.  402  ;  Coles  v.  Iowa  State 
Mut.  Ins.  Co.,  18  Iowa,  426. 

4  Diehl  V.  Adams  County  Mut.  Ins.  Co.,  58  Penn.  St.  443. 

5  Hackney  v.  Alleghany  County  Mut.  Ins.  Co.,  4  Penu.  St.  185. 

6  Columbia  Ins.  Co.  v.  Cooper,  50  Penn.  St.  331. 

7  Sands  v.  Hill,  42  Barb.  (N.  Y.)  65  ,  Traders'  Mut.  Fire  Ins.  Co.  v.  Stone, 
9  Allen  (Mass.),  483  ;  Appleton  Mut.  Ins.  Co.  v.  Jesser,  5  ib.  446  ;  Citizens'  Mut. 
Ins.  Co.  V.  Sortwell,  8  ib.  217;  Currie  v.  Mut.  Ass.  Soc,  4  H.  &  M.  (Va.)  315; 
Cooper  V.  Shaver,  41  Barb.  (N.  Y.)  151. 

8  Fell  V.  McHenry,  42  Penn.  St.  41. 

9  New  England  Mut.  Fire  Ins.  Co.  v.  Belknap,  9  Cush.  (Mass.)  140. 

w  New  England  Mut.  Fire  Ins.  Co.  v.  Butler,  34  Me.  351 ;  Hamilton  Mut.  Ins. 
Co.  V.  Hobart,  2  Gray  (Mass.),  543;  Insurance  Co.  v.  Connor,  17  Penn.  St.  136. 
ii  Great  Falls  Mut.  Fire  Ins.  Co.  v.  Harvey,  45  N.  H.  292. 


688  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

§  OoS.  Forfeiture  of  Policy  no  Defence  against  Liability  on 
Note.  —  When  membership  is  oiice  established,  its  liabilities 
continue,  although  the  member  does  some  act  which,  by  the 
terms  of  the  contract,  avoids  the  policy,  and  although  the  com- 
pany declares  the  policy  void,  so  that  the  right  of  the  insured 
to  indemnity  in  case  of  loss  no  longer  exists.  And  this  lia- 
bility extends  to  all  losses  while  the  policy  was  in  force  and 
the  insured  was  a  member.^ 

Acts  of  policy-holders,  which  might  entitle  the  corporation 
to  defend  against  claims  for  losses,  do  not  necessarily  release 
such  parties  from  liability  to  assessment  as  members.  They 
cannot  take  advantage  of  want  of  insurable  interest,  whether 
it  existed  originally,  or  was  occasioned  by  destruction  or  re- 
moval of  the  buildings  insured,  or  by  alienation ;  nor  of  mis- 
description of  the  property,  insured,  or  its  mode  of  occupation  ; 
nor  of  a  loss  of  the  right  to  recover  upon  the  policy  by  reason 
of  other  insurance  not  assented  to.  Such  parties  are  members 
of  the  corporation,  notwithstanding  such  ground  of  defence  to 
a  suit  for  recovery  of  a  loss. 

But  members  only  are  liable  to  assessment.  Parties  who 
have  neither  taken  their  policy,  nor  signed  any  application  or 
deposit  note,  nor  paid  the  premium,  are  not  members,  and  can- 
not properly  be  included  in  the  assessment.  Assignees  of  poli- 
cies, even  with  consent  of  the  company,  who  have  not  made 
themselves  members  by  signing  any  agreement  to  become  so, 
or  to  pay  what  may  become  due  upon  the  policy  or  upon  the 
deposit  note,  are  not  liable  to  assessment.^ 

And  if  the  policy  by  its  terms  stipulates  that  in  case  of  for- 
feiture by  the  act  of  the  insured  he  shall  not  be  released  from 
the  obligations  of  the  deposit  or  premium  note  until  he  has 
complied  with  the  conditions  of  the  policy  and  charter  requir- 
ing the  payment  of  his  proportion  of  all  losses  and  expenses 
that  may  have  accrued  prior  to  the  surrender  of  the  policy  or 

1  Iowa  State  Mut.  Ins.  Co.  v.  Prosser,  11  Iowa,  115;  Commonwealth  v.  Union 
Mut.  Fire  Ins.  Co.,  Sup.  Jud.  Ct.  Mass.,  Marcli,  1873,  not  yet  reported. 

2  Commonwealth  v.  Union  Mut.  Ins.  Co.,  ubi  supra ;  Philbrook  v.  New  Eng- 
land Mut.  Ins.  Co.,  37  Me.  137  ;  Gardiner  v.  Piscataquis  Mut.  Fire  Ins.  Co., 
38  Me.  439 ;  Boynton  v.  Clinton  Ins.  Co.,  16  Barb.  (N.  Y.)  254. 


MUTUAL   INSURANCE.  689 

alienation  of  the  property,  the  insured  will  still  remain  liable 
upon  his  deposit  note  for  losses  occurring  after,  as  well  as 
before  the  alienation  or  act  working  the  forfeiture,  until  all 
assessments  are  paid  and  the  policy  surrendered.  And  this  is 
so  notwithstanding  the  policy  provides  that  the  person  becom- 
ing a  member  shall  continue  a  member  so  long  as  he  is  insured 
and  no  longer.^  But  an  assessment,  after  forfeiture  of  the 
policy,  made  with  knowledge  thereof,  and  for  losses  occurring 
afterwards,  is  a  waiver  of  the  forfeiture,  and  gives  to  the 
insured  the  right  to  indemnity  for  loss  under  the  policy.^ 
It  is  otherwise,  however,  if  the  assessment  is  made  for  a  loss 
occurring  before  the  forfeiture,^  or  be  made  without  knowl- 
edge of  the  forfeiture.^  And  an  assessment  for  losses  occur- 
ring after  forfeiture,  made  by  the  company  with  knowledge  of 
the  foi'feiture,  cannot  be  enforced.^ 

§  554.  Forfeiture  —  Premium  Note.  — r  A  successful  defence  to 
an  action  on  the  policy  for  a  loss,  on  the  ground  that  the  policy 
became  void  because  the  insured  procured  other  insurance  with- 
out notice,  is  in  legal  effect  an  adjudication  between  the  parties 
that  the  policy  was  void  from  and  after  tiie  day  when  the  addi- 
tional insurance  was  procured  ;  and  from  the  moment  that  the 
insurers  tluis  elect  to  avoid  tlie  policy,  the  premium  note  also 
becomes  void  and  without  consideration  in  respect  to  all  future 
losses.^  A  vote,  however,  to  suspend  the  operation  of  the  pol- 
icy, without  authority  of  charter  or  l)y-law,  or  the  assent  of  the 
insured,  is  of  no  force  or  effect.^  In  Rhode  Island,  where  a 
mortgagor  insured  under  a  policy,  void  if  the  interest  of  the 

1  Hyatt  V.  Wait,  37  Barb.  (N.  Y.)  29;  Neely  v.  Onondaga  County  Mut.  Ins. 
Co.,  7  Hill  (N.  Y.),  49  ;■  Atlantic  Ins.  Co.  v.  Goodall,  35  N.H.  328.  But  see  contra, 
Wilson  V.  Trumbull  County  Mut.  Ins.  Co.,  19  Penn.  St.  372. 

2  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651 ;  Insurance  Co.  v.  Stockbower,  2G  Penn. 
St.  199  ;  Tuttle  v.  Robinson,  33  N.  H.  104.  But  see  contra,  Philbrook  v.  New- 
England  Mut.  Ins.  Co.,  37  Me.  137. 

3  Viale  V.  Genessee  Mut.  Fire  Ins.  Co.,  19  Barb.  (N.  Y.)  440. 

*  Allen  V.  Vermont  Mut.  Fire  Ins.  Co.,  12  Vt.  366 ;  Finley  i'.  Lycoming  County 
Mut.  Ins.  Co.,  30  Penn.  St.  311. 

5  Tuckerman  v.  Bigler,  46  Barb.  (N.  Y.)  375;  Smith  v.  Saratoga  County  Mut. 
Ins.  Co.,  3  Hill  (N.  Y.),  500 ;  Wilson  v.  Trumbull  County  Mut.  Fire  Ins.  Co.,  19 
Penn.  St.  372. 

«  Tuckerman  v.  Bigler,  46  Barb.  (N.  Y.)  375. 

T  New  England  Mut.  Fire  Ins.  Co.  v.  Butler,  34  Me.  451. 

44 


690  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

insured  should  be  conveyed  without  the  consent  of  the  insurers, 
made  an  assignment  of  his  interest  without  the  knowledge  of 
the  insurers  or  the  mortgagee,  and  afterwards,  but  without 
knowledge  of  the  alienation,  the  insurers  made  an  assessment 
and  collected  it  from  the  insured,  in  an  action  to  recover  the 
loss,  with  a  count  for  money  had  and  received,  it  was  held 
that  though  the  plaintiff  could  not  recover  for  the  loss  by 
reason  of  the  alienation,  and  although  the  collection  of  an 
assessment  without  knowledge  of  the  forfeiture  was  no  waiver, 
yet  the  insured  might  recover  back  on  his  money  count  what 
he  had  paid  on  the  assessment,  as  money  paid  by  mistake.^ 

§  555.  Void  Policy  —  Surrender  and  Cancellation  —  Insol- 
vency. —  If  the  contract  of  insurance  be  invalid,  as  prohib- 
ited unless  under  certain  preliminary  conditions  precedent, 
the  premium  note  is  also  invalid  ah  initio?  So  if  the  policy 
was  delivered  but  was  ineffectual,  because  never  counter- 
signed, the  premium  note  is  also  invalid.^  And  it  has  been 
held  >that  the  surrender  and  cancellation  of  the  policy  and 
premium  note  dissolves  the  membership,  carries  with  it  the 
note,  and  releases  the  insured  from  further  claims,  whether 
on  account  of  past  or  future  losses,  as  amounting  to  an  adjust- 
ment of  mutual  claims.'*  So  the  insolvency  of  the  maker  of 
the  premium  note,  and  his  discharge  from  his  debts,  relieves 
the  company  from  any  obligation  towards  him,  and  the  receipt 
of  interest  upon  the  premium  note  after  the  filing  of  the  peti- 

1  Hazard  v.  Franklin  Fire  Ins  Co.,  7  R.  I.  429.  In  Indiana,  it  is  said,  obiter, 
tliat  wliere  a  policy  becomes  void  by  a  sale  and  conveyance  by  the  insured,  he 
is  no  longer  liable  to  an  assessment  upon  his  premium  note  :  Boland  v.  Whitman, 
33  Ind.  64  ;  though  in  a  previous  case,  Indiana  Mut.  Ins.  Co.  v.  Connor,  5  Ind. 
170,  the  note  was  held  to  be  collectible  in  proportion  to  the  time  the  policy  was 
in  force.  And  the  liability  is  discharged  whether  the  policy  be  actually  sur- 
rendered or  not,  the  insured  having  paid  all  assessments  and  dues  up  to  the  time 
of  forfeiture.  The  insurance  is  the  consideration  upon  which  the  note  rests,  and 
that  failing,  the  note  fails :  Ibid. ;  overruling  McCuUough  v.  Indiana  jMut.  Fire 
Ins.  Co.,  8  Blatchf.  (Ind.)  50,  and  Indiana  Mut.  Fire  Ins.  Co.  v.  Coquillard,  2  lud. 
G4-5,  holding  that  an  actual  surrender  of  the  policy  is  necessary. 

'-'  Haverhill  Ins.  Co.  v.  Prescott,  42  N.  H.  -547. 

3  Lynn  i;.  Burgoyne,  13  B.  Mon.  (Ky.)  400. 

*  Wadsworth  v.  Davis,  13  Ohio  St.  123;  Hyde  v.  Lynde,  4  Comst.  (N.  Y.) 
387 ;  Campbell  v.  Adams,  38  Barb.  (N.  Y.)  132 ;  York  County  Mut.  Fire  Ins.  Co. 
i;.  Turner,  53  Me.  225. 


MUTUAL   INSURANCE,  691 

tion  in  bankruptcy,  witliDut  actual  knowledge,  will  not  revive 
the  policy.^  Other  authorities  hold  tliat  in  such  cases  the  pol- 
icy is  merely  voidable  and  not  void,  and  the  premium  note  is 
therefore  valid,  at  least  till  the  insurers  assert  their  right  to 
claim  a  forfeiture.^  But  it  is  elsewhere  held  that  neither  the 
surrender  and  cancellation,  nor  the  expiration  of  the  policy, 
nor  the  insolvency  of  the  company,  releases  the  holder  of  a 
policy  from  his  liability  to  assessment  for  losses  which  occur 
during  his  membership.^  The  true  doctrine  doubtless  is,  that 
if  the  surrender  of  the  policy  and  of  the  premium  note  are  in 
pursuance  of  an  adjustment  which  the  company  has  a  right  to 
make,  there  is  no  longer  membership  or  liability.  An  unexe- 
cuted agreement  to  cancel  is  no  defence*  Neither  does  the 
destruction  of  the  property  and  payment  of  the  loss  dissolve 
the  relations  of  the  insured  to  the  company.  He  is  still 
insured  and  liable  on  his  deposit  note  during  the  currency 
of  the  policy  ;  and  during  that  period  the  company  has  a  lien 
upon  the  insured  premises.^  Upon  a  vote  of  the  directors, 
authorized  by  the  by-laws,  that  by  reason  of  non-payment  of 
an  assessment  the  policy  shall  be  suspended  till  payment, 
the  liability  of  the  insured  to  assessments  for  losses  occurring 
during  the  suspension  continues,  though  his  right  to  indemnity 
meantime  is  in  abeyance.^  So,  without  a  vote  of  the  directors, 
if  the  charter  provides  that  neglect  to  pay  an  assessment  shall 
operate  as  a  suspension  of  the  liability." 

»  Reynolds  v.  Mut.  Fire  Ins.  Co.,  34  Md.  280.  It  was  said  by  Bradley,  C.  J., 
in  Frost  v.  Saratoga  Mut.  Fire  Ins.  Co.,  5  Denio,  154,  that  if  the  policy  is  void 
for  false  warranty,  the  premium  note  is  void  for  want  of  consideration.  But  this 
was  not  a  point  necessary  to  be  decided  in  the  case. 

•i  Huntley  v.  Perry,  38  Barb.  (N.  Y.)  571;  Atlantic  Ins.  Co.  v.  Goodalj,  35 
N.  H.  328.  But  see  contra,  Gardiner  v.  Piscataquis  ]\Iut.  Fire  Ins.  Co.,  38  Me. 
439 ;  Jackson  v.  Mass.  Mut.  Fire  Ins.  Co.,  23  Pick.  (Mass.)  418  ;  Wilson  v.  Trum- 
bull County  Mut.  Fire  Ins.  Co.,  \\)  Penn.  8t.  372. 

'  Commonwealth  v.  Union  Mut.  Fire  Ins.  Co.,  Sup.  Jud.  Ct.  Mass.,  March, 
1873,  not  yet  reported  ;  Same  r.  Mechanics'  Mut.  Fire  Ins.  Co.,  ibid. ;  St.  Louis 
Mut.  Fire  Ins.  Co.  i'.  Broeckler,  19  Mo.  135;  Sterling  v.  Mer.  Mut.  Ins.  Co.,  32 
Penn.  St.  75;  Alliance  Mut.  Ins.  Co.  v.  Swift,  10  Cush.  (Mass.)  433. 

*  Columbia  Ins.  Co.  v.  Stone,  3  Allen  (Mass.),  385. 

5  Bangs  V.  Skidinore,  24  Barb.  (N.  Y.)  29;  affirmed,  21  X.  Y.  13G ;  New 
Hampshire  Mut.  Fire  Ins.  Co.  v.  Kand,  4  Fost.  (X.  H.)  428. 

6  Coles  V.  Iowa  State  Mut.  Ins.  Co.,  18  Iowa,  425. 
'  Xash  V.  Union  Mut.  Ins.  Co.,  43  Me.  343. 


692  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

§  556.  Life  Insurance  —  Premium  Note  —  Liability  after  Lapse 
of  Policy.  —  The  charter  of  a  life  insurance  company  pro- 
vided that  all  wlio  insured  with  the  company  should  be 
deemed  members  while  they  continued  so  insured ;  also,  that 
the  company  might  take  the  notes  of  the  members,  either  in 
whole  or  part  payment  of  premium  ;  also,  that  if  losses  were 
sustained  by  the  company  in  excess  of  the  funds  on  hand,  the 
directors  might  assess  the  deficiency  ratably  upon  such  mem- 
bers, the  assessment  not  to  exceed  the  sum  due  on  the  notes, 
of  which  sixty  days  notice  was  to  be  given  ;  and  if  the  amount 
assessed  was  not  paid  within  that  time,  the  party  in  default 
was  to  cease  to  be  a  member  of  the  company,  and  forfeit  all 
preceding  payments.  It  was  also  provided  that  if  the  premium 
in  any  case  should  exceed  fifty  dollars,  one-fourth  of  the  amount 
should  be  paid  in  cash,  and  the  balance  might  be  paid  by  a 
secured  note  subject  to  assessment. 

J.  effected  insurance  with  the  company,  paid  one-quarter  of 
the  first  year's  premium  in  cash,  and  gave  his  note  for  the  bal- 
ance. At  the  expiration  of  the  first  year  he  paid  one-quarter 
in  cash  towards  the  second  year's  premium,  and  gave  his  note 
for  three-quarters  of  the  total  premium  for  the  first  and  second 
years,  and  took  up  his  former  note.  The  insured,  at  the  end 
of  the  second  year,  gave  up  his  policy,  withdrew  from  the  com- 
pany, and  ceased  to  be  a  member  thereof.  In  an  action  on  the 
last  note,  after  the  policy  had  lapsed,  it  was  held  that,  in  the 
absence  of  proof  of  any  assessments  to  make  up  deficiencies 
as  provided  in  the  charter,  the  company  was  not  entitled 
to  recover,  the  note  being  regarded  as  a  mere  security  for 
the  payment  of  losses,  upon  assessments  made  for  that  pur- 
pose.^ 

1  Mut.  Ben.  Life  Ins.  Co.  v.  Jarvis,  22  Conn.  133.  There  was  a  dissenting 
opinion  by  Ellsworth,  J.  The  whole  case  is  so  instructive  that  we  give  it  more 
fully  in  this  note.  The  action  was  upon  the  following  promissory  note  and 
guaranty  :  — 

"MiDDLETOWN,  Octobep  7,  1848. 

"  $o67^go. 

"  I  promise  to  pay  the  Mutual  Benefit  Life  Insurance  Company,  or  to  the 
order  of  their  treasurer,  three  hundred  and  sixty-seven  -^^^  dollars,  for  value 
received,  without  defalcation  or  discount,  with  interest,  at  six  per  cent,  payable 


MUTUAL   INSURANCE.  693 

§  557.  Right  to  assess  strictly  construed,  —  All  assessment 
can  only  be  valid  when  laid  under  the  conditions  stated  in  the 

in  twelve  months  after  date,  or  sooner,  if  required  to  meet  assessments  by  the 
company. 

"  Geo.  0.  Jarvis." 

"For  value  received,  I  guarantee  the  payment  of  the  above  note,  and  stand 
security  therefor  till  paid. 

"  William  Jarvis." 

"  MiDDLETOWN,  October  7,  1848. 
"Received  on  the  within  note,  as  principal,  twenty-seven  j^q^q  dollars.    No- 
vember 29,  1848." 

Hinman,  J.,  for  the  majority  of  the  court :  "  The  plaintiflF's  charter  makes 
them  in  fact,  as  well  as  in  name,  a  mutual  benefit  life  insurance  company.  Tiiis 
is  the  fundamental  principle  of  their  organization.  It  is  implied  in  their  name 
and  is  more  fully  expressed  in  the  body  of  the  charter,  which  gives  them  power 
to  insure  the  respective  lives  of  their  members,  and  denies  them  the  power  to 
insure  any  others,  by  providing  that  all  persons  who  shall  at  any  time  insure  in 
or  with  said  association,  shall,  while  they  continue  so  insured,  be  deemed  and 
taken  as  members  of  the  corporation ;  and  provides  for  an  equal  assessment  upon 
all  the  members,  in  proportion  to  each  member's  insurance,  to  pay  for  losses 
which  the  company  may  not  have  funds  on  hand  to  discharge. 

"  The  sixth  section  of  the  charter  authorizes  the  company  to  take  the  notes 
or  obligations  of  their  members  for  the  amount,  either  in  part  or  in  whole,  of  the 
premiums  of  insurance,  in  proportion  to  the  amount  insured ;  and  then  in  the 
ninth  section  it  is  provided,  that  if  it  shall  so  happen  that  there  shall  be  just 
claims  on  the  corporation  for  losses  sustained,  to  a  greater  amount  than  they 
have  funds  on  hand  to  discharge,  the  directors  in  such  case  shall  proceed  to 
assess  such  deficiency,  in  a  ratable  proportion,  on  the  members  of  the  associa- 
tion, or  their  lawful  representatives,  according  to  the  amount  of  each  member's 
insurance,  '  provided  that  such  assessment  shall  not  exceed  the  amount  of  the  note  or 
ohligation  given  by  each  member.'  The  section  further  provides,  that  if,  on  due 
notice  of  his  assessment,  a  member  shall  neglect  to  pay  the  same  within  sixty 
days,  he  shallforfeit  all  claim  to  his  policy,  shall  be  no  longer  a  member  of  the 
association,  and  shall  also  be  liable  to  the  amount  of  such  assessment  in  an  action 
of  debt.  The  only  provision  in  the  charter  relative  to  the  payment  of  losses  is 
contained  in  this  ninth  section  ;  and  as  the  funds  of  the  company  are  all  derived 
from  the  payment  of  premiums  by  the  members,  on  their  respective  policies,  and 
as  the  members  are  in  no  event  liable  to  be  assessed  to  any  greater  amount  than 
their  respective  notes  or  obligations,  it  is  clear  that  the  notes  or  obligations 
referred  to  in  the  ninth  section  of  the  charter  as  liable  to  this  assessment  must 
be  the  notes  or  obligations  which  the  company  are  authorized  to  take  of  its 
members  for  the  amount,  either  in  part  or  in  whole,  of  their  respective  preiiiiums 
of  insurance  ;  or,  as  they  are  called  in  the  rules  and  i-egulations  of  the  company, 
they  are  the  premium  notes  of  the  members.  The  finding  shows  that  the  note 
in  suit  was  one  of  these  premium  notes ;  and  as  the  company  has  met  with  no 
losses  which  make  it  necessary  for  them  to  collect  it,  and  has  made  no  assess 
ment  to  meet  any  loss,  the  question  arises  whether  the  defendant  is  liable  upon 


694  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

charter.  A  .sreneral  vote  of  the  directors  to  assess  to  a  certain 
amount  to  pay  the  indebtedness  of  the  company  is  no  valid 

his  note,  except  for  the  purpose  of  meeting  a  loss,  and  then  only  to  the  extent  of 
an  assessment  regularly  made  according  to  the  provisions  of  the  ninth  section 
of  the  plaintiff's  charter.  The  note  is  absolute  and  unconditional  in  its  terms, 
and  as  the  time  it  had  to  run  has  expired,  it  appears  to  be  due.  If  this  was  all 
there  was  in  the  case,  undoubtedly  the  plaintiffs  could  recover.  It  might  have 
been  given  for  money,  or  it  might  have  been  given  for  the  premium,  or  the  por- 
tion of  it  that  was,  by  the  agreement  of  the  parties,  to  be  paid  in  cash,  irrespec- 
tive of  any  call  for  losses ;  and  if  such  was  the  case  it  ought  to  be  paid.  The 
finding,  however,  shows  that  such  is  not  tlie  case,  and,  on  the  contrary,  that  the 
understanding  upon  which  this  note  was  given  was,  that  it  was  not  to  be  paid 
unless  required  to  meet  losses.  It  was  given  for  a  portion  of  the  premium  which, 
by  the  regulations  of  the  company,  it  was  the  intention  should  be  met  by  the 
profits  of  the  business,  unless  required  to  meet  losses.  In  the  prospectus  con- 
taining the  rules  and  regulations  of  the  company,  which  was  examined  by  the 
defendant  for  the  purpose  of  determining  whether  he  would  become  a  member 
of  the  company,  and  was  delivered  to  him  for  that  purpose  by  the  company's 
agent,  we  find  one  of  the  first  regulations  to  be  that  the  premium,  if  over  fifty 
dollars,  can  be  paid,  one-fourth  in  cash  and  three-fourths  in  a  secured  note  at 
twelve  months,  bearing  six  per  cent  interest,  and  subject  to  assessment,  if 
required  ;  or  it  may  be  paid  weekly,  monthly,  or  quarterly.  It  was  under  this 
regulation  that  the  note  in  suit  was  given.  It  was  in  part  a  renewal  of  an  origi- 
nal note  given  for  seventy-five  per  cent  of  a  previous  year's  premium,  and  in 
part  for  the  same  percentage  on  the  then  accruing  year's  premium.  Under  the 
head  of  '  mode  of  payments,'  we  find  this  rule  repeated  in  these  words  :  '  If  the 
annual  premium  is  over  fifty  dollars,  he  can  pay  one-fourth  in  cash  and  three- 
fourths  in  a  secured  note  at  twelve  months,  bearing  interest  at  six  per  cent,  which 
note  is  subject  to  assessment,  if  required  by  the  directors,  and  of  which  sixty 
days'  notice  will  be  given.  At  the  end  of  the  year,  if  the  party  so  desires,  he 
may  renew  the  balance  of  the  old  note  not  then  called  for,  by  paying  the  interest 
and  adding  it  to  the  next  year's  premium  note,  and  paying  his  twenty-five  per 
cent  in  cash  as  at  first.'  Again,  the  company  anticipated  that  the  members 
would  receive  back  a  large  percentage  of  the  amount  paid,  in  annual  dividends 
of  profits,  to  be  declared  upon  the  amount  of  premium ;  and  in  order  to  equahze 
the  be;iefits  to  all  their  members,  they  provide  that  scrip,  bearing  six  per  cent 
interest,  sliall  be  issued  to  those  who  pay  their  premiums  in  full,  which  interest 
is  to  be  paid  annually ;  while  those  who  give  and  renew  their  notes  are  not  to 
receive  scrip,  but  their  proportion  of  profits  is  carried  to  their  credit,  and  draws 
interest,  being  retained  by  the  company  as  additional  securit}^  for  the  notes. 
Again,  the  company  say  that  by  the  system  of  payments  adopted  by  them,  it  is 
easy  for  all  who  are  not  paupers  to  protect  their  f^imilies  from  want ;  they  are 
not  required  to  pay  from  year  to  year  in  cash  a  portion  of  the  premium,  which  is 
to  remain  in  the  hands  of  the  company  as  profits,  but  the  profits,  after  a  few 
years,  can  be  used  by  them  to  aid  in  the  payment  of  their  annual  premium.  It 
is  not  necessary  to  allude  further  to  the  charter,  and  the  rules  and  regulations 
of  the  plaintiffs'  company.  Undoubtedly  there  are  other  parts  of  these  docu- 
ments which  have  a  bearing  upon  the  question  under  consideration.    Indeed,  the 


MUTUAL   INSURANCE.  695 

assessment.  It  must  appear  that  such  a  state  of  affairs  ex- 
isted when  the  vote  was  passed  as  to  authorize  the  vote  itself, 

whole  tenor  of  them,  in  connection  with  the  circumstances  under  which  the  note 
in  question  was  executed,  goes  to  show  that  the  only  object  of  the  note  was  to 
secure  the  company  against  losses  which  might  be  sustained  while  the  insured 
remained  a  member  of  tiie  association.  The  charter  authorizes  the  company  to 
take  premium  notes.  It  provides  how  the  losses  of  the  company  shall  be  assessed 
upon  these  notes.  These  two  provisions  are  followed  up  in  the  regulations  of 
the  company,  which  provide  that  the  parties  may  renew  at  the  end  of  tlie  year 
the  balance  of  the  old  notes  not  called  for  or  required  by  the  directors.  If  it  be 
asked  what  power  the  directors  had  to  call  for  assessments,  the  answer  is  in  the 
charter,  '  to  meet  losses.'  Indeed,  in  the  argument  of  the  case,  counsel  seemed 
to  admit  that  in  regard  to  all  who  continued  members  of  the  company,  and  chose 
tb  renew  their  notes  from  year  to  year,  they  had  a  right  to  do  so.  It  was  the 
expectation  of  the  company  that  the  twenty-five  per  cent  of  the  premium,  which 
was  required  to  be  paid  in  cash,  would  be  sufficient  to  meet  the  ordinary  expenses 
and  pay  the  ordinary  losses ;  and  the  seventy-five  per  cent  would  never  be  re- 
quired to  be  paid,  except  perhaps  a  small  balance  which  might  be  due  at  the 
death  of  the  insured,  after  deducting  the  proportion  of  profits  that  might  be  earned 
by  the  company,  and  the  balance  was  then  only  to  be  deducted  from  the  amount 
of  the  policy.  In  this  way  those  who  paid  their  premiums  in  full,  by  receiving 
dividends  of  profits  annually,  would,  in  the  end,  be  made  equal  with  those  who 
only  paid  twenty-five  per  cent  of  their  premiums  in  cash ;  and  the  company 
prominently  held  this  out  as  an  inducement  to  persons  of  limited  means  to  insure 
their  lives  in  this  association  ;  and  it  is  this  principle  alone  which  enables  them 
to  say  in  their  prospectus  that  it  is  easy  for  all  who  are  not  paupers  to  protect 
their  families  from  want,  by  insuring  their  lives  with  them  ;  and  this  makes 
between  all  the  members  that  mutuality  in  regard  to  profits  and  losses  which 
was  contemplated  by  the  charter  and  the  organization  of  the  company.  But  if 
the  company  can  collect  just  such  notes  as  it  pleases,  without  first  making  an 
equal  assessment  upon  all,  it  is  clear  that  there  is  an  end  to  anything  like  mutu- 
ality. It  is  not  pretended  that  they  do  collect  the  great  mass  of  their  premium 
notes  ;  but  the  broad  ground  is  taken  that  they  can  collect,  or  omit  to  collect  any 
or  all,  as  the  company  pleases,  thus  destroying  all  mutuality,  and  leaving  the 
members  who  have  taken  their  policies  upon  the  faith  that  they  could  renew 
their  notes  from  time  to  time,  unless  required  to  meet  losses  to  be  assessed  upon 
all  alike,  at  the  mercy  of  the  persons  who  may  be  officers  of  the  company  for  the 
time  being.  It  is  insisted,  however,  that  the  provisions  of  the  ninth  section  of  the 
plaintiff 's  charter  relate  only  to  the  members  of  the  association,  and  have  no  appli- 
cation to  the  defendant  after  he  ceased  to  be  a  member.  But  the  defendant  was  a 
member  when  he  gave  the  note,  and  it  was  the  act  of  giving  it,  and  paying  that 
portion  of  the  premium  which  is  required  to  be  paid  in  cash,  that  continued  to 
him  his  right  as  such  member  ;  and  we  look  in  vain  to  the  charter  or  regulations 
for  any  different  rule  or  distinction  between  the  notes  of  the  members  and  those 
who  have  ceased  to  be  members.  The  premium  notes  all  stand  upon  the  same 
footing,  and  the  character  which  the  charter  and  the  regulations  of  the  association 
impressed  upon  tliem  at  their  inception  must  remain,  unless  there  is  something 
in  the  same  documents  to  alter  it.     The  difficulty  under  which  the  plaintifts 


696  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

as  that  losses  and  expenses  had  actually  been  incurred  be- 
yond the  available  assets  in  hand,  and  which  could  not  be 

counsel  labor  arises  from  their  looking  at  the  absolute  terms  in  which  the  note 
itself  is  expressed.  But  if  we  take  it  in  connection  with  the  charter,  and  con- 
sider that  it  was  not  an  ordinary  note,  and  was  never  delivered  as  such,  but  was 
delivered  as  a  premium  note,  under  the  charter  and  the  regulations  of  the  com- 
pany, we  at  once  attach  to  it  all  the  conditions  which  are  expressed  in  tlie  char- 
ter and  regulations.  By  these  conditions  it  appears  that  it  was  never  an  absolute 
promise  to  pay,  but  was  a  mere  security  for  losses,  and  merely  subject  to  assess- 
ments for  losses,  and  for  nothing  else ;  as  a  conditional  security  for  losses,  there 
was  a  consideration  for  it,  and  to  collect  it  for  otlier  purposes  would  operate  as 
a  fraud  upon  the  maker.  Again,  it  is  said  that  the  consideration  of  the  note  was 
the  premium  of  insurance  on  the  defendant's  life  for  tiie  year  it  had  to  run,  and 
that  the  defendant  had  the  benefit  of  the  insurance  for  that  year,  and  in  justice 
ought  to  pay  for  the  risk.  If  this  was  so  in  fact,  we  do  not  see  that  it  would 
make  liim  liable  in  any  other  Avay  than  is  prescribed  in  the  charter  ;  but  enough 
has  been  said  to  show  that  this  is  not  so.  By  giving  the  note,  he  came  under  an 
obligation  to  pay  such  assessment  for  losses,  not  exceeding  its  amount,  as  might 
be  regularly  made  by  the  directors  :  none  such  has  been  made,  and  so  there  is 
no  obligation  to  pay;  nor  is  this  unjust  in  regard  to  the  other  members  of  the 
association.  By  looking  at  the  tables  in  the  prospectus,  it  will  be  seen  that  tlie 
real  risk  which  the  company  ran,  for  the  year  previous  to  the  time  the  note  fell 
due,  was  but  a  trifle  over  the  twenty-five  per  cent  of  the  premium  which  was 
paid  in  cash.  If  he  had  insured  for  a  single  year,  the  premium  would  have  been 
at  the  rate  of  about  two  per  cent  on  a  hundred  dollars,  whereas,  by  insuring  for 
life,  they  charged  him  nearly  five  per  cent  annually.  The  additional  charge 
undoubtedly  arises  from  averaging  the  risk  among  all  the  years  that  such  a  life 
is  estimated  to  last.  Still  it  is  no  less  true  that  he  paid  the  company  in  cash 
very  nearly  the  full  value  of  the  risk  the  company  ran  before  his  jjolicy  became 
A'oid  by  his  withdrawal ;  and  it  is  this  fact  which  enables  the  company  safely  to 
issue  life  policies  upon  the  payment  of  so  small  a  proportion  of  the  premium  in 
cash.  If  the  members  withdraw  from  the  association,  they  have  paid  in  cash  the 
full,  or  about  the  full  value  of  the  risk  wliich  the  company  had  run  before  the  with- 
drawal ;  and  if  they  do  not  withdraM'  when  tlie  policy  is  paid,  the  company  deduct 
the  balance  of  the  premium  notes  not  previously  paid  by  a  credit  of  profits  from 
the  sum  insured  in  the  policy.  Upon  this  system,  the  company,  if  it  has  correctly 
calculated  the  proportion  of  the  premium  which  it  will  require  to  be  paid  in  cash, 
is  always  safe.  Indeed,  it  is  for  its  advantage,  after  the  life  policies  have  run  a 
few  years,  that  the  members  should  avoid  their  policies  by  withdrawal,  and  obvi- 
ously becomes  more  and  more  so  by  the  lapse  of  time.  Indeed,  so  obvious  is  this, 
that  the  regulations  say  that  the  assured  can,  after  a  term  of  years,  surrender 
the  policy  and  receive  its  equivalent  in  value  ;  and  this  seems  to  us  a  sufficient 
answer  to  the  suggestion  that  it  was  a  fraud  upon  the  company  to  take  the  ben- 
efit of  the  policy  for  the  year  before  the  withdrawal,  and  not  pay  the  premium 
charged." 

Ellsworth,  J.  dissented :  "  My  reflections  upon  this  case  have  brought  me 
to  a  diflferent  conclusion  from  that  expressed  by  my  brethren.  Mr.  Jarvis,  the 
defendant,  applied  to  the  plaintiffs  for  an  insurance  upon  his  life  for  -^SjOOO,  from 


MUTUAL   INSURANCE.  697 

met  but  by  an  assessment.  The  liability  of  a  member  of  a 
mutual  insurance  company  on   his  premium   note,  left  as  a 

the  7tli  of  October,  1847.  From  Carlisle's  tables  (which  were  used  by  the  com- 
pany to  ascertain  the  proper  annual  premium  to  be  paid  by  the  defendant)  it 
appears,  and  it  was  agreed,  it  should  be  the  sum  of  $245 ;  one-quarter  of  this  the 
defendant  paid  at  the  time,  and  gave  his  note  for  the  remaining  three-quarters, 
payable  at  the  end  of  the  year,  '  without  default  or  discount,'  with  interest.  If, 
at  the  end  of  the  year,  he  chose  to  continue  a  member  of  the  company  by  further 
insuring,  he  could,  at  his  request,  renew  the  insurance  for  another  year,  by  pay- 
ing twenty-five  per  cent  of  the  premium  for  another  year,  and  giving  a  new  note 
for  the  amount  of  the  former  note  and  interest  and  the  three-quarters  of  another 
$245,  the  premium  for  the  second  year  ;  so  that  the  note  now  in  suit  consists  of 
premium  and  interest  for  two  3'ears'  insurance.  This  premium  note  fell  due  on 
the  7th  of  October,  1849,  that  being  tlie  date  up  to  which  he  had  been  insured, 
and  after  which  he  did  not  ask  for  further  insurance.  It  will  thus  be  seen  that 
tlie  company  had  insured  the  defendant's  life  for  two  years,  at  the  stipulated  pre- 
mium ;  and  how  the  defendant  is  to  get  rid  of  the  payment  of  this  emiifd  money, 
by  his  own  act  simply,  I  have  not  been  able  to  discover.  The  money,  being 
earned,  can  be  recovered  on  the  common  counts  as  well  as  on  the  special  count. 

"By  the  terms  of  the  charter,  in  the  sixth  section  the  company  declare  'that 
it  shall  and  may  be  lawful  for  tlie  officers  of  said  corporation  to  take  the  notes  or 
obligations  of  the  members  for  the  amount,  either  in  part  or  in  whole,  of  the  pre- 
mium of  insurance,  in  proportion  to  the  amount  insured.'  In  pursuance  of  this 
provision,  the  directors  passed  a  by-law,  that,  in  all  cases  where  the  premium 
was  over  fifty  dollars,  the  insured  might  pay  twentj^-five  per  cent  down,  and  give 
his  note  for  the  balance,  to  be  paid  at  the  end  of  the  year,  with  interest,  this  being 
the  termination  of  the  risk  ;  and  if  possible  to  make  this  obligation  more  clear 
and  strong,  it  was  to  be  paid  without  defalcation  or  discount,  and  might  in  the 
mean  time  be  called  for,  should  the  company  need  it  to  pay  losses.  It  would 
seem,  therefore,  that  the  note  in  question  was  understandingly  given  as  an  equiv- 
alent for  the  risk  taken  by  the  plaintiffs  for  the  defendant's  life  for  the  space  of 
two  years.  So,  from  the  note  itself,  it  seems  the  promise  is  absolute  and  positive. 
The  money  is  to  be  paid  in  twelve  months  after  date,  and  sooner,  if  required  to 
meet  assessments. 

"  It  is  said,  however,  that  the  note  is  not  absolute,  and  is  not  to  be  paid,  as 
is  written,  without  defalcation,  but  is  to  be  paid  only  upon  future  assessments. 
Here,  I  think,  is  the  great  mistake  of  the  defendant's  counsel.  The  defendant, 
by  separating  himself  from  the  company,  has  deprived  himself  of  the  privilege 
contemplated  by  this  provision  of  the  by-law,  so  that  the  by-law  is  not  at  all 
applicable  to  the  case  of  the  defendant.  The  provision  is  intended  for  his  bene- 
fit while  he  remains  a  member ;  but  he  has  forfeited  that  privilege  by  his  separa- 
tion. When  he  ceased  to  be  a  member,  he  ceased  to  be  a  subject  of  assessment, 
both  by  the  charter  and  the  bj'-laws  ;  for  none  but  members  can  be  assessed.  Were 
it  indeed  practicable  to  assess  those  who  had  been  members,  for  what  losses  could 
this  be  done^  those  that  accrued  during  membership,  or  those  which  may  accrue 
at  any  future  period,  upon  policies  issued  during  the  time  of  membership  ? 

"  It  must  be  conceded  that  if  the  defendant  is  not  liable  in  the  present  suit  he 


698  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

deposit  as  the  basis  of  an  assessment  should  occasion  arise, 
is  not  an  absolute  liability  to  pay  the  whole  amount  of  his 

is  not  liable  at  all,  and  yet  he  has  been  insured  for  the  agreed  premium  of  $490, 
by  paying  only  §122.50.  In  the  same  by-law,  to  which  the  defendant  refers  for 
his  deliverance  from  this  note,  we  find  what  I  am  confident  is  the  only  provision 
applicable  to  this  case.  It  is  this  :  '  At  the  end  of  the  year,  if  the  party  so  desire, 
he  may  renew  the  balance  of  the  old  note,  not  then  called  for,  by  paying  the 
interest,  adding  the  next  year's  premium,  and  paying  twenty-five  per  cent  in 
cash  as  at  first.'  This  the  defendant  has  not  desired  to  do ;  but,  on  the  other 
hand,  has  absolutely  refused  and  neglected  to  do  any  thing,  and  yet  insists  he 
ought  not  to  pay.  He  claims  that  he  cannot  be  assessed,  because  he  is  not  a  mem- 
ber, and  that  he  cannot  be  compelled  to  pay  without  assessments.  Thus  he 
would  avoid  the  payment  of  a  note  as  fairly  earned  and  due  as  any  that  was  ever 
presented  in  a  court  of  justice.  I  am  for  holding  the  defendant  to  his  agreement. 
If  he  will  not  renew  his  note,  nor  pay  the  stipulated  twenty-five  per  cent,  nor 
find  satisfactory  security,  he  ought  to  pay  the  note  as  it  is  written ;  upon  his  own 
showing,  the  assessment  provision  has  nothing  to  do  with  the  question.  And 
further,  the  note,  under  no  circumstances,  is  to  be  assessed.  By  the  ninth  sec- 
tion of  the  charter,  in  a  ratable  proportion  the  members  of  the  association  (not  the 
notes  of  the  members)  may  be  assessed.  The  notes  are  held  to  be  due  and  pay- 
able as  written  ;  and,  as  I  contend,  are  absolutely  payable  when  and  because  the 
members  have  enjoyed  their  insurance,  and  cannot  alter  their  obligations  by  with- 
drawing from  the  company. 

"  It  must  be  further  remembered  that  these  notes,  given  for  earned  premiums, 
constitute  the  fund  of  the  company  to  which  the  public  look  for  the  payment  of 
losses,  but  they  now  discover  that  these  notes  mean  nothing  and  secure  nothing. 
The  consequence,  too,  is  that  a  person  may  remain  a  member  of  the  company 
and  be  insured  for  any  time,  twenty  or  fifty  years,  until  his  premium  note  shall 
amount  to  thousands  of  dollars,  and  then  retire  from  the  company,  repudiate  his 
note,  and,  if  dishonest  enough,  pursue  the  same  course  with  another  company. 

"  I  would  inquire,  what  is  the  diflerence  between  the  person  who  pays  in  cash, 
when  the  annual  premium  is  less  than  fifty  dollars,  and  one  who  pays  partly  in 
cash  and  partly  in  a  promissory  note  where  the  premium  is  more  ?  Upon  the 
hypothesis  of  the  defendant,  the  latter  may  pay  one-quarter  of  his  premium  and 
be  as  fully  insured  as  if  he  had  paid  the  whole.  This  is  a  gross  absurdity,  and  I 
cannot  feel  that  it  is  at  all  in  accordance  with  the  understanding  of  the  parties,  or 
the  public,  or  with  any  principles  of  justice  or  law  with  which  I  am  acquainted. 
From  the  first  breaking  of  this  case  I  have  been  at  a  loss  to  learn  what  could  be 
urged  by  the  defendant  in  favor  of  this  defence. 

"  Something  has  been  said  about  the  want  of  mutuality  and  of  consideration ; 
but  no  question  of  this  kind  can  arise  ;  for  the  defendant's  life  was  insured  for 
two  years  at  the  price  agreed,  and  that  surely  is  mutuality  and  consideration 
enough.  And  I  insist  that  the  defence  is  nothing  but  a  barefaced  attempt  to 
avoid  the  payment  of  a  clear  note  of  hand.  The  defendant  was  fairly  and  fully 
insured ;  and  had  he  died  within  the  two  years,  his  representatives  would  have 
been  entitled  to  the  five  thousand  dollars.  And  yet  he  asserts  that,  though  he 
was  so  insured,  he  will  not  fulfil  the  contract  as  he  made  it.     He  will  neither 


MUTUAL   INSURANCE.  699 

note,  but  it  is  conditional,  and  depends  upon  the  contingency 
of  the  happening  of  losses  and  expenses  to  which  he  shall  be 
liable  to  contribute,  which  have  been  duly  ascertained  by  the 
directors,  and  which  make  necessary  a  resort  to  an  assessment 
tliereon.  The  promise  of  the  insured  is  to  pay  upon  such 
conditions  ;  and  the  existence  of  these  conditions  must  be  es- 
tablished affirmatively  before  a  call  for  the  payment  of  the 
note,  or  any  part  thereof,  can  be  enforced.^  Though  the  pre- 
mium note  be  absolute  on  its  face,  yet,  being  given  to  pay  losses, 
it  is  only  assessable  in  case  of  loss.^  But  the  assessment  must 
be  made  in  strict  accordance  with  the  authority  given.  Thus, 
where  the  charter  authorizes  the  directors  to  make  an  assess- 
ment, and  they  vote  to  assess  to  a  certain  amount,  and  tliere- 
upon  refer  the  matter  to  a  committee  to  make  the  assessment, 
who  —  a  minority  of  the  directors  —  assess  a  different  and 
less  sum,  the  assessment  is  invalid :  so  held  in  an  action  on  a 
note  to  recover  such  an  assessment.^  So  a  vote  to  make  an 
assessment,  leaving  the  per  cent  or  amount  in  blank,  is  invalid.'* 
And  so  is  a  vote  to  assess  passed  by  a  board  of  directors  ille- 
gally elected ;  ^  though  an  assessment  was  held  valid  made  by 

renew  nor  pay  his  note,  nor  remain  in  a  condition  to  be  assessed  ;  and  in  this 
defence  he  has  succeeded,  as  I  think,  by  the  prostration  of  the  plainest  principles 
of  equity  and  justice." 

1  Pacific  Mut.  Lis.  Co.  v.  Guse,  49  Mo.  329  ;  Long  Pond  Ins.  Co.  v.  Hough- 
ton, 6  Gray  (Mass.),  77  ;  Atlantic  Ins.  Co.  v.  Fitzpatrick,  2  Gray  (Mass.),  279  ; 
Thomas  v.  Whallon,  31  Barb.  (N.  Y.)  172;  In  re  Bangs,  15  ib.  264  ;  American 
Ins.  Co.  V.  Schmidt,  19  Iowa,  502 ;  Savage  v.  Medbury,  19  N.  Y.  32 ;  Bangs  v. 
Duckinfield,  18  N.  Y.  592  ;  Stow  v.  Wadley,  8  Johns.  (N.  Y.)  124  ;  Bangs  v.  Gray, 
2  Ker.  (N.  Y.)  477  ;  Herkimer  County  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.  (N.  Y.) 
873 ;  Devendrof  v.  Beardsley,  23  ib.  656  ;  Appleton  3ilut.  Fire  Ins.  Co.  v.  Jesser, 
5  Allen  (Mass.),  446 ;  Ohio  Mut.  Ins.  Co.  v.  Marietta  Woollen  Co.,  3  Ohio  St. 
348. 

2  Insurance  Co.  v.  Jarvis,  22  Conn.  133.  It  is  said  in  Kelly  t;.  Troy  Fire  Ins. 
Co.,  3  Wis.  254,  that  an  assessment  may  bt;  made  in  anticipation  of  losses,  as 
otherwise  great  delay  would  be  experienced  in  adjusting  and  paying  them.  But 
the  objection  urged  in  that  case,  that  if  assessments  are  made  upon  the  premium 
notes  before  losses  have  occurred,  the  right  to  withdraw,  upon  payment  of  the 
share  of  losses  assessable  while  the  policy  was  in  force,  cannot  be  availed  of, 
because  money  to  pay  assessments  will  be  taken  when  no  loss  has  occurred, 
may,  perhaps,  be  entitled  to  more  favor  than  was  allowed  in  that  case. 

3  Monmouth  Mut.  Fire  Ins.  Co.  v.  Lovell,  59  Me.  564. 

*  St.  Lawrence  Mut.  Ins.  Co.  v.  Paige,  1  Hilton  (N.  Y.),  430. 
5  People's  Mut.  Ins.  Co.  v.  Westcott,  14  Gray  (Mass.),  440. 


700  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

directors  out  of  whom  a  president  was  to  be  chosen,  though 
the  president  was  chosen  before  the  directors  were.^  And 
assessments  can  only  be  laid  by  the  corporation,  or  a  receiver 
clothed  with  such  of  its  powers  as  may  be  necessary  for  winding 
up  its  affairs,  under  the  direction  of  the  court.  An  assignee 
of  the  corporation  has  no  such  power.^ 

§  558.  Slight  Errors  do  not  invalidate  Assessments.  —  Slight 
and  unintentional  errors,  however,  in  estimating  the  amount 
which  it  may  be  necessary  to  assess,  or  in  making  up  the  lists 
of  those  liable  to  assessment,  will  not  vitiate  the  assessment, 
the  assessment  being  substantially  correct,  made  in  good  faith, 
and  upon  correct  principles.  Nor  will  assessments  be  inval- 
idated by  delay,  not  unreasonable,  in  making  them ;  nor  by 
variance  at  different  times  between  the  proportions  of  the  cash 
premium  to  the  amount  of  the  deposit  note,  as  against  mem- 
bers suffering  no  injury  thereby.^  Nor  can  an  assessment  be 
resisted  on  the  ground  that  claims  for  losses  found  due,  allowed 
by  the  directors,  might  have  been  successfully  resisted  on 
technical  grounds.*  Nor  need  assessments  be  made  literally 
"  forthwith  "  after  every  loss,  nor  separately  for  each  loss.  Some 
reasonable  and  practicable  rule  approximating  to  it  is  suffi- 
cient.^ And  if  losses  occur  at  one  and  the  same  time,  sufficient 
to  absorb  all  the  company's  resources  from  premium  notes, 
whether  the  notes  be  classified  or  not,  one  assessment,  or  call 
for  the  whole,  will  be  valid. '^ 

§  559.  "What  Assessments  may  include  —  Set-off.  —  The  inten- 
tional omission  of  members  who  are  liable  to  any  considerable 
amount  will  vitiate  the  whole  assessment.'^     But  the  omission 

1  Currie  v.  Mut.  Ass.  Co.,  4  H.  &  M.  (Va.)  318. 

2  Hurlburt  v.  Carter,  21  Barb.  (N.  Y.)  221. 

3  Marblehead  Mut.  Ins.  Co.  v.  Underwood,  3  Gray  (Mass.),  210. 
*  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651. 

^  New  England  Mut.  Ins.  Co.  v.  Belknap,  9  Cush.  (Mass.)  140;  Shaughnessy 
V.  Rensselaer  Ins.  Co.,  21  Barb.  (N.  Y.)  605. 

6  Rlieinhardt  v.  Allegbany  County  Mut.  Ins.  Co.,  1  Penn.  St.  359 ;  Common- 
wealth V.  Mechanics'  Mut.  Ins.  Co.,*  Sup.  Jud.  Ct.  Mass.,  March,  1873,  not  yet 
reported  ;  Sands  v.  Sanders,  28  N.  Y.  416. 

■J  Marblehead  Mut.  Fire  Ins.  Co.  v.  Hayward,  3  Gray  (Mass.),  208  ;  Herkimer 
County  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.  (N.  Y.)  373;  People's  Eq.  Mut.  Ins. 
Co.  V.  Arthur,  7  Gray  (Mass.),  267. 


MUTUAL   INSURANCE.  701 

of  a  few  adjusted  and  cancelled  policies,  so  small  in  amount 
as  not  materially  to  increase  the  assessment  on  the  remainder, 
will  not  have  this  effect.^  But  in  determining  whether  there 
are  earned  premiums  available  to  pay  losses,  uncollectible 
and  worthless  claims  may  be  disregarded.^  And  in  fixing  the 
amount  to  be  assessed,  interest  on  borrowed  money,  probable 
failures  in  the  collection,  a  reasonable  sum  for  the  expense  of 
collection,  and  a  reasonable  allowance  by  way  of  discount  for 
prompt  payment,  may  be  taken  into  account.^  So  may  return 
premiums  due  on  surrendered  and  cancelled  policies.'^  The 
amount  of  such  overlay  must  be  reasonable.  Twenty-four  per 
cent  was  held  to  be  reasonable  in  People's  Equitable  Mutual 
Fire  Insurance  Company,  Petitioners  ;^  but  double  the  amount 
was  held  to  be  unreasonable  and  excessive,  in  the  absence  of 
special  circumstances  shown  to  justify  it,  in  the  case  of  the 
same  company  against  Babbitt.*^  Involuntary  payments  made 
under  a  prior  illegal  assessment  may  be  treated  as  a  por- 
tion of  the  just  claims  upon  which  to  make  the  new  assess- 
ment, and  in  the  collection  of  the  latter  each  member  is  to 
be  credited  with  the  amount  of  his  payment  under  the  illegal 
assessment."  In  Indiana,  however,  it  appears  that  the  statute 
prohibits  any  overlay  to  cover  expenses.^  Where  the  assess- 
ments are  to  pay  losses,  and  the  premium  on  deposit  notes  is 
made  payable  by  instalments  as  shall  from  time  to  time,  agree- 
ably to  the  by-laws,  be  required  by  the  directors,  the  directors 
having  ascertained  that  the  company  is  liable  for  a  loss,  and 
that  the  company  have  not  sufficient  available  funds  to  pay  the 
loss,  are  first  to  ascertain  who  were  members  at  the  time  of 
the  loss,  and  to  assess  upon  each  such  proportion  thereof 
as  his  individual  liability  bears  to  the  aggregate  liability  of  all 
the  members.     The  length  of  time   which  may  have  elapsed 

1  Fayette  Mut.  Fire  Ins.  Co.  i'.  Fuller,  8  Allen  (Mass.),  27. 

2  Maine  Mut.  Mar.  Ins.  Co.  v.  Neal,  50  Me.  301. 

3  Jones  V.  Sisson,  6  Gray  (Mass.),  288;  Bangs  v.  Gray,  2  Ker.  (N.  Y.)  264; 
reversing  s.  c.  15  Barb.  (N.  Y.)  264. 

*  Fayette  Mut.  Fire  Ins.  Co.  t:  Fuller,  8  Allen  (Mass.),  27. 

5  9  Allen  (Mass.),  319.  «  7  Allen  (Mass.),  235. 

7  People's  Eq.  Mut.  Fire  Ins.  Co.,  9  Allen  (Mass.),  319. 

8  Sinnissippi  Ins.  Co.  v.  Taft,  26  Ind.  246. 


702  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

since  membership  began  is  not  to  be  taken  into  account.^ 
And  although  assessments  cannot  be  made  for  losses  occurring 
prior  to  membership,  the  inclusion  of  such  losses  will  not 
invalidate  the  assessment  as  to  those  who  were  members  when 
the  losses  occurred. ^  Where  the  policies  ran  for  one,  three,  and 
five  years  respectively,  the  premiums  for  three  years  being  at 
twice  the  rate  for  one,  and  those  for  five  years  at  three  times 
the  rate  for  one,  and  in  computing  the  amount  to  be  assessed 
for  each  month's  losses  a  basis  was  found  by  taking  the  whole  of 
the  premium  for  each  yearly  policy,  one-third  of  that  for  each 
three  years'  policy,  and  one-fifth  of  that  for  each  five  years' 
policy,  the  court  thought  there  was  no  such  inequality  as  to 
require  the  assessment  to  be  set  aside.^  So  where,  after  a 
former  assessment  has  been  adjudged  illegal,  it  is  found  that 
two  years  before  a  large  debt  was  due  from  the  company,  and 
that  many  of  the  members  who  paid  the  illegal  assessment 
have  become,  by  lapse  of  time,  exempt  from  a  new  assess- 
ment, so  that,  if  the  debt  should  be  assessed  on  policies  which 
were  in  existence  when  the  several  items  of  debt  accrued 
and  are  still  liable  to  assessment,  there  would  not  be  premium 
notes  sufficient  in  amount  to  pay  all,  the  whole  debt  may  be 
taken  as  a  unit,  and  assessed  upon  all  the  policies  which  were 
then  outstanding,  in  proportion  to  the  time  of  their  existence 
and  the  amount  of  their  premiums.  And  in  making  such  assess- 
ment for  just  claims  which  have  accrued  within  two  years,  the 
aggregate  of  the  whole  net  expense,  and  of  the  sums  received 
in  payment  of  the  illegal  assessment  during  each  year,  may  be 
divided  by  twelve  to  ascertain  the  average  amount  to  be  raised 
for  each  month  during  that  year ;  to  which  may  be  added  the 
losses  in  each  month.  And  the  sum  thus  ascertained  may  be 
taken  to  be  the  sum  to  be  raised  for  each  month,  in  proportion 
to  the  amount  of  the  premiums  paid  therefor  applicable  to 
that  month.^  But  the  assessment  must  not  include  the  amount 
of  a  previous  assessment  for  losses  which  have  been  paid.^ 

1  Herkimer  County  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.  (N.  Y.)  373. 
'^  Long  Pond  Mut.  Fire  Ins.  Co.  v.  Houghton,  6  Gray  (Mass.),  77. 
3  Citizens'  Mut.  Fire  Ins.  Co.  v.  Sortwell,  10  Allen  (Mass.),  110. 
*  People's  Eq.  Mut.  Fire  Ins.  Co.,  Petrs.,  9  Allen  (Mass.),  319. 
6  Cooper  V.  Shaver,  41  Barb.  (N.  Y.)  151. 


MUTUAL   INSURANCE.  703 

But  a  new  assessment,  calling  for  the  whole  amount  due  on  a 
note,  is  valid,  although  there  is  a  prior  assessment  calling  for 
a  part  which  is  still  uncollected. ^  Of  course,  if  the  prior  assess- 
ment be  illegal,  it  may  be  disregarded.^  The  liability  to  assess- 
ment is  fixed  at  any  time  only  by  the  amount  of  losses  for  which 
the  company  is  at  that  time  responsible,  and  it  is  not  apportiona- 
ble  according  to  the  ratio  of  time  of  the  expired  and  the  unex- 
pired term  of  the  policy,  provided  the  amount  of  the  losses  is 
sufficient  to  absorb  the  whole.^  AVhen  this  is  the  case,  the 
assessment  cannot  be  reduced,  or  any  part  of  it  withheld 
to  provide  future  indemnity  for  members  who  have  not 
already  suffered  loss.  Where  the  whole  proceeds  of  the  con- 
ditional as  well  as  the  absolute  funds  —  that  is,  cash,  premium 
notes,  and  statute  liability  to  assessment  —  are  pledged  to  sat- 
isfy and  make  good  the  losses  that  have  occurred,  each  one 
in  turn,  who  suffers  loss,  is  entitled  to  the  full  benefit  of  this 
pledge,  according  to  the  state  of  those  funds  when  his  loss 
occurs.  This  forbids  any  reduction  of  the  fund  when  the 
whole  is  required  to  cover  losses,  either  by  apportionment,  set- 
off, or  otherwise.  The  directors  of  the  company  are  not  bound 
to  provide  for  reinsurance  either  by  reserving  a  fund  therefor,  or 
by  an  allowance  to  policy  holders  whose  policies  are  cancelled ; 
and  they  liave  no  right  to  do  so  to  the  prejudice  of  the  superior 
claims  of  those  who  have  suffered  losses  upon  their  policies. 

And  if,  in  case  of  insufficiency, '' a  just  average"  is  to  be 
made  in  such  proportion  as  the  loss  sustained  by  each  party 
"  bears  to  the  whole  amount  of  losses  then  remaining  unpaid," 
this  rule,  established  by  the  contract  of  the  corporation  with 
all  its  members  alike,  do^s  not  permit  a  set-off,  even  as  between 
the  company  and  those  who  have  claims  for  losses,  upon  which 
they  are  entitled  to  a  distributive  share  of  the  proceeds  of  the 
assessment. 

Accrued  profits,  although  credited  to  the  several  policies 

»  Sands  v.  Sweet,  44  Barb.  (N.  Y.)  108,  overruling  Campbell  i'.  Adams,  38 
Barb.  (N.  Y.)  132,  to  the  contrary.  See  also  Jackson  v.  Van  Slyke,  44  Barb. 
(N.  Y.)  116,  note. 

2  People's  Mut.  Fire  Ins.  Co.  v.  Allen,  10  Gray,  301. 

*  Commonwealth  v.  Union  Mut.  Ins.  Co.  Sup.  Jud.  Ct.  (Mass.)  March,  1873, 
not  yet  reported. 


704  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC. 

according  to  the  share  of  each  therehi,  remained  as  absolute 
funds  of  the  corporation  pledged  to  the  payment  of  losses, 
until  by  expiration  or  cancellation  of  the  policy  its  holder  be- 
comes entitled  to  withdraw  the  balance,  after  charging  for 
losses  as  the  "  dividend  due  to  his  policy."  The  members 
are  entitled  to  a  dividend  only  of  such  profits  as  remain  or 
are  shown  upon  a  valuation  of  their  policies  at  the  termination 
of  their  membership. 

If  the  payment  of  expenses  and  losses  and  return  premiums 
are  only  provided  for,  the  insured  is  not  entitled  to  withhold, 
or  to  have  withheld  for  him,  for  his  own  future  indemnity,  any 
part  of  the  fund  ;  and,  therefore,  the  loss  of  the  unexpired 
term  of  his  policy,  whether  by  cancellation  or  by  insolvency  of 
the  company,  can  give  him  no  claim  against  the  corporation, 
either  as  a  debt,  or  by  way  of  damages  for  non-fulfilment  of 
its  contract  with  himself.^ 

§  560.  Assessment  —  Classification  of  Risks  and  Funds. — 
When  a  classification  of  risks  is  autlwrized  by  the  charter, 
and  the  funds  of  one  class  are  set  apart  to  pay  the  losses  in 
that  class,  the  losses  in  both  classes  are  payable  by  the  com- 
pany, and  the  assessment  is  in  form  by  the  company,  and  not 
by  the  particular  class.  The  whole  company  acts  for  each 
particular  class.^  But,  though  the  assessment  be  made  by  the 
company,  the  funds  raised  on  notes  in  one  department  only 
must  first  be  appropriated  to  pay  the  losses  of  that  department.^ 
The  directors  cannot,  however,  classify  risks  and  make  different 
rates  of  assessment  without  the  authority  of  the  charter,  or  a 
vote  of  the  members.'^  Nor  can  the  assessment  be  by  classes, 
when  authorized,  unless  the  amounts  insured  in  the  respective 
classes  have  reached  the  required  amount.^  And  when  assess- 
ment is  by  classes,  and  the  means  of  one  class  are  insufficient 
to  pay  the  losses  of  that  class,  resort  may  be  had  to  the  other 

1  Commonwealth  v.  Union  Mut.  Ins.  Co.,  ubi  supra. 

2  Kelley  v.  Troy  Fire  Ins.  Co.,  3  Wis.  254. 

3  Allen  V.  Winne,  15  Wis.  113. 

*  Thomas  v.  Achilles,  16  Barb.  (N.  Y.)  401  ;  Currie  v.  Mut.  Ass.  Soc.,  4  H.  & 
M.  (Va.)  315;  People's  Eq.  Mut.  Ins.  Co.  v.  Arthur,  7  Gray  (Mass.),  267. 
^  Augusta  Mut.  Ins.  Co.  v.  French,  30  Me.  522. 


MUTUAL   INSURANCE.  705 

class,  if  any  thing  remains  after  paying  the  losses  of  that 
class. ^  If  a  certain  class  of  funds  is  to  be  resorted  to  in  the 
first  instance  for  payment,  these  must  be  exhausted  before 
others  can  be  availed  of  by  assessment.^  But  if  tliere  is  no 
such  distinction,  all  are  to  be  assessed  alike.^  And  if  the 
funds  raised  are  to  be  appropriated  for  the  payment  of  certain 
claims  in  successive  order,  the  first  must  be  paid  in  toto  before 
any  thing  can  be  appropriated  for  the  payment  in  the  next 
succeeding  class,  as  for  return  of  premiums,  for  instance.'* 

§  561.  Premium  Notes,  when  recoverable  to  the  full  Amount 
without  Assessment.  —  In  some  cases  it  is  provided  by  the 
charter  or  by-laws  that,  in  case  of  neglect  to  pay  an  assess- 
ment for  a  specified  time,  the  whole  amount  of  the  deposit 
note  may  be  sued  for  and  recovered.  If,  in  such  case,  an  as- 
sessment has  been  paid,  the  whole  amount  recoverable  is  the 
face  of  the  note  less  the  paid  assessments,^  but  witiiout  inter- 
est, as  the  right  to  recover  the  wliole  amount  is  in  the  nature 
of  a  penalty,  which  carries  no  interest.^  And  the  failure  to 
pay  such  an  assessment  does  not  exclude  the  insured  from  his 
right  to  indemnity  in  case  of  loss,  if  the  by-laws  treat  the  note 
"  as  payment  in  advance  "  of  the  assessment,'  although  the 
charter  provides  that  if  he  neglect  to  pay  an  assessment  he 
shall  cease  to  have  his  property  insured  until  he  pays. 

§  562.  Notice  of  Assessment. —  Unless  some  special  mode  or 
form  of  notice  of  the  assessment  be  required  by  the  charter 
or  by-laws,  personal   service  will   be    sufficient   publication.^ 

1  White  V.  Ross,  15  Abb.  Pr.  (N.  Y.)  66.  In  Massachusetts,  by  statute,  where 
the  affairs  of  an  insurance  company  have  been  placed  in  the  hands  of  a  receiver, 
an  assessment  may  be  made  by  him,  whicii,  being  ratified  by  tlie  court,  on  a  bill 
in  equity,  concludes  all  parties  in  interest ;  and,  upon  decree  of  confirmation,  exe- 
cutions may  issue  for  the  respective  amounts  against  those  upon  whom  they  are 
assessed.     Hamilton  Mut.  Ins.  Co.  v.  Parker,  11  Allen  (Mass. J,  674. 

^  Long  Pond  Ins.  Co.  v.  Houghton,  6  Gray,  77. 

3  Fayette  Mut.  Fire  Ins.  Co.  v.  Fuller,  8  Allen  (Mass.),  27. 

*  Commonwealth  v.  Union  Mut.  Ins.  Co.,  uhi  supra ;  Commonwealth  v.  Mass. 
Mut.  Fire  Ins.  Co.,  ibid. 

5  Bangs  V.  Bailey,  37  Barb.  (N.  Y.)  630. 

6  Ibid.;  Bangs  v.  Mcintosh,  23  Barb.  (N.  Y.)  591. 

7  King  V.  Mut.  Ins.  Co.,  20  N.  H.  198. 

8  Jones  V.  Sisson,  6  Gray  (Mass.),  288 ;  York  County  Mut.  Fire  Ins.  Co.  v. 
Knight,  48  Me.  75. 

45 


706  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

Nor  need  the  notice  specify  the  amount  due  on  each  note.^ 
The  rate  per  cent  will  be  sufficient,  or  any  notice  which  will 
enable  the  insured  to  determine  by  calculation  the  amount 
which  he  will  be  called  on  to  pay,  and  not  incumbered  by 
matter  which  misleads.^  And  notice  required  to  be  by  mail 
or  otherwise  is  sufficient,  if  deposited  in  the  post-office  directed 
to  the  place  of  residence  indicated  in  the  policy.  A  change 
of  residence  not  made  known  to  the  company  is  without  effect 
upon  them.'^  If  by  the  terms  of  the  by-laws  notice  of  an  as- 
sessment is  to  be  given,  an  action  for  recovery  of  the  assess- 
ment cannot  be  maintained  by  the  company  or  its  receiver 
without  first  giving  the  notice.'*  If,  however,  publication  of 
notice  for  three  weeks  be  required,  and  after  assessment  is 
made  the  company  goes  into  the  hands  of  the  receiver,  their 
being  no  company  to  give  the  required  notice,  actual  notice  by 
the  receiver,  before  action  brought,  will  suffice.^  The  notice 
should  not  be  given  till  the  assessment  is  made.^  Notice  of 
an  intention  to  assess  is  not  necessary,  unless  required  by  the 
by-laws  or  charter.  Assessments  at  the  regular  meeting  of 
the  directors  are  presumably  a  part  of  the  business  of  the 
company,  and  no  notice  is  required.  And  as  this  is  a  part 
of  the  duty  of  the  directors,  made  so  by  statute,  a  by-law 
authorizing  the  directors  to  lay  an  assessment  at  a  meeting 
called  for  that  purpose  neither  restricts  nor  enlarges  the 
power  of  the  directors.'^  The  notice,  when  required,  should 
be  given  to  the  member  of  the  company  insured,  although 
there  has  been  an  assignment  of  tiie  policy  with  the  consent  of 
the  company  ;  ^  unless  by  the  giving  a  new  premium  note,  or 
assuming  the  liability  on  the  original,  the  assignee  becomes  a 

1  Atlantic  Mar.  and  Fire  Ins.  Co.  v.  Sanders,  36  N.  H.  252.    * 

2  Bangs  I'.  Duckingfield,  18  N.  Y.  592. 

3  Lothrop  V.  Greenfield   Stock  and   Mut.  Fire  Ins.   Co.,  2  Allen  (Mass.), 
82. 

*  Williams  v.  Babcock,  25  Barb.  (N.  Y.)  109. 
5  Cooper  V.  Shaver,  41  Barb.  (N.  Y.)  151. 
G  Bangs  V.  Mcintosh,  23  Barb.  (N.  Y.)  591. 

1  Bay  State  Mut.  Fire  Ins.  Co.  v.  Sawyer,  12  Cush.  64  ;  Fayette  Mut.  Fire 
Ins.  Co.  V.  Fuller,  8  Allen  (Mass.),  27. 

8  Brannin  v.  Mercer  County  Mut.  Ins.  Co.,  4  Dutch.  (N.  J.)  92. 


MUTUAL   INSURANCE.  707 

member  ;  in  which  case  he  should  be  notified,  and  not  the  orig- 
inal insured.^ 

§  563.  Mutual  Insurance  —  Lien — Contract  with  Parties  out 
of  the  State.  —  A  mutual  insurance  company  of  New  York, 
empowered  to  do  business  in  a  particular  county,  and  having 
by  its  charter  a  lien  upon  real  estate  insured  by  it  upon  fil- 
ing notice,  it  has  been  held  in  Canada,  cannot  make  there  a 
valid  contract  with  a  citizen  of  Canada  for  the  insurance  of 
his  buildings.  Such  a  contract  is  void  ab  initio.  There  could 
be  no  mutuality  in  such  a  contract,  and  the  insured  could  not 
subject  his  property  to  the  required  lien.^  But  in  an  action 
against  the  same  company,  the  New  York  courts  held  that  the 
company  might  lawfully  make  in  New  York  a  contract  to 
insure  personal  property  situated  in  Canada  and  belonging 
to  a  person  residing  there. ^  And  it  is  well  settled  that  as 
between  the  States  of  the  Union  mutual  insurance  companies 
incorporated  by  one  State  may  make  in  other  States  valid 
contracts  of  insurance,  both  of  the  real  and  personal  property 
of  citizens  of  other  States,  although  doubtless  without  the 
permission  of  the  foreign  State,  no  lien  in  such  case  will 
attach  to  the  real  estate.  The  practice  of  mutual  insurance 
companies  to  insure  both  real  estate  and  personal  property 
upon  which  they  can  have  no  lien  is  generally,  if  not  univer- 
sally, upheld. 

§  564.  Liability  of  Directors  for  neglecting  to  assess,  strictly- 
construed. —  The  insurance  company,  of  which  the  appellees 
were  directors,  issued  a  policy  to  the  appellant  upon  his  barn, 
wdiich  was  afterward  destroyed  by  fire.  The  company  ad- 
justed the  loss  and  gave  the  appellant  a  note  for  one  thousand 
dollars,  the  amount  of  tlie  loss,  and  received  from  him  a  writ- 
ten receipt,  discharging  the  company  from  all  further  claims 
on  account  of  the  fire.  This  note  the  company  afterward  took 
up,  jtaying  part  of  the  amount  in  cash,  and  giving  a  new  note 
for  the  remainder,  upon  which  the  appellant  afterwards  brought 
suit  and  recovered  a  judgment.    The  directors  failed  to  satisfy 

1  Bowditch  Mut.  Fire  Ins.  Co.  v.  Winslow,  3  Gray  (Mass.),  415. 

2  Genessee  Mut.  Ins.  Co.  v.  Westman,  8  Upper  Canada  (Q.  B.),  487. 

3  Western  v.  Genessee  Mut.  Ins.  Co  ,  2  Ker.  (N.  Y.)  258. 


708  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

the  execution  issued  upon  the  judgment,  or  to  make  an  assess- 
ment. The  statute  touching  insurance  companies  provided  that 
"  whenever  sufficient  goods  or  estate  of  any  such  corporation 
cannot  be  found  to  satisfy  an  execution  issued  against  them 
upon  a  judgment  recovered  on  a  policy  by  them  made,  and  the 
said  corporation  have  goods  or  estate  to  satisfy  such  execution, 
and  the  directors  shall  neglect  or  refuse  to  pay  the  same ;  or 
if  the  directors  shall  for  thirty  days  after  the  rendition  of 
such  judgment  refuse  or  neglect  to  make  such  an  assessment 
as  they  may  be  authorized  to  make  therefor,  and  to  deliver 
the  same  to  the  treasurer  for  coUecticfn,  or  fail  to  apply  such 
assessment  when  collected,  toward  satisfying  such  execution, 
then,  in  either  of  the  cases  aforesaid,  the  directors  shall  be 
personally  liable  for  the  whole  amount  of  such  execution." 
This  being  in  the  nature  of  a  penal  statute,  inflicting  upon 
the  directors  the  penalty  of  a  personal  liability  for  a  failure  to 
pay  the  execution,  or  to  make  and  properly  apply  the  assess- 
ment, must  therefore  be  construed  with  some  degree  of  strict- 
ness, and  cannot  be  extended  beyond  the  cases  fairly  within 
its  terms,  in  order  to  meet  those  that  might  be  conceived  to 
be  within  the  spirit  and  object  of  the  law.  And  where  the 
legislature  provides  the  personal  remedy  against  the  directors 
only  in  cases  where  there  has  been  a  judgment  against  the  cor- 
poration on  a  policy,  the  court  cannot  extend  the  remedy  to 
cases  where  a  judgment  has  been  recovered  on  something  else 
than  a  policy.^ 

1  Kaber  v.  Jones,  Sup.  Ct.  Incl.,  2  Ins.  L.  J.  514. 


REMEDIES,   EVIDENCE,   PLEADING,   BANKRUPTCY.  709 


CHAPTER    XXYI. 

OF   REMEDIES,   EVIDENCE,    PLEADING,   BANKRUPTCY. 

§  565.  Insured  against  Insurer  —  Refusal  to  deliver  Policy. — 
It  not  unfrequently  occurs  that,  the  parties  having  come  to  an 
agreement  upon  the  terms  of  the  contract  before  the  delivery 
of  the  policy,  a  fire  or  some  other  event  intervenes,  and  the 
company  refuses  to  deliver  the  policy  or  to  admit  its  liability. 
In  such  case  two  courses  are  open  to  the  insured.  He  may 
resort  to  a  court  of  equity  to  compel  the  delivery  of  the  policy, 
when,  in  a  proper  case,  the  court,  having  jurisdiction  to  com- 
pel specific  performance,  will,  to  avoid  circuity  of  action,  de- 
cree payment  for  the  loss,  as  if  a  policy  had  issued. ^  Or  a  suit 
at  law  will  be  sustained,  upon  competent  and  satisfactory  evi- 
dence, whether  verbal  or  written,  to  show  the  terms  of  the 
contract.^ 

§  566.  Insured  against  Insurer  —  Reform  of  Contract.  — 
Where  the  insured  is  likely  to  be  met  with  the  defence  that 
there  is  falsehood  in  his  answers  contained  in  the  application, 
and  he  would  avail  himself  of  the  reply  that  he  was  misled 
by  the  insurers  or  their  agent,  he  will  carefully  consider  how 
he  will  seek  his  remedy.  In  some  States  the  courts  of  law 
feel  obliged,  under  the  strict  rules  of  evidence  which  govern 

1  Rhodes  v.  Railway  Passengers'  Ins.  Co.,  5  Lansing  (N.  Y.)  71 ;  Union  Mut. 
Ins.  Co.  V.  Com.  Mut.  Mar.  Ins.  Co.,  2  Curtis  (C.  Ct.  U.  S.),  524  ;  s.  c.  affirmed, 
19  How.  (U.  S.)  318;  Fraed  v.  Royal  In.s.  Co.,  N.  Y.  Ct.  of  App.,  2  Ins.  L.  J. 
126  ;  Franklin  Fire  Ins.  Co.  v.  Hewitt,  3  B.  Mon.  (Ky.)  231 ;  Harris  v.  Columbus 
County  Mut.  Fire  Ins.  Co.,  18  Ohio,  116. 

-  Perkins  v.  Washington  Ins.  Co.,  4  Cow.  645  ;  Kentucky  Mut.  Ins.  Co.  v. 
Jenks,  9  Ind.  96  ;  Hamilton  v.  Lycoming  Ins.  Co.,  5  Penn.  St.  339  ;  Whittaker  v. 
Farmers'  Union  Ins.  Co.,  29  Barb.  (N.  Y.)  312;  City  of  Davenport  v.  Peoria 
Mar.  and  Fire  Ins.  Co.,  17  Iowa,  276  ;  Hallock  v.  Commercial  Ins.  Co.,  3  Dutch. 
(N.  J.)  645,  affirming  s.  c.  2  ib.  268  ;  Sussex  County  Mut.  Ins.  Co.  i-.  Woodruff, 
2  ib.  541 ;  Shelden  v.  Conn.  Mut.  Life  Lis.  Co.,  25  Conn.  207.  And  see  also  ante, 
§23. 


710  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

such  courts,  to  deny  him  the  privilege  of  proving  the  facts, 
and  so  he  will  fail  in  his  suit ;  while  the  same  courts,  perhaps, 
had  their  aid  been  invoked  in  equity,  would  have  found  some 
way  ill  which  the  facts  might  have  been  available.^  In  most 
of  the  States,  however,  courts  of  law  will  apply  the  doctrines 
of  waiver  and  estoppel,  so  as  to  enable  the  plaintiff  to  main- 
tain his  action  for  indemnity,  and  not  drive  him  to  a  court  of 
equity. 2  And  where  this  is  not  permitted,  a  court  of  equity 
may  be  applied  to  to  reform  the  contract,  if  it  does  not  con- 
form to  the  agreement,  as  made  by  mistake  of  law  or  fact,  or 
procured  by  fraud,  so  that  an  action  at  law  can  be  maintained.^ 
And  in  this  case,  as  in  the  case  of  a  bill  in  equity  to  enforce 
specific  performance  by  delivery  of  the  contract,  the  court  hav- 
ing jurisdiction  to  reform,  and  for  the  same  reason,  will  decree 
damages.^  The  evidence,  however,  in  such  case  must  be  clear 
and  satisfactory.  If  there  be  doubt  as  to  what  was  the  state- 
ment of  the  applicant,  or  the  agreement  of  the  parties,  or  a 
conflict  of  testimony,  the  court  will  not  aid  the  plaintiff.  The 
affirmative  is  upon  him,  and  he  must  show  what  statement  he 
made,  and  what  the  agreement  was.  The  fact  that  the  state- 
ment is  not  true,  and  the  presumption  that  he  would  not  make 
a  false  statement,  the  effect  of  which  would  be  to  invalidate 
the  policy,  are  not  enough.  Where  the  court  is  called  upon 
to  reform  a  contract  on  account  of  mistake,  it  must  appear 
that  the  mistake  was  mutual,  and  this  by  the  most  clear  and 
distinct  evidence,  free  from  all  reasonable  doubt.^   Or,  again,  a 

1  Holmes  et  al.  v.  Charlestown  Mut.  Fire  Ins.  Co.,  10  Met.  (Mass.)  211;  Bar- 
rett et  als.  V.  Union  Mut.  Fire  Ins.  Co.,  7  Cush.  (Mass.)  175. 

2  Wilson  V.  Conway  Mut.  Fire  Ins.  Co.,  4  R.  I.  141.  And  see  ante,  §§  143, 
144,  498  et  seq. 

3  Oliver  v.  Com.  Mut.  Mar.  Ins.  Co.,  2  Curtis  (C.  Ct.  U.  S.),  277 ;  Phoenix  Lis. 
Co.  V.  Hofflieimer,  46  Miss.  645 ;  Collett  ;;.  Morrison,  12  Eng.  L.  &  Eq.  171 ; 
Phoenix  Ins.  Co.  v.  Gurnie,  1  Paige  (N.  Y.),  278  ;  Longhurst  v.  Star  Ins.  Co.,  19 
Iowa,  364  ;  Neville  v.  Merch.  and  Manuf.  Ins.  Co.,  19  Ohio,  452  ;  New  York  Ice 
Co.  V.  North  ^Yest.  Ins.  Co.,  23  N.  Y.  357,  reversing  s.  c.  10  Abb.  Pr.  (N.  Y.) 
841 ;  Stout  V.  Fire  Ins.  Co.  of  New  Haven,  12  Iowa,  871 ;  Perry  v.  Newcastle 
Dist.  Mut.  Fire  Ins.  Co.,  8  Upper  Canada  (Q.  B.),  868. 

4  Ibid. 

5  Ibid. ;  Nat.  Ins.  Co.  v.  Crane,  16  Md.  260 ;  Suydam  v.  Columbus  Ins.  Co., 
18  Ohio,  459  ;  Cooper  v.  Farmers'  Mut.  Fire  Ins.  Co.,  50  Penn.  St.  299 ;  Tusson 
V.  Atlantic  Mut.  Ins.  Co.,  40  Mo.  33 ;  Parsons  v.  Bignold,  15  L.  J.  n.  s.  (Ch.)  379, 


I 


REMEDIES,  EVIDENCE,  PLEADING,  BANKRUPTCY.      711 

court  of  equity  will,  in  a  proper  case,  enjoin  the  insurers  fi-om 
setting  up  a  defence  which  would  be  fraudulent  or  grossly  in- 
equitable and  unjust. 1 

§  567.  Recovery  back  of  Premium. — If  a  policy  be  void  ab 
initio,  or  if  the  risk  never  attaches,  and  there  is  no  fraud  on 
the  part  of  the  insured,  and  the  contract  is  not  against  law  or 
good  morals,  he  may  recover  back  all  the  premiums  he  may 
have  paid,  either  in  an  action  for  them  alone,  or  on  a  count  for 
money  had  and  received,  coupled  with  a  count  on  the  policy 
in  an  action  for  the  loss.^  So  where  the  premium  is  applica- 
ble to  two  risks,  and  one  never  attaches,  the  premium  paid 
on  the  latter,  if  ascertainable,  may  be  recovered  back.^  So  if 
the  insured,  after  alienation,  has  the  option  to  surrender  his 
policy  and  take  up  his  deposit  note,  he  may  recover  back  so 
much  of  tlie  premiums  paid  as  may  not  be  required  for  the 
payment  of  losses  up  to  the  time  of  the  surrender.'^  And  such 
doubtless  would  be  the  case  where  premiums  are  paid  after 
forfeiture  of  the  policy,  in  the  belief  that  the  forfeiture  lias 
been  waived. °  But  if  the  policy  be  obtained  by  means  of  fraud- 
ulent misrepresentation,  for  that  reason,  though  tlie  risk  never 
attaches,  tiie  premium  cannot  be  recovered  back.*^  So  if  the 
policy  be  an  illegal  contract,  neither  party  can  have  any  rem- 
edy in  the  courts  against  the  other. ^  But  if  the  risk  once 
attaclies,  the  premium  is  not  apportionable.^     The  promise  of 

per  Lyndlmrst,  L.  C. ;  Van  Twyl  v.  West  Chester  Fire  Ins.  Co.,  N.  Y.  Ct.  of 
App.,  Alb.  L.  J.  Nov.  1,  1873;  Salms  v.  Rutgers  Fire  Ins.  Co.,  8  Bosw.  (N.  Y.) 
578. 

1  Woodbury  Sav.  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  518. 

2  Clark  i:  Manufrs.  Ins.  Co.,  2  Woodb.  &  Minot  (C.  Ct.  U.  S.),  472  ;  Mut.  Ass. 
Co.  V.  Mahon,  5  Call  (Va.),  517  ;  Tyrie  v.  Fletcher,  Cowp.  G68 ;  Fowler  v.  Scot- 
tish Eq.  Life  Ins.  Co.,  28  L.  J.  Ch.  225  ;  Rochester  Ins.  Co.  v.  Martin,  13  Minn. 
59;  Foster  v.  U.  S.  Ins.  Co.,  11  Pick.  (Mass.)  85. 

^  Bunyon,  Insurance,  95. 

*  Sullivan  v.  Massachusetts  Mut.  Fire  Ins.  Co.,  2  Mass.  318. 

5  McKee  i'.  Phoenix  Ins.  Co.,  28  Mo.  383. 

s  Friesmouth  v.  Agawam  Mut.  Lis.  Co.,  10  Cush.  (Mass.)  587;  Hoyt  v.  Gil- 
man,  8  Mass.  336. 

"  Browning  v.  Morris,  Cowp.  790';  Andree  v.  Fletcher,  2  T.  R.  161 ;  Howson 
V.  Hancock,  8  T.  R.  575 ;  Russell  v.  De  Grand,  15  Mass.  35. 

8  Bermon  v.  Woodbridge,  Doug.  781 ;  Fulton  v.  Lancaster  Ins.  Co.,  7  Oliio, 
325;  Merchants'  Ins.  Co.  v.  Clapp,  11  Pick.  (Mass.)  56. 


712  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

an  agent  of  a  company  at  the  time  of  the  delivery  of  the  pol- 
icy, which  was  objected  to  on  certain  grounds,  but  accepted 
and  acted  upon  by  the  payment  of  premiums,  that  the  com- 
pany would  make  it  all  right,  will  not  authorize  a  subsequent 
disaffirmance  of  the  contract  and  recovery  back  of  the  pre- 
mium by  the  insured. ^  But  in  such  case  the  insured  may 
compel  the  execution  and  delivery  of  a  valid  policy .^ 

§  .568.  Insured  against  Insurer  —  Suit  to  revive  Policy  declared 
forfeited,  or  to  recover  back  Premiums  paid.  —  Cohen  v.  New  York 
Mutual  Life  Insurance  Company  ^  presented  the  case  of  an 
insured,  who,  on  the  breaking  out  of  the  war,  was  compelled 
thereby  to  suspend  the  payment  of  the  annual  premiums  as 
required  by  the  policy,  but,  on  the  termination  of  the  war, 
tendered  the  whole  amount  due.  The  insurers  refusing  to 
accept,  the  insured  brought  suit  to  compel  acceptance  and  to 
have  the  policy  declared  valid,  or  to  compel  the  return  of  pre- 
miums theretofore  paid.  The  court  upheld  the  action  against 
the  objections  of  the  defence.  "  The  defendant  also  objects," 
said  the  court  by  Allen,  J.,  "to  the  right  of  the  plaintiff  to 
maintain  an  action  at  this  time,  there  having  been  no  loss, 
and  therefore  no  cause  of  action  under  the  policy.  The  alle- 
gations of  the  complaint  are,  that  the  plaintiff  has  tendered 
the  premiums  due,  and  that  the  defendant  refused  them,  and 
declared  the  said  policy  cancelled  and  forfeited.  This  is  a 
peculiar  case,  and  there  are  many  reasons,  unless  there  is  some 
rigid  rule  forbidding  the  court  to  entertain  jurisdiction,  why 
it  should  determine  the  matters  in  controversy  at  this  time. 
1.  There  is  an  actual  controversy  existing,  and  the  only  par- 
ties to  it  are  before  the  court.  There  is  not  the  reason  for 
declining  jurisdiction  that  presented  itself  in  some  of  the 
cases  cited  by  the  defendant,  as  in  Grove  v.  Bastard,*  that 
all  the  parties  in  interest  could  not  be  heard  and  their  rights 
determined.     2.  Present  rights  under  the  policy,  and  incident 

'  Mecke  v.  Life  Ins.  Co.  of  New  York,  8  Phila.  Rep.  6. 
.    2  Perry  v.  Newcastle  Dist.  Mut.  Fire  Ins.  Co.,  8  Upper  Canada  (Q.  B.),  363. 
And  see  also  ante,  §  544. 

3  50  N.  Y.  610,  overruling  the  same  case  cited  ante,  §  41,  upon  the  point  that  the 
failure  to  pay  the  premiums  as  they  fell  due  worked  a  forfeiture  ;  2  Ins.  L.  J.  426. 

4  2  Ph.  (Eng.  Ch.  22),  619. 


EEMEDIES,   EVIDENCE,   PLEADING,    BANKRUPTCY.  713 

to  it,  are  denied  the  plaintiff.  Her  policy  having  been  declared 
forfeited  and  cancelled,  she  is  excluded  from  the  privileges 
and  denied  the  rights  which  belong  to  her  as  a  member  of  the 
company.  She  is  entitled,  unless  the  claim  of  the  defendant 
is  well  grounded,  at  once  and  all  times  to  the  privileges  of 
other  policy-holders,  and  to  l)e  recognized  as  such.  3.  The 
plaintiff  is  entitled,  if  the  right  to  pay  the  premiums  and  con- 
tinue the  policy  still  exists,  to  pay  the  arrearages  and  stop  the 
accruing  of  interest,  and  to  make  the  future  payments  as  they 
accrue  and  become  due,  without  interest,  and  relieve  herself 
as  well  of  the  risk  and  burden  of  retaining  the  money  which 
of  right  belongs  to  the  defendant.  4.  The  contract  of  insur- 
ance where  the  policy  is  to  be  kept  alive  by  periodical  pay- 
ments is  peculiar ;  and  the  duty  to  pay,  and  obligation  to 
receive,  are  mutual.  It  is  somewhat  different  from  a  simple 
obligation  to  pay  money,  a  tender  to  perform  which  would  bar 
an  action  upon  it.  So,  too,  a  receipt  or  acknowledgment  of 
the  payment  is  customarily  given,  and  is  as  essential  as  evi- 
dence of  the  continuance  of  the  contract  as  is  the  original 
policy.  The  policy-holder  is  entitled  to  some  evidence  of  the 
performance  of  the  condition  on  his  part,  if,  as  is  believed, 
the  universal  usage  is  for  the  insurers  to  certify  in  some  way 
the  fact  that  the  annual  premiums  are  paid.  5.  It  is  fit  and 
proper  that  both  parties  to  the  contract  sliould  know  their 
rights.  Especially  is  it  important  to  the  plaintiff  and  the 
insured  that  if  this  policy  is  avoided  they  may  seek  insurance 
elsewhere,  and  if  valid,  that  they  may  perform  the  conditions 
of  the  policy.  In  ordinary  cases  courts  will  not,  in  advance 
of  any  present  duty,  obligation,  or  default,  declare  the  rights 
and  obligations  of  suitors ;  they  will  do  it  where  peculiar  cir- 
cumstances render  it  necessary  to  the  preservation  of  right. 
It  was  done  in  Baylies  v.  Payson."  ^  In  McKee  v.  Phoenix 
Insurance  Company,^  where  a  wife  insured  the  life  of  her  hus- 
band, and,  after  making  several  payments,  obtained  a  divorce, 
but  continued  to  pay  the  annual  premiums  after  the  divorce, 
until  the  company  refused  to  receive  them,  on  the  ground  that 
she  no  longer  had  an  insurable  interest,  it  was  held  that  the 
1  5  Allen,  473.  2  28  Mo.  383. 


714  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

refusal  was  wrongful,  and  the  insured  might,  if  she  chose,  treat 
the  contract  as  at  an  end,  and  recover  back  all  the  premiums 
she  had  paid.  In  Girdlestone  v.  North  British  Mercantile  In- 
surance Company,  a  bill  was  brought  to  compel  the  insurers 
to  rehistate  the  insured,  in  a  policy  which  the  insurers  claimed 
had  lapsed  by  the  failure  of  the  insured  to  pay  his  premium. 
And  the  court,  in  aid  of  the  bill,  ordered  the  defendants  to  an- 
swer certain  interrogatories  relative  to  the  plaintiff's  case. 

§  569.  Recovery  back  of  Premium.  —  In  Leonard  v.  Wash- 
burn,i  an  agent  of  a.  foreign  insurance  company  took  the 
acceptance  of  the  applicant  for  the  premium  to  be  paid,  and 
agreed  to  procure  and  dehver  a  policy,  which  he  accordingly 
did,  ill  the  usual  form  of  policies  issued  by  the  office.  The 
terms  of  the  policy  proving  objectionable  to  the  applicant,  a 
modification  was  obtained,  but,  being  still  unsatisfactory,  the 
applicant  refused  to  accept  it,  and  demanded  a  return  of  his 
acceptance.  But  this  had  been  negotiated,  and  the  proceeds 
forwarded  to  the  company  on  the  receipt  of  the  policy.  The 
acts  of  tlie  agent  were  in  contravention  of  his  instructions  as 
to  the  receipt  of  the  premium ;  but  the  policy  had  been  issued 
under  such  circumstances  that  it  would  be  valid.  The  appli- 
cant paid  his  acceptance  at  maturity,  and  then  brought  suit 
against  the  agent  to  recover  the  amount.  But  it  was  held  that 
as  the  agent  had  done  all  he  had  agreed  to  do,  and  the  policy 
actually  issued  was  a  valid  one,  the  action  could  not  be  sus- 
tained. The  statute  prohibiting  foreign  insurance  companies 
from  recovering  premiums  or  assessments,  unless  they  have 
complied  with  certain  requirements  as  to  the  appointment  of 
agents,  —  non-compliance  with  which  was  the  case  here,  —  it 
was  also  held,  did  not  invalidate  the  policy,  nor  give  the  appli- 
cant a  right  to  recover  back  a  premium  actually  paid  for  a  valid 
policy. 

§  570.  Insured  against  Directors  —  Premiums  —  Loss.  —  Di- 
rectors and  others  making  or  permitting  false  statements  as  to 
the  condition  and  assets  of  an  insurance  company,  whereby  a 
party  is  induced  to  insure  in  a  worthless  company,  are  person- 
ally liable  to  him  in  an  action  at  law  for  the  deceit,-  although 

1  100  Mass.  251.  2  Salmon  v.  Richardson,  30  Conn.  3G0. 


REMEDIES,   EVIDENCE,  PLEADING,   BANKRUPTCY.  715 

no  actual  damage  has  been  sustained  beyond  the  payment  of 
the  premiums.^  "Where  directors  are  made  liable  if  they  do 
not  promptly  assess  to  pay  losses,  the  liability  will  be  strictly 
construed.  And  if  a  loss  be  settled  by  the  company  by  giving 
its  note,  a  failure  to  assess  to  pay  the  note  is  not  within  the 
liability.^ 

§  571.  Mutual  Insurance  —  Dividend.  —  "Where  a  dividend 
which  has  been  made  proves  to  be  incorrectly  computed,  the 
company  may  be  compelled,  at  the  suit  of  a  stockholder,  to 
readjust  and  correct  the  same.^ 

§  572.  Forfeiture  — Equitable  Adjustment.  —  "Where  a  policy 
becomes  forfeited  by  violation  of  its  terms,  a  clause  providing 
that  in  such  case  "  the  party  interested  shall  have  the  benefit 
of  such  equitable  adjustment  as  may  from  time  to  time  be  pro- 
vided by  the  board  of  directors,"  does  not  give  the  courts  the 
right  to  compel  an  adjustment,  unless,  perhaps,  the  directors, 
having  established  general  rules  upon  the  sulyect,  might  be 
held  to  abide  by  these  rules  in  the  particular  case.* 

§  573.  Insurers  against  Insured  —  Policy  obtained  by  Fraud. — 
Equity  will  also  interfere  to  compel  the  surrender  of  a  policy 
wrongfully  obtained  or  delivered  under  a  mistake  of  the  facts, 
induced  by  the  misrepresentation  or  concealment  of  the  as- 
sured. So  it  was  decreed  in  a  recent  case,°  even  when  the 
policy  had  been  Assigned  for  value,  without  notice  of  the  con- 
cealment. The  insured  had  made  his  proposal,  which,  after 
the  usual  examination,  was  accepted,  and  he  was  duly  notified 
of  the  acceptance.  He  was  at  the  same  time  notified  that 
until  payment  of  the  premium  the  company  incurred  no  risk, 
and  that  any  alteration  in  the  mean  time  in  his  health  would 
render  the  policy  invalid,  unless  disclosed  to  the  insurers  be- 
fore the  actual  receipt  of  the  premium.  After  this  notice, 
and  before  payment  of  the  premium,  the  insured  was  told 
by   a   special   physician,   whom   he   travelled   a   considerable 

1  Pontifex  v.  Bignold,  3  M.  &  G.  42 ;  Tebbetts  v.  Hamilton  Mut.  Ins.  Co.,  3 
Allen  (Mass.),  569. 

2  Ante,  §  -564. 

3  Luling  V.  Atlantic  Mut.  Ins.  Co.,  4-5  Barb.  (N.  Y.)  -510. 

1  Nightingale  r.  State  Mut.  Life  Ins.  Co.  of  Worcester,  5  R.  I.  38. 
5  The  Britisli  Eq.  Ass.  Co.  v.  The  Great  Western  Railway  Co.,  20  L.  T.  n.  s. 
422. 


716  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC. 

distance  to  consult,  that  he  was  dangerously  ill,  his  ordinary 
medical  attendant,  however,  advising  him  that  he  considered 
the  appearances,  upon  which  the  physician  first  consulted 
predicated  his  opinion,  as  of  a  temporary  character  only. 
After  all  these  facts  had  transpired,  the  assured  forwarded  his 
check  for  the  amount  of  the  premium,  making  no  mention  of 
the  facts  about  his  health,  but  leaving  this  question  to  stand 
upon  his  original  answers  that  he  was  well,  and  had  always 
been  well,  and  could  not  recollect  that  he  ever  had  any  illness, 
and  received  his  policy.  But  the  court,  in  a  bill  in  equity, 
brought  by  the  insurers  against  the  assignee  to  compel  him  to 
deliver  up  to  them  the  policy,  decreed  for  the  complainant,  on 
the  ground  that  the  policy  was  void,  both  because  of  the  sup- 
pression of  the  facts  transpiring  after  notice  of  the  acceptance 
of  the  proposal,  and  because  the  answers  contained  in  the  pol- 
icy, as  to  the  health  of  the  insured,  were  not  true,  as  of  the 
date  when  the  premium  was  paid  and  the  policy  issued.^  If  a 
policy  of  insurance  be  obtained  by  fraud,  and  with  the  intent  to 
defraud,  whicli  gives  an  apparent  cause  of  action  to  the  holder 
against  the  company,  the  court,  on  a  bill  in  equity,  will  order 
the  policy  to  be  delivered  up  and  cancelled  ;  ^  but  will  not 
interfere  where  there  is  nothing  to  show  that  the  fraud  may 
not  be  set  up  in  defence  as  well,  as  completely  at  law  as  in 
equity.^ 

§  574.  Right  to  cancel  Policy  strictly  construed.  —  This  right 
can  only  be  exercised  within  the  limits  of  good  faith.  A  substan- 
tial change  in  the  circumstances  increasing  the  risk  is  the  usual 
and  sufficient  ground  on  the  part  of  the  insurers.  But  they  can- 
not avail  themselves  of  such  a  right  in  the  face  of  a  fire-  actually 
threatening  the  destruction  of  the  property  insured  ;  because, 

1  This  was  in  affirmation  of  the  judgment  of  Malins,  V.  C,  in  the  same  case, 
19  Law  Times,  n.  s.  476.  Upon  the  question  of  jurisdiction,  the  following  cases 
were  cited :  Slim  v.  Croucher,  1  De  G.,  F.  &  J.  518 ;  Jones  v.  The  Provincial 
Ins.  Co.,  3  C.  B.  N.  s.  65 ;  Fowkes  v.  The  Manchester  and  London  Life  Assur. 
Ass.,  3  Best  &  Sim.  917  ;  Traill  v.  Baring,  4  Giff.  485 ;  Thornton  v.  Knight,  16 
Sim.  509  ;  The  Prince  of  Wales  Ass.  Co.  v.  Palmer,  25  Beav.  605. 

2  Commercial  Ins.  Co.  v.  McLoon,  14  Allen  (Mass.),  351 ;  French  v.  Connelly, 
2  Anstruther,  454. 

3  Phoenix  Ins.  Co.  v.  Bailey,  17  Wall.  (U.  S.)  616 ;  Home  Ins.  Co.  v.  Stanch- 
field,  C.  Ct.  U.  S  ,  Dist.  of  Minn  ,  2  Abb.  C.  C.  6. 


REMEDIES,    EVIDENCE,   PLEADING,   BANKRUPTCY.  717 

if  this  could  be  done,  a  policy  of  insurance  would  be  in  many 
cases  worthless,  since  it  would  be  possible,  in  every  case  where 
fire  approaches  from  without,  to  give  notice  of  cancellation,  and 
thus  escape  all  risk  under  the  policy.^  And  the  right  can  only 
be  exercised  by  a  strict  compliance  with  the  terms  and  condi- 
tions upon  which  it  is  admissible.  And  if  refunding  the  pre- 
mium, or  a  portion  of  it,  be  one  of  the  terms,  there  must  be  a 
payment  or  tender.  An  agreement  with  the  insured  that  he 
shall  return  the  policy  to  be  cancelled,  and  receive  his  pre- 
mium, is  no  cancellation. 2 

§  575.  Insurers  against  Insured  —  Recovery  back  of  Loss  paid. 
—  If  a  loss  be  paid  under  a  mistake  of  facts  pertaining  to  the 
loss,  as  distinguished  from  facts  inducing  the  contract,  which, 
if  known  to  the  insurers,  would  have  enabled  them  to  success- 
fully resist  the  claim,  they  may  recover  back  the  amount  so 
paid.^  In  Columbus  Insurance  Company  v.  Walsh,'*  where  a 
loss  had  been  paid  in  ignorance  of  the  fact  that  the  policy  had 
become  void  by  subsequent  insurance,  obtained  without  assent, 
and  contrary  to  the  provisions  of  the  policy,  the  insurers  were 
allowed  to  recover  it  back.  And  it  has  been  said  that  this  is 
so  whether  the  company  so  paying  has  the  means  of  knowing 
the  facts  or  not.^  But  it  was  recently  held  in  New  York,  in  a 
case  which  was  very  elaborately  argued  and  well  considered, 
that  insurers  cannot  be  permitted,  in  the  absence  of  fraud  upon 
them,  to  reopen  and  try  a  case,  upon  a  ground  which  might 
have  been  presented  and  tried  when  the  claim  was  made 
under  the  policy  for  the  loss ;  as,  for  instance,  that  the  policy 
was  void  for  misrepresentation,  of  which  they  were  aware  at 
the  time  of  payment  of  the  loss,  or  might  have  been  upon  due 
inquiry.^ 

1  Home  Ins.  Co.  v.  Heck,  Supreme  Ct.  111.,  2  Ins.  L.  J.  437. 

2  Hathorn  v.  Gerraania  Ins.  Co.,  55  Barb.  (N.  Y.)  28.  See  also  mite,  §§  67-69, 
on  the  subject  of  the  right  of  cancellation. 

'  Mut.  Life  Ins.  Co.  v.  Wager,  27  Barb.  (N.  Y.)  354;  Hartford  Live  Stock 
Ins.  Co.  V.  Matthews,  102  Mass.  221 ;  Berkshire  Mut.  Fire  Ins.  Co.  v.  Sturgis,  13 
Gray  (Mass.),  177  ;  McConnell  v.  Delaware  Ins.  Co.,  18  III.  228. 

*  18  Mo.  229. 

5  De  Hahn  v.  Hartley,  1  T.  R.  343 ;  Kelley  v.  Solari,  9  M.  &  W.  55. 

6  Mut.  Life  Ins.  Co.  v.  Wager,  27  Barb.  (X.  Y.)  354. 


718  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

■  §  576,  Remedy  —  Agents  against  Insurers  —  Commissions.  — 
All  insurance  agent  who  has  voluntarily  left  the  service  has 
no  claim  to  subsequently  accruing  commission  on  policies  he 
obtained.^  And  though,  in  the  case  last  cited,  the  jury  were 
instructed  that  if  the  agent  was  dismissed  he  would  have  a 
claim,  yet  the  Supreme  Court  of  the  United  States  has  decided 
that  the  fact  that  the  agent  leaves  the  service  of  the  company 
involuntarily  does  not  give  him  a  claim.^ 

§  577.  Remedies  by  and  against  Foreign  Insurance  Compa- 
nies. —  Where  foreign  insurance  companies  are  prohibited  by 
statute  from  entering  into  contracts  of  insurance  until  they  have 
complied  with  certain  conditions,  it  is  generally  held  that  they 
cannot  recover  on  their  premium  notes  until  they  have  so  com- 
plied.^ But  a  compliance  after  the  negotiation  of  the  contract 
will  permit  a  recovery."^  And  a  subscription  to  stock,  payable 
in  instalments,  is  also  recoverable.  The  prohibition  does  not 
apply  to  stock  notes  given  as  part  of  the  capital  in  organizing 
the  company ;  nor  is  the  taking  of  such  notes  "  doing  business," 
within  the  meaning  of  a  statute  which  prohibits  foreign  insur- 
ance companies  from  doing  business  except  under  certain  condi- 
tions. In  Missouri,  it  is  held  that  recovery  may  be  had  without 
such  compliance.^  In  some  of  the  States,  policies  issued  under 
such  circumstances  are  held  to  be  valid  ;^  in  Indiana,  they  are 
held  to  be  invalid.'  In  Haverhill  Insurance  Company  v.  Pres- 
cott,^  the  suit  was  on  a  note,  and  the  question  of  the  validity 
of  the  policy  did  not  arise. 

1  Shaw  V.  Home  Life  Ins.  Co.,  N.  Y.  Ct.  of  App.,  49  N.  Y.  681 ;  Myers  v. 
Knickerbocker  Life  Ins.  Co.,  Cuyahoga  C.  P.  (Penn.),  2  Bigelow's  Digest,  149. 

2  Partridge  v.  Phoenix  Mut.  Life  Ins.  Co.,  15  Wall.  (U.  S  )  458. 

3  .Jones  V.  Smith,  3  Gray  (Mass.),  500  ;  Wash  County  Mut.  Ins.  Co.  r.  Davies, 
6  Gray  (Mass.),  376  ;  Same  v.  Hastings,  2  Allen  (Mass.),  398  ;  General  Mut.  Ins. 
Co.  V.  Philips,  13  Gray  (Mass.),  90;  iEtna  Ins.  Co.  v.  Harvey,  11  Wis.  394;  Wil- 
liams V.  Cheney,  8  Gray  (Mass  ),  206  ;  Cincinnati  Mut.  Health  Ins.  Co.  v.  Rosen- 
thal, 55  111.  85;  Ford  r.  Buckeye  State  Ins.  Co.,  6  Bush  (Ky.),  135. 

*  National  Mut.  Fire  Ins.  Co.  v.  Purcell,  10  Allen  (Mass.),  231. 

5  Clarke  v.  Middleton,  19  Mo.  53  ;  Columbus  Ins.  Co.  v.  Walsh,  18  Mo.  229. 

*>  Columbus  Ins.  Co.  v.  Walsh,  uU  supra;  Leonard  v.  Washburn,  100  Mass. 
251  ;  Hartford  Live  Stock  Ins.  Co.  i-.  Matthews,  102  Mass.  221. 

1  Rising  Sun  Ins.  Co.  v.  Slaugliter,  20  Ind.  520.  But  see  Hoffman  v.  Banks 
in  the  same  State,  2  Ins.  L.  J.  348. 

8  42  N.  H.  547. 


REMEDIES,   EVIDENCE,   PLEADING,   BANKRUPTCY.  719 

§  578.  Foreign  Insurance  Company  —  Right  to  remove  Action. 
—  If  a  foreign  insurance  company  submits  itself  to  the  exclu- 
sive jurisdiction  of  the  courts  of  a  State,  as  a  condition  of  the 
privilege  of  doing  business  in  that  State,  it  waives  any  right  it 
may  possess  as  a  quasi  citizen  of  another  State  to  remove  to 
the  courts  of  the  United  States  an  action  commenced  in  the 
courts  of  such  State,  upon  a  cause  of  action  accruing  there. ^ 

§  570.  Evidence.  —  The  general  rules  of  evidence,  as  laid 
down  in  the  special  treatises  on  that  subject,  are  applicable 
to  the  contract  of  insura)ice  as  well  as  to  otlier  contracts.  It 
is  only  to  some  special  applications  that  we  shall  refer. 

§  580.  Evidence  —  Experts.  —  In  Joyce  V.  Maine  Insurance 
Company,^  it  was  decided  that  an  expert  in  insurance  matters 
could  not  be  permitted  to  give  his  opinion  whether  "  the  rate 
of  premium  for  insurance  would  be  increased  by  vacating  a 
dwelling-house."  The  condition,  made  part  of  the  contract, 
made  the  insurance  void  and  of  no  effect  if  the  risk  should 
be  increased  by  any  means  whatever  within  the  control  of  the 
insured.  It  was  said  not  to  be  a  question  of  science  or  skill. 
So  it  has  been  held,  and  for  a  like  reason,  that,  under  substan- 
tially similar  terms  of  the  contract  insurance,  experts  could  not 
be  permitted  to  testify  wiiether  "leaving  a  dwelling-house  unoc- 
cupied for  a  considerable  length  of  time "  was  an  increase 
of  risk.^  And  generally  their  opinions  as  to  the  materiality  of 
certain  facts  to  the  risk  are  incompetent.*  But  in  Schenck 
V.  Mercer  County  Mutual  Insurance  Company,^  a  fireman  was 
allowed  to  testify  whether  the  risk  of  fire  was  increased  by  cer- 
tain alterations ;  and  it  was  decided  in  the  case  last  cited  from 

1  Glens  Falls  Ins.  Co.  v.  Judge  of  Jackson  Circuit  Court,  21  Mich.  577.  The 
statute  (Laws  of  Mich.  1869,  p.  243)  provided  that  no  insurance  company  should 
transact  business  in  that  State  without  first  appointing  an  agent  or  attorney  "  on 
whom  process  of  law  can  be  served,  which  process  shall  issue  from  the  courts  of 
this  State,  and  such  courts  shall  have  exclusive  jurisdiction  of  all  cases  arising 
under  this  act."     See  also  Stevens  v.  Phoenix  Ins.  Co.,  2i  How.  (N.  Y.)  517. 

•^  45  Me.  168. 

3  Luce  V.  Dorchester  Mut.  Fire  Ins.  Co.,  105  Mass.  298. 

*  Jefferson  Ins.  Co.  v.  Cothcal,  7  Wend.  (N.  Y.)  72;  Hartford  Prot.  Ins.  Co. 
I'.  Harmer,  2  Ohio  St.  452.  Contra,  Kern  v.  South  St.  Louis  Alut.  Fire  Ins.  Co., 
40  Mo.  19. 

5  4  Zab.  (N.  J.)  447. 


720  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

Massachusetts  that  the  question,  whether  such  leaving  a  dwell- 
ing-house unoccupied  is  material  to  the  risk,  might  be  tested 
by  the  question  whether  underwriters  generally  would  in  such 
case  charge  a  higher  premium.^  The  first  question  was  said 
to  be  as  to  a  subject  within  common  knowledge,  as  to  which 
opinions  were  inadmissible,  while  the  latter  related  to  a  matter 
which  was  within  the  peculiar  knowledge  of  persons  versed  in 
the  business  of  insurance.  The  distinction,  though  fine,  seems 
to  be  sound  ;  it  is  between  an  inadmissible  opinion  and  an  ad- 
missible fact.  The  inference  of  increased  risk,  based  upon  the 
fact  known  to  him  of  a  higher  rate  of  premium  in  such  cases, 
cannot  be  stated  by  the  witness  ;  but  he  may  state  the  fact, 
which  is  to  him  a  matter  of  special  knowledge,  and  from  this 
the  jury  may  draw  the  inference  of  increased  risk.  Tiiat  per- 
sons having  this  peculiar  knowledge  may  testify  thereto  is  a 
well-settled  rule  of  evidence.^ 

§  581.  Evidence  —  Experts.  —  In  life  insurance,  physicians 
may  give  their  opinion  as  to  the  causes  of  disease,  and  whether 
a  particular  disease  or  infirmity  or  injury  or  habit  is  the  cause 
of  death,  or  tends  to  shorten  life  ;  ^  but  neither  they  nor  experts 
in  insurance  can  be  allowed  to  give  their  opinion  upon  the  ques- 
tion whether  the  applicant  was  an  insurable  subject,  nor  whether 
certain  facts  render  the  subject  uninsurable.^ 

§  582.  Evidence  —  Custom.  —  Evidence  of  a  particular  cus- 
tom of  the  insurers,  not  brought  home  to  the  knowledge 
of  the  insured,  is  inadmissible.^  But  evidence  of  a  general 
custom  of  insurance  companies,  as,  for  instance,  to  charge  a 
higher  rate   of    premium    on  unoccupied  dwelling-houses,  is 

1  And  see  also  Merriam  v.  Middlesex  Ins.  Co.,  21  Pick.  162;  Daniels  v.  Hud- 
son River  Fire  Ins.  Co.,  12  Cusli.  (Mass.)  416. 

2  Webber  v.  Eastern  Railroad  Co.,  2  Met.  (Mass.)  147;  Mulry  v.  Mohawk 
Valley  Ins.  Co.,  5  Gray  (Mass.),  541 ;  Hawes  v.  New  England  Ins.  Co.,  2  Curtis 
(C.  Ct.),  229;  Lyman  v.  State  Ins.  Co.,  14  Allen  (Mass.),  329  ;  Hartman  v.  Key- 
stone Ins.  Co.,  21  Penn.  St.  466 ;  Quin  v.  National  Ass.  Co.,  Jones  &  Cary 
(Irish),  316. 

3  Miller  v.  Mut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216. 

*  Rawles  v.  Am.  Life  Ins.  Co.,  36  Barb.  357  ;  s.  c.  affirmed,  27  N.  Y.  282. 

5  Adams  v.  Otterbach,  15  How.  (U.  S.)  539 ;  Carter  v.  Boehm,  3  Burr.  1905; 
Hartford  Prot.  Ins.  Co.  v.  Harmer,  2  Ohio  St.  452 ;  Luce  v.  Dorchester  Mut.  Fire 
Ins.  Co.,  105  Mass.  298;  Taylor  v.  ./Etna  Life  Ins.  Co.,  13  Gray  (Mass.),  434. 


EEMEDIES,   EVIDENCE,   PLEADING,   BANKRUPTCY.  721 

admissible,  on  the  issue  whether  there  is  an  increase  of  risk 
in  a  case  where  a  dwelling-house  occupied  at  the  time  of  in- 
surance was  afterwards  left  unoccupied. ^  So  of  a  general 
custom  of  insurance  companies  to  give  thirty  days'  grace  for 
the  payment  of  the  annual  premiums.'^  So  the  usage  of  life 
insurance  companies  is  competent  evidence,  in  a  question  be- 
tween them  and  their  agents  as  to  the  nature  and  amount  of 
interest  the  latter  may  have  in  the  policies  they  procure.'^ 

§  583,  Evidence  —  Wilful  Burning.  —  Where  the  defence  to 
an  action  on  a  policy  of  insurance  involves  the  proof  of  a 
crime,  as  the  wilful  setting  fire  to  the  premises,  or  the  design- 
edly casting  away  a  vessel,  the  authorities  differ  upon  the 
question  of  proof  whether  the  rule  in  civil  or  criminal  cases 
shall  be  the  guide.  In  Thurtell  v.  Beaumont,'*  the  jury  were 
instructed  that  they  must  be  as  clearly  satisfied  of  the  fact  as 
if  the  insured  were  on  trial  on  the  criminal  charge.  And  this 
rule  was  adopted  in  the  very  recent  case  of  Shultz  v.  Pacific 
Insurance  Company.^  And  so  it  has  been  held  in  Maine," 
on  the  authority  of  Thurtell  v.  Beaumont,  and  apparently  in 
Illinois,^  though  the  point  was  not  much  considered.  But 
reason  and  the  weight  of  authority  are  the  other  way.^ 

§  68-1:.  Evidence  —  Issue  of  Policy  —  Signing  Application  — 
Receipt  of  Premium  —  Organization  of  Company.  —  The  recital 
in  a  premium  note  that  a  policy  has  issued,  is  prima  facie  evi- 
dence of  that  fact  against  the  maker  of  the  note.^  So  the 
statement  of  the  secretary  that  a  policy  has  issued,  in  an  action 
of  covenant  on  a  lost  policy,  is  sufficient  evidence  that  the  pol- 

1  Luce  V.  Dorchester  Mut.  Fire  Ins.  Co.,  105  Mass.  298. 

^  Helme  v.  Phila.  Life  Ins.  Co.,  61  Penn.  107.  But  see  contra,  Mut.  Ben. 
Life  Ins.  Co.  v.  Ruse,  8  Geo.  584. 

3  P:nsworth  v.  New  York  Life  Ins.  Co.  (C.  Ct.  U.  S.),  North  Dist.  Oiiio,  7  Am. 
Law  Reg.  n.  s.  332. 

*  1  Bing.  339. 

5  Sup.  Ct.  of  Florida,  2  Ins.  L.  J.  495. 

«  Butman  v.  Hobbs,  35  Me.  227. 

7  McConnell  v.  Delaware  Ins.  Co.,  18  III.  228. 

8  Schmedt  v.  N.  Y.  Union  Mut.  Fire  Ins.  Co.,  1  Gray  (Mass.),  529;  Washing- 
ton Ins.  Co.  V.  Wilson,  7  Wis.  169 ;  Wightman  v.  West.  Mar.  and  Fire  Ins.  Co., 
8  Rob.  (La.)  442;  Hottman  v.  Same,  1  La.  An.  216;  Scott  v.  Home  Ins.  Co.,  1 
Dillon  (C.  Ct.  U.  S.),  105. 

9  New  England  Mut.  Fire  Ins.  Co.  v.  Belknap,  9  Cush.  (Mass.),  140. 

46 


722  •  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

icy  was  issued. ^  The  court  were  divided  in  Foster  v.  Mentor 
Life  Assurance  Company,^  on  the  question  whether  tlie  insured, 
having  accepted  a  policy  reciting  that  he  had  signed  the  decla- 
ration, might  show  to  the  contrary,  two  judges  thinking  the 
jury  should  decide  the  question  of  signature,  and  two  holding 
that  the  jury  should  be  instructed  that  the  recital  was  prima 
facie  proof  of  the  signature.  And  by  the  weight  of  authority 
the  recital  in  a  policy  of  the  receipt  of  the  premium  is  prima 
facie,  and  only  j^rima  facie,  evidence  of  the  fact.^  But  the  con- 
trary seems  to  be  the  rule  -in  Illinois.^  The  production  of  a 
premium  note,  signed  by  the  insured,  is  also  prima  facie  evi- 
dence, as  against  him,  that  the  company  is  duly  organized.^ 

§  582.  Evidence  —  Chronic  Disease  —  State  of  Health.  —  A 
post  mortem  examination,  fifteen  hours  after  death,  in  New 
Orleans,  in  October,  developing  an  inflammation  and  ulcera- 
tion of  the  intestines,  which  in  the  opinion  of  the  physicians 
had  been  of  long  standing,  is  not  sufficient  evidence  of  chronic 
disease  existing  in  June  of  the  same  year,  in  a  climate  where 
fifteen  hours  of  mortification  may  have  made  great  ravages, 
especially  if  at  that  time  he  appeared  in  perfect  health.^  In 
Schaible  v.  Washington  Life  Insurance  Company,  a  photo- 
graph of  the  deceased,  taken  a  short  time  before  the  insur- 
ance was  effected,  was  permitted  to  go  to  the  jury  as  evidence 
of  the  physical  appearance  and  condition  of  the  assured  at  that 
time." 

§683.  Evidence  —  Effect  of  Misrepresentation.  —  In  Wash- 
ington Life  Insurance  Company  v.  Harvey,  the  president  of 
the  insurance  company  which  issued  the  policy  was  not  per- 

1  Sussex  County  Mut.  Ins.  Co.  v.  TV^oodruff,  2  Dutch.  (N.  J.)  542;  Harding 
V.  Carter,  Park,  Ins.  5. 

2  3  E.  &  B.  48 ;  s.  c.  24  Eng.  L.  &  Eq.  103. 

3  Sheldon  v.  Atlantic  Fire  and  Mar.  Ins.  Co.,  26  N.  Y.  460  ;  Ins.  Co.  of  Penn. 
V.  Smith,  3  Whart.  (Penn.)  520;  Baker  v.  Union  Mut.  Life  Ins.  Co.,  43  N.  Y. 
283,  reversing  s.  c.  6  Robt.  393  ;  Bergson  v.  Builders'  Ins.  Co.,  38  Cal.  541 ;  Rob- 
ert V.  New  England  Mut.  Life  Ins.  Co.,  2  Disney  (Ohio),  106  ;  Pitt  v.  Berkshire 
Life  Ins.  Co.,  100  Mass.  500 ;  Troy  Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  20. 

4  Prov.  Life  Ins.  Co.  v.  Fennell,  49  111.  180. 

5  WiUiams  v.  Cheney,  3  Gray  (Mass.),  215. 

6  Murphy  v.  Mut.  Ben.  Life  Ins.  Co.,  6  La.  An.  518. 

7  Leg.  Int.  vol.  v.  p.  232,  July  18,  1873. 


REMEDIES,    EVIDENCE,   PLEADING,   BANKRUPTCY.  723 

mitted  to  testify  that  the  policy  was  issued  in  the  belief  that 
the  statements  in  the  application  were  true,  and  that  no  policy 
would  have  been  issued  had  the  company  had  any  reason  to 
believe  that  the  representations  and  answers  were  in  any 
respect  false.  It  is  to  be  presumed  that  a  policy  is  issued 
upon  the  facts  stated  in  the  application  ;  and  how  far  false 
statements,  if  any  there  are  in  the  application,  affect  the  valid- 
ity of  the  contract,  is  a  question  of  law  for  the  court,  and  not 
one  to  be  settled  by  the  opinion  or  judgment  of  either  party. 

§584.  Evidence  —  Intentional  Suicide.  —  A  man's  religious 
belief  or  unbelief  affords  no  ground  upon  which  to  infer 
whether  he  intentionally  commits  suicide  or  not,  and  cannot 
be  put  in  evidence. ^ 

§  585.  Pleading.  — Tiie  rules  of  pleading,  as  well  as  of  evi- 
dence, are  the  same  in  their  application  to  the  contract  of 
insurance  as  to  other  contracts,  though  these  are  to  a  greater 
extent  modified  by  local  laws.  These  modifications  it  is  not 
proposed  to  state.  Nor  is  it  proposed  to  consider  the  subject 
of  pleading  generally,  but  only  to  state  some  general  rules  of 
such  frequent  occurrence  in  practice  as  to  make  a  statement 
here  specially  convenient. 

§  586.  General  Statement  of  Plaintiff's  Case.  —  In  declaring 
upon  a  contract  of  insurance,  it,  or  so  much  of  it  as  will  show 
a  right  to  recover,  must  be  set  out  in  terms  or  in  substance. 
The  rule  that  obtains  in  declaring  upon  a  penal  bond  at  com- 
mon law,  where  the  plaintiff  may  simply  count  on  the  bond, 
and  leave  the  defendant  to  set  up  the  condition  and  plead  per- 
formance, does  not  obtain  here.  But,  as  in  cases  of  insurance, 
the  money  is  only  recoverable  on  the  performance  of  certain 
acts  by  tiie  insured,  and  the  existence  of  certain  facts,  the 
performance  of  these  acts  and  the  existence  of  these  facts 
must  be  alleged.  But  this  applies  only  to  conditions  and  facts 
precedent.  Conditions  subsequent  to  the  right  of  recovery,  and 
all  acts  to  be  done  by  the  insurers  in  discharge  of  their  lia- 
bility may  be  omitted  from  the  declaration,  and  left  for  the 
insurers  to  set  up  in  defence.^     And  upon  the  same  principle 

I  Gibson  v.  Am.  Mut.  Life  Ins.  Co.,  37  N.  Y.  80. 

^  Rockford  Ins.  Co.  v.  Nelson,  Sup.  Ct.  111.,  2  Ins.  L.  J.  341 ;  Campbell  v.  Am. 


724  .  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC. 

it  has  been  held  that  a  covenant  that  the  capital  stock  and 
funds  of  the  company  should  be  subject  and  liable  to  make 
good,  and  should  be  applied  to  pay  and  make  good,  all  such 
losses  and  damages  as  might  happen  to  the  subject-matter  of 
insurance  within  a  certain  amount,  and  that  the  capital  stock 
and  funds  of  the  company  should  alone  be  liable,  is  an  abso- 
lute covenant  on  the  part  of  the  company  to  pay  the  sum 
insured  when  a  loss  should, happen  ;  and  it  is  not  necessary  to 
aver  in  the  declaration  the  sufficiency  of  the  capital  stock 
and  funds,  that  being  a  matter  to  be  pleaded  by  the  insurers, 
if  a  defence  at  all.^ 

§  587.  Special  Allegations  —  Interest  —  Survivorship  —  Value 
—  Compliance  •with  Statute  Requirements  —  Negative  Allega- 
tions.—  The  plaintiff  must  aver  an  insurable  interest,  or,  if  he 
has  not  that,  the  grounds  upon  which  he  rests  his  right  to 
sue.^  In  Gilbert  v.  National  Insurance  Company ,3  it  was  held 
that  as  the  statement  in  the  policy  that  the  insured  premises 
were  the  property  of  the  plaintiff  did  not  amount  to  a  war- 
ranty, the  declaration  need  not  aver  such  ownership.*  Where 
the  purchaser  or  assignee  of  the  "  subject  insured  "  is  by  the 
terms  of  the  policy  entitled  to  sue,  his  declaration  should  show 
that  he  has  the  whole  interest.  To  allege  that  he  has  an 
interest  is  not  sufficient.^  An  allegation  by  the  plaintiff  that 
"  his  "  store  was  consumed  is  a  sufficient  allegation  of  owner- 
ship after  verdict ;  and  an  omission  to  allege  the  value  of  the 
property  lost  cannot  be  objected  to  after  verdict ;  ^  otherwise 
on  demurrer.'^     An  allegation  that  the  defendant  "  insured  the 

Pop.  Life  Ins.  Co.,  4  Am.  Law  Times  (U.  S.  Court  Keports),  6;  s.  c.  1  Bige- 
low's  Life  and  Accident  lus.  Cases,  16  ;  Campbell  v.  New  England  Mut.  Life  Ins. 
Co.,  98  Mass.  381. 

i  Sunderland  Mar.  Ins.  Co.  v.  Kearney  et  al.,  6  Eng.  L.  &  Eq.  312. 

•i  Freeman  v.  Fulton  Ins.  Co.,  38  Barb.  (N.  Y.)  247. 

3  12  Irish  Law,  148. 

*  But  see  contra,  Illinois  Mut.  Fire  Ins.  Co.  v.  Marseilles  Manufacturing  Co., 
1  Gilm.  (III.)  236. 

5  Granger  v.  Howard  Ins.  Co.,  5  Wend.  (N.  Y.)  200. 

t>  Lane  v.  Maine  Mut.  Fire  Ins.  Co.,  12  Me.  44  ;  Ins.  Co.  v.  Seitz,  4  W.  &  S. 
(Penn.)  273;  New  Hampshire  Mut.  Fire  Ins.  Co.  v.  Walker,  10  Fost.  (N.  H.) 
324 ;  Howard  Fire  Ins.  Co.  v.  Cormick,  24  111.  455. 

^  Ibid. ;  Fowler  v.  New  York  Ind.  Ins.  Co.,  26  N.  Y.  422,  reversing  s.  c.  23 
Barb.  (N.  Y.)  143. 


REMEDIES,   EVIDENCE,   PLEADING,   BANKRUPTCY.  (  2o 

plaintiff  to  the  amount  of  three  thousand  dollars  on  ten  thou- 
sand bushels  of  oats,"  sufficiently  states  an  insurable  interest.^ 
The  plaintiff  need  not  allege  that  the  defendants  —  a  foreign 
insurance  company — have  complied  with  the  statutes  giving 
them  authority  to  transact  business  within  the  jurisdiction. ^ 
And  in  an  action  by  a  foreign  insurance  company,  non-com- 
pliance will  not  be  presumed,  but  must  be  set  up  in  defence.^ 
The  plaintiff  need  not  aver  the  truth  of  statements  contained 
in  the  application,"^  nor  the  performance  of  conditions  subse- 
quent,^  nor  negative  prohibited  acts,^  or  that  he  is  within  the 
excepted  risks. 

§  588.  Matters  in  Defence  —  Breach  of  "Warranty  —  Misrepre- 
sentation —  Other  Insurance  —  False  STvearing  —  Fraud.  —  Mat- 
ters in  defence  cannot  be  availed  of  unless  pleaded."  In  setting 
forth  the  grounds  of  defence  it  is  not  enough  merely  to  nega- 
tive the  truth  of  a  declaration  in  the  application  made  by 
the  insured.  The  particulars  in  which  its  untruthfulness 
consists  should  be  set  out  as  far  as  can  reasonably  be  done, 
that  the  plaintiff  may  have  some  notice  of  what  he  is  to  meet. 
Thus,  where  the  plaintiff  in  his  application  stated  that  he  had 
not  had  symptoms  of  gout,  "  or  any  other  complaint,"  the  plea 
that  he  had  had  symptoms  of  disease  of  the  stomach  was  held 
insufficient,  as  too  vague ;  and  it  was  said  that  while  the  court 
would  not  tie  the  defendant  down  very  strictly  at  the  trial,  he 
must  honestly  do  his  best  to  furnish  particulars.  The  partic- 
ular symptoms  should  be  stated.®  So  where  misrepresentation 
of  title  or  breach  of  warranty  is  alleged,  facts  from  which  the 

1  Rising  Sun  Ins.  Co.  v.  Slaughter,  20  Ind.  520. 

2  Fitzsimmons  v.  City  Fire  Ins.  Co.,  18  Wis.  234. 

3  Williams  v.  Cheney,  3  Gray  (Mass.),  215. 

.    *  Herron  v.  Peoria  Mar.  and  Fire  Ins.  Co..  28  111.  255. 

5  Ketchutn  v.  Prot.  Ins.  Co.,  1  Allen  (N.  B.),  136. 

6  Hunt  V.  Hudson  River  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  481 ; 
Troy  Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  20. 

^  Haskins  v.  Hamilton  Mut.  Ins.  Co.,  5  Gray  (Mass.),  432;  New  York  Cen- 
tral Ins.  Co.  V.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.)  468;  Sussex  County  Mut. 
Ins.  Co.  V.  WoodruflF,  2  Dutch.  (N.  J.)  541 ;  Phoenix  Ins.  Co.  v.  Lawrence,  4  Met. 
(Ky.)  9  ;  Cassacia  v.  Phoenix  Ins.  Co.,  28  Cal.  628  ;  Derendorf  v.  Beardsley,  23 
Barb.  (N.  Y.)  656. 

8  Marshall  v.  Emperor  Life  Ass.  Co.,  Law  Reports  (1  Q.  B.),  35. 


726  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC. 

court  can  see  that  there  is  misrepresentation  or  breach  of 
warranty  must  be  stated.^  So  a  plea  of  a  defective  fireplace 
should  show  in  what  the  defect  consisted,  and  that  it  was 
material  to  the  risk.^  A  plea  of  other  insurance  should  state 
the  particulars.^  If  fraud  is  alleged  in  defence,  it  should 
show  that  the  fraud  was  committed  by  the  plaintiff  or  some 
party  in  interest,*  and  in  what  particulars.^  A  plea  of  false 
swearing  in  a  statement  of  loss  must  show  where,  and  before 
whom,  the  oatii  was  taken,  and  in  what  particulars  it  is  false.^ 
§  689.  Bankruptcy  and  Insolvency  —  Conflict  of  Laws.  —  An 
insurance  company  is  a  "  business  or  commercial  corporation  " 
within  the  meaning  of  the  bankrupt  laws  of  the  United  States, 
and  if  it  commits  acts  of  bankruptcy,  may  be  declared  bank- 
rupt like  a  natural  person.''  This  case  gave  rise  to  an  interest- 
ing question  of  jurisdiction.  After  the  act  of  bankruptcy,  the 
company  was  declared  insolvent  under  the  insolvent  laws  of 
Massachusetts,  under  proceedings  iu  the  courts  of  that  State, 
enjoined  from  further  doing  business,  and  at  a  subsequent 
date  a  receiver  was  appointed,  and  the  corporation  itself  ad- 
judged and  decreed  to  be  dissolved.  On  a  petition  in  bank- 
ruptcy subsequently,  it  was  claimed  that  the  corporation  waS' 
defunct,  and  could  not  answer  or  be  dealt  with.  But  the  court 
held  that  the  insolvent  laws  of  Massachusetts  were  suspended, 
after  the  passage  of  the  bankrupt  law,  as  to  all  matters  to 
which  the  latter  applied,  and  therefore  the  proceedings  in  insol- 
vency in  the  courts  of  Massachusetts  were  ineffectual  and 
nugatory ;  and  that,  irrespective  of  those  statutes,  or  of  some 
other  statute  authority,  the  courts  of  Massachusetts  had  no 
more  right  to  annul  the  existence  of  the  corporation  than  they 

^  Ken.  and  Lou.  Mut.  Ins.  Co.  v.  Southard,  8  B.  Mon.  (Ky.)  634;  Merch.and 
Manuf.  JMut.  Ins.  Co.  v.  Wash.  Mut.  Ins.  Co.,  1  Handy  (Ohio),  408. 

2  Ibid. 

3  Ramsay  Woollen  Cloth  Manufacturing  Co.  v.  Mut.  Fire  Ins.  Co.,  11  Upper 
Canada  (Q.  B.),  516. 

*  Ferris  v.  North  American  Fire  Ins.  Co.,  1  Hill  (N.  Y.),  71. 

5  Ibid. ;  Sterling  v.  Mercantile  Mut.  Ins.  Co.,  32  Peno.  St.  75. 

6  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (N.  B.),  136. 

■^  Reed  v.  Independent  Ins.  Co.,  Cir.  Ct.  U.  S.  Mass.  Dist.,  1872,  Shepley,  J., 
1  Ins.  L.  J.  735. 


EEMEDIES,   EVIDENCE,   PLEADING,   BANKRUPTCY.  727 

would  have  to  take  the  life  of  a  natural  person.^  A  mutual 
life  insurance  company  was  also  held  to  be  a  "  business  "  cor- 
poration within  the  meaning  of  that  act  in  the  United  States 
District  Court  for  the  Southern  District  of  New  York.^ 

§  590.  Bankruptcy  —  Status  of  the  Company.  —  After  adjudi- 
cation of  bankruptcy  the  court  has  exclusive  jurisdiction  over 
the  estate  and  assets  of  the  bankrupt  corporation,  and  is 
vested  with  all  the  power  and  control  previously  vested  iu 
either  the  chartered  officers  of  the  company  or  stockholders, 
or  both  collectively,  over  the  same,  and  can  make  any  assess- 
ment or  call  necessary  for  the  collection  of  the  assets  as  fully 
as  the  stockholders  or  directors  could  have  done.  And  if  the 
notes  given  by  the  stockholders,  as  and  for  the  capital  stock, 
have  not  been  paid,  any  balance  remaining  unpaid  may  be 
called  in  by  order  of  court,  notwithstanding,  by  the  terms  of 
the  subscription  and  by  the  certificate  of  stock,  that  balance 
is  to  be  paid  on  the  call  of  the  directors  when  ordered  by  the 
stockholders.  And  such  call  is  conclusive  as  to  its  amount 
and  propriety,  and  cannot  be  questioned  in  a  collateral  suit,  or 
in  a  suit  on  the  note.  Nor  can  the  defence  of  false  represen- 
tation as  to  the  character  and  prospects  of  the  company  be 
set  up  as  against  the  assignees  who  represent  the  creditors, 
though  that  might  have  been  good  had  it  been  availed  of  before 
the  adjudication.  Nor  can  it  avail  that  the  directors  voted  to 
release  tlie  stockholders  from  the  payment  of  any  outstand- 
ing balance  due  on  their  stock  notes,  and  caused  them  to  be 
stamped  unassessable.  Such  a  vote  is  inoperative  as  to  credit- 
ors and  those  who  insured  in  the  company  without  knowledge 
of  the  fact.  And  the  purchaser  of  a  certificate,  who  surrenders 
it  and  has  one  issued  to  himself,  succeeds  to  the  rights  and 
the  liabilities  of  the  holder  of  the  certificate  which  he  pur- 
chased, and  of  an  original  stockholder,  and  the  acceptance  of  a 
partly  unpaid  certificate  carries  with  it  an  implied  obligation 

1  The  learned  judge  cited,  amongst  other  cases,  Folger  v.  Columbian  Ins.  Co., 
99  Mass.  267  ;  Ilayward  v.  Fulcher,  Sir  William  Jones,  166  ;  Dean  and  Chapter 
of  Norwich,  3  Coke,  75  a.  The  real  question,  however,  in  this  case  was  whether 
the  insurance  company  was  within  the  meaning  of  the  Bankrupt  Act  of  1867. 

2  In  re  Hercules  Mut.  Life  Ass.  Soc,  1  Ins.  L.  J.  875. 


728  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC. 

to  pay  the  balance.^  In  making  the  call  for  an  assessment  it 
is  discretionary  with  the  court  whether  to  give  notice,  and  the 
stockholders  are  so  far  parties  to  the  bankrupt  proceedings  as  to 
be  bound  thereby  without  notice.^ 

§  591.  Bankruptcy  and  Insolvency  —  Powers  and  Duties  of 
Assignee  and  Receivers  —  Status  of  Policy-holder.  —  The  bank- 
ruptcy of  an  insurance  company  does  not  release  the  policy- 
holder from  the  obligations  of  his  contract ;  and  whatever 
remains  incomplete  at  the  time  of  the  adjudication  of  bank- 
ruptcy passes  over  to  be  acted  upon  by  the  court  which  repre- 
sents the  company  and  succeeds  generally  to  its  rights.  The 
assignee  has  not  the  original  powers  of  the  company.  He  is 
an  officer  of  the  court  and  a  trustee  of  the  creditors,  and  can- 
not waive  the  performance  of  conditions,  whether  limiting 
time  within  which  action  may  be  brought  or  otherwise,  which 
the  company  might  have  done.  And  it  is  his  duty,  where  proofs 
have  been  furnished  and  losses  adjusted  before  adjudication, 
to  revise  the  same,  if  he  has  reason  to  believe  there  is  any 
equitable  ground  for  such  revision,  and  he  may  affirm  what 
appears  clearly  to  have  been  done  or  accepted  by  the  company 
in  the  way  of  adjustment  or  proof  of  loss.  But  if  that  which 
has  been  done  would  not  have  concluded  the  company,  he  can 
give  it  no  additional  force  by  his  affirmance,^  And  proof  of  a 
claim  for  loss  must  be  made  within  the  time  limited  for  bring- 
ing suit.^  Several  of  the  States  have  passed  special  statutes 
relative  to  the  insolvency  of  insurance  companies,  differing  in 
particulars,  but  substantially  alike.  In  New  York,  the  receiver, 
who  is  an  officer  of  the  court  placed  in  charge  of  the  property, 
may  sue  in  his  own  name.  In  Massachusetts,  the  corporation 
is  not  dissolved  merely  by  the  insolvency  proceedings,  and  the 
receiver  sues  in  the  name  of  the  company.  In  New  York,  — 
and  the  same  is  doubtless  true  of  other  States,  —  the  receiver 
takes  the  place  of  the  directors  in  the  settlement  of  tiie  affairs 

1  Upton  V.  Hansbrough,  U.  S.  Dist.  Ct.  North.  Dist.  111.,  Jan.  Term,  1873, 
5  Chicago  Legal  News,  242. 

^  Ibid.    An  elaborate  and  well-considered  case. 

3  In  re  Fireman's  Ins.  Co.,  U.  S.  Dist.  Ct.  North.  Dist.  111.,  Jan.  1873,  5  Clii- 
cago  Legal  News,  253. 

«  Ibid. 


REMEDIES,   EVIDENCE,    PLEADING,   BANKRUPTCY.  729 

of  the  company,  under  the  direction  of  the  court,  and  all  his 
acts  must  have  the  sanction  of  the  court.  In  making  assess- 
ments, however,  he  must  show  the  existence  of  the  same  facts 
and  circumstances  which  would  authorize  an  assessment  hy  the 
directors  if  the  company  were  not  insolvent.  He  derives  no 
additional  powers  from  the  fact. of  insolvency,  and  can  main- 
tain suits  and  recover  thereon  only  as  the  directors  might  have 
done.^  As  we  have  just  seen  that  in  bankruptcy  the  assignees 
have  not  the  full  discretionary  powers  of  the  directors,  so  in 
insolvency  the  receiver,  being  a  trustee,  has  no  right  to  waive 
proofs  of  loss,  and,  upon  the  same  grounds,  doubtless  no  right 
to  waive  the  Statute  of  Limitations. ^  An  assignment  by  the 
act  of  the  parties  clothes  the  assignee  with  no  powers  not  right- 
fully given  by  the  deed  of  assignment ;  and  this  does  not  include 
the  power  to  make  assessments,  and  the  like  powers  held  by 
the  corporation.     Such  powers  are  not  transferable.^ 

§  592.  Bankruptcy  and  Insolvency  —  Set-off.  —  In  general,  a 
set-off  of  a  liquidated  debt  due  the  corporation  is  allowable 
against  an  unliquidated  debt  due  from  them  ;  and  this  extends 
to  all  mutual  credits  arising,  ex  contractu^  between  the  original 
parties.*  When  an  insurance  company  becomes  insolvent,  the 
court  will  sustain  the  claim  of  holders  of  a  policy  under  which 
they  are  entitled  to  recover  for  a  loss,  to  have  a  note  given 
by  them  prior  to  the  insolvency,  and  purchased  by  the  insurance 
company,  applied  in  part  payment  of  the  loss,  although  the 
note  has  been  sold,  if  the  sale  be  subsequent  to  the  insolvency 
and  to  the  happening  of  the  loss.°  So  where  the  insurance  com- 
pany had  loaned  money  directly  to  the  assured,  who  afterwards 
sustained  a  loss,  it  was  held  that  the  loan  might  be  set  off  in 

i  Savage  v.  Medbury,  19  N.  Y.  32  ;  Devendorf  v.  Beardsley,  23  Barb.  (N.  Y.) 
656;  Thomas  v.  Whallon,  31  Barb.  (N.  Y.)  172  ;  Shaughnessy  v.  Rensselaer  Ins. 
Co.,  21  Barb.  (N.  Y.)  605  ;  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651 ;  Furness  r.  Sher- 
wood, 8  Sandf.  (N.  Y.  Superior  Ct.)  521. 

2  Evans  v.  Trimountain  Mut.  Fire  Ins.  Co.,  9  Allen  (Mass.),  329;  In  re  Fire- 
man's Ins.  Co.,  uhi  supra. 

3  Hurlburt  v.  Carter,  21  Barb.  (N.  Y.)  221. 

*  Holbrook  v.  American  Fire  Ins.  Co.,  6  Paige  (N.  Y.  Ch.).  220. 
5  Commonwealth  v.  Shoe  and  Leather  Dealers'  Fire  and  Mar.  Ins.  Co.,  on  the 
Petition  of  Low  et  al.,  Sup.  Jud.  Ct.  Mass.,  April,  1873,  not  yet  reported. 


T30  msnRAXcE:  fire,  life,  AcaDEsr,  etc. 

the  adjustment  of  the  claim  for  the  loss.^  In  Drake  v.  Rollo, 
Assignee,-  it  was  held  that  where  a  person  borrowed  money  of 
an  insurance  company,  payable  partly  in  three  and  partly  in 
five  years,  and  before  the  payment  the  company  became  insol- 
vent and  was  adjudicated  a  bankrupt,  he  can,  under  the  twen- 
tieth section  of  the  bankrupt  l^w,  providing  that  mutual  debts 
and  credits  may  be  set  off.  set  off  the  debt  for  claims  he  has 
for  loss  on  policies  against  the  company,  though  the  effect 
would  be  to  give  him  a  preference  over  other  creditors.  The 
rights  of  the  parties  are  to  be  determined  by  the  state  of  facts 
at  the  time  of  tlie  loss.  And  if  in  such  case  the  money  bor- 
rowed is  not  due  when  the  loss  becomes  payable,  and  the  com- 
pany is  bankrupt  and  insolvent,  the  borrower  may  maintain 
his  bill  in  equity  against  the  company  or  its  assignee  to  enforce 
the  set-off.  If,  however,  the  claim  against  the  company  for 
loss  be  procured  with  full  knowledge  of  their  insolvency, 
though  prior  to  any  legal  declaration  of  the  fact,  it  cannot  be 
set  off,  as  this  would  be  a  perversion  of  the  statute,  for  the 
benefit  of  one  creditor  to  the  prejudice  of  another,  and  against 
its  spirit.  If  a  court  of  equity  could  not  interpose  in  such 
a  case,  though  it  be  not  one  of  the  claims  excepted  from  the 
right  of  set-off,  a  person  might  borrow  the  whole  capital  of  an 
insurance  company,  and  on  learning  of  its  insolvency,  instead 
of  paying  tlie  debt  might  use  a  part  of  it  in  buying  up  the 
depreciated  claims  against  the  company  to  the  amount  of  his 
debt,  and  keep  the  rest  in  his  f)ocket.^ 

§  693.  Rule  as  to  Set-off  when  Company  is  Solvent,  diSerent 
from  the  Rule  when  Company  is  Insolvent,  — The  right  of  Set-off 
is  affected  by  the  question  whether  the  company  is  solvent  or 
insolvent.  Thus,  where  the  insured  still  owes  an  unpaid  bal- 
ance of  his  subscription  or  stock  note,  tliis  balance  is  a  fund 
in  trust  for  the  benefit  of  creditors,  and  a  claim  for  loss  cannot 
be  set  off  against  it  so  long  as  the  losses  are  unpaid  in  full. 
In  a  solvent  company,  able  to  pay  all  its  losses,  the  claims 

1  Receivers  of  Globe  Ins.  Co.,  2  Edw.  (X.  T.  Ch.)  62-5. 
-  U.  S.  C.  Ct.  North.  Dist-  Dl.,  6  Chicago  Legal  News,  9. 
'  Hitchcock  r.  Rollo  Ass.,  ibid.,  disapproving  /«  re  The  City  Bank  of  Gamej, 
4  Legal  News,  81,  U.  S.  Dist.  Ct.  CaL ;  Smith  c.  Hill,  8  Gray  (Mass.),  572. 


REMEDIES,   EVIDENCE,    PLEADING,   BANKTRUPTCY.  731 

might  be  deemed  mutual,  and  subject  to  set-off,  each  against 
the  otlier.  But  insolvency  changes  the  rule.^  Nor  are  holders 
of  claims  for  losses  entitled  in  mutual  insurance  companies  to 
set  off  their  claims  in  actions  on  their  premium  notes.  They 
must  pay  those  notes  to  the  amount  required,  and  then,  if  the 
assets  prove  insufficient  to  pay  the  whole  amount  of  the  losses, 
they  can  only  receive  the  same  percentage  of  their  losses  that 
the  other  members  receive  ;  otherwise,  the  holder  of  a  claim 
offsetting  the  whole,  or  a  portion  of  it,  against  the  company's 
claim  on  his  premium  note,  would  receive  more  than  his  just 
proportion  of  loss.^  Nor  can  a  claim  for  loss  assigned  to  the 
maker  of  a  premium  note  be  set  off  in  an  action  on  the  pre- 
mium note,  except  to  the  amount  to  which  he  would  be  enti- 
tled as  a  dividend  on  the  claim. ^  In  payment  of  losses  the 
insurers  are  entitled  to  set  off"  all  sums  due  on  the  premium 
note,  and  for  the  claimant's  just  proportion  of  losses  up  to  the 
time  of  payment  of  .the  loss;  or,  if  the  company  is  trusteed 
up  to  the  time  of  the  service  of  process.* 

1  Scammon  v.  Kimball  Ass.,  U.  S.  C.  Ct.  North.  Dist.  HI.,  6  Chicago  Legal 
News,  1. 

2  Lawrence  v.  Nelson,  4  Bosw.  (N.  Y.  Superior  Ct.)  240;  s.  c.  affirmed,  21 
N.  Y.  158  ;  Hillier  v.  Alleghany  County  Mut.  Ins.  Co.,  3  Penn.  St.  470.  And  see 
also  Lawrence  v.  McCready,  6  Bosw.  (N.  Y.)  329. 

3  Long  V.  Penn.  Ins.  Co.,  6  Penn.  St.  421. 

4  Swaniscott  Mach.  Co.  v.  Partridge,  5  Post.  (N.  H.)  369 ;  Nevins  v.  Rock 
Fire  Ins.  Co.,  ib.  22. 


APPENDIX. 


The  following  act,  providing  for  a  standard  form  of  policy,  was 
passed  by  the  legislature  of  Massachusetts,  at  its  regular  session  next 
after  the  great  fire  in  Boston. 

[Chap.  331,  Stat.  1873.] 
Ax  Act  to  establish  a  Standard  Form  for  Insurance  Policies. 
Be  it  enacted,  &c.,  as  follows  : 

Sect.  1.  Any  insurance  company  authorized  to  issue  policies  in  this  Com- 
monwealth may  print  upon  their  policies  the  -words  "  Massachusetts  Standard 
Policy,"  provided  that  the  printed  parts  of  such  policies  are  in  the  following 
form  and  language,  and  that  all  other  provisions  of  said  policies,  except  as 
provided  in  section  two,  are  in  writing :  — 

The  Insurance  Company,  of  in  consid-     Premium, 

eration  of  dollars,  insures  to  the  amount     Amount  insured. 

of  dollars,   on  Property  insured. 

Bills  of  exchange,  notes,  accounts,  evidences  and  securi-     property  not  cov- 
ties  of  property  of  every  kind,  books,  wearing  apparel,  plate,     ered  by  poUcy. 
money,  jewels,  musical  instruments,  medals,  paintings,  sculpture,  and  curi- 
osities are  not  included  in  said  insured  property,  unless  specially  mentioned. 

Said  property  is  insured  for  the  term  of  begin- 

ning on  the  day  of  in  the  year  one  thou- 

sand eight  hundred  and  at  noon,  and  continuing  until  the 

day  of  in  the  year  one  thousand  eight  hundred  and  at 

noon,  against  all  loss  or  damage  by  jire,  originating  in  any  ^exWi  insured 
cause  except  invasion,  foreign  enemies,  civil  commotions,  against. 
riots,  or  any  military  oi*  usurped  power  whatever ;  the  amount  of  said  losa 
or  damage  to  be  estimated  according  to  the  actual  value  of  the  insured  prop- 
erty at  the  time  when  such  loss  or  damage  happens,  but  not  to  include  loss 
or  damage  caused  by  explosions  of  any  kind,  unless  fire  ensues,  and  then  to 
include  that  caused  by  fire  only. 

This  policy  shall  be  void  if  any  material  fact  or  circum-  jjattgjg  aToiding 
stance  stated  in  writing  has  not  been  fairly  represented  by  the    poUcy. 


734  APPENDIX. 

insured,  —  or  if  the  insured  now  has  or  shall  hereafter  make  any  other  insur- 
ance on  the  said  property  without  the  written  assent  of"  the  company,  —  or 
if,  without  such  assent,  the  said  property  shall  be  removed,  unless  such 
removal  shall  be  necessary  for  its  preservation  from  fire,  —  or  if,  without 
such  assent,  the  situation  or  circumstances  affecting  the  risk  shall,  by  or  with 
the  advice,  agency,  or  consent  of  the  insured,  be  so  altered  as  to  cause  an 
increase  of  such  risk,  the  non-occupancy  of  the  premises  insured,  or  contain- 
ing the  property  insured,  not  being  deemed,  however,  to  cause  such  increase, 
—  or  if,  without  such  assent,  the  said  property  shall  be  sold,  or  this  policy 
assigned,  —  or  if  the  insured  shall  make  any  attempt  to  defraud  the  com- 
pany, —  or  if  gunpowder  or  other  articles  subject  to  legal  restriction  shall  be 
kept  in  quantities  or  manner  different  from  those  allowed  or  prescribed  by 
law,  —  or  if  camphene,  benzine,  naphtha,  or  other  chemical  oils  or  burning 
fluids  shall  be  used  by  the  insured  on  the  premises  insured,  except  that  what 
is  known  as  refined  petroleum,  kerosene,  or  coal  oil,  may  be  used  in  stores 
or  dwellings  for  lighting. 

Assured  to  pro-  If  the  insured  property  shall  be  exposed  to  loss  or  dam- 

ca^e  of'exposure  ^S^  ^7  ^^'^'  ^^^  insured  shall  make  all  reasonable  exertions 
*°  fi"'^-  to  save  and  protect  the  same. 

statement  by  in-  ^^  ^*^®  ^^  ^^Y  ^°^^  '^^  damage  under  this  policy,  a  state- 

sured  in  case  of      merit  in  writing,  signed  and  sworn  to  by  the  insured,  shall  be 

loss.  n       1       •  1  . 

forthwith  rendered  to  the  company,  setting  forth  the  value 
of  the  property  insured,  the  interest  of  the  insured  therein,  all  other  insur- 
ance thereon,  the  purposes  for  which  and  the  persons  by  whom  the  building 
insured,  or  containing  the  property  insured,  was  used,  and  the  time  at  which 
and  manner  in  which  the  fire  originated,  so  far  as  known  to  the  insured. 
The  company  may  also  examine  the  books  of  account  and  vouchers  of  the 
insured,  and  make  extracts  from  the  same. 
Payment  of  loss  I"  ^'^^^  of  any  loss  or  damage,  the  company,  within  sixty 

to  be  made  within  Jayg  after  the  insured  shall  have  submitted  a  statement,  as 
60  days  after  "^    .  .  _  ' 

proof,  unless  provided  in  the  preceding  clause,  shall  either  pay  the  amount 

to  replace  or  for  which  it  shall  be  liable,  or  replace  the  property  with  other 

repair.  ^f  ^j^g  same  kind  and  goodness,  —  or  it  may,  within  fifteen 

days  after  such  statement  is  submitted,  notify  the  insured  of  its  intention  to 

rebuild  or  repair  the  premises,  and  shall  thereupon  enter  upon  said  premises 

and  proceed  to  rebuild  or  repair  the  same  with  reasonable  expedition.     It 

is  moreover  understood  that  there  can  be  no  abandonment  of  the  property 

insured  to  the  company,  and  that  the  company  shall  not  in  any  case  be  liable 

for  more  than  the  sum  insured,  with  interest  thereon  from  the  time  when  the 

loss  shall  become  payable,  as  above  provided. 

Apportionment  ^^  there   shall  be  any  other  insurance  on   the  property 

of  loss  in  ca.se  of  insured,  whether  prior  or  subsequent,  the  insured  shall  re- 
other  insurance.  .  .  '■ 

cover  on  this  policy  no  greater  proportion  of  the  loss  sus- 
tained than  the  sum  hereby  insured  bears  to  the  whole. amount  insured 


APPENDIX.  735 

thereon.    And  whenever  the  company  shall  pay  any  loss,  the    insured  to  assign 
insured  shall  assicrn  to  it,  to  the  extent  of  the  amount  so     '?  .'=°">P''ny 

=  '  claims  against 

paid,  all  rights  to  recover  satisfaction  for  the  loss  or  dam-     t^^'ra  parties, 
age  from  any  person,  town,  or  other  corporation,  excepting  other  insurers  ; 
or  the  insured,  if  requested,  shall  prosecute  therefor  at  the  charge  and  for 
the  account  of  the  company. 

This  policy  may  be  cancelled  at  any  time  at  the  request  cancellation  of 
of  the  insured,  who  shall  thereupon  be  entitled  to  a  return  of  policy- 
the  portion  of  the  above  premium  remaining,  after  deducting  the  customary 
monthly  short  rates  for  the  time  this  policy  shall  have  been  in  force.  The 
company  also  reserves  the  right,  after  giving  written  notice  to  the  insured, 
and  tendering  to  the  insured  a  ratable  proportion  of  the  i)remiuiii,  to  cancel 
this  policy  as  to  all  risks  subsequent  to  the  expiration  of  ten  days  from  such 
notice. 

If  this  policy  shall  be  made  payable  to  a  mortgagee,  no  Ri„ijtg  ^f  parties 
act  or  default  of  the  insured  shall  affect  such  mortjjasree's     >°  <^a°e  the  poi- 

.  ,11  "^y  ■''  made  pay- 

right  to  recover  in  case  of  loss  :  p?oi7'rfetZ,  that  be  shall,  on     able  to  a  mort- 

demand,  pay  according  to  the  established  scale  of  rates  for  ^"S^-e- 
any  increase  of  risks  not  paid  for  by  the  insured,  and  shall,  if  the  company 
shall  elect  upon  the  happening  of  a  loss  to  pay  him  the  whole  amount  se- 
cured by  this  mortgage,  assign  to  the  company,  upon  such  payment,  his  said 
mortgage,  together  with  the  note  and  debt  thereby  secured,  and  all  other 
securities  held  by  him  as  collateral  for  the  same. 

In  case  any  difference  of  opinion  shall  arise  as  to  the  rights  Differences  to  be 
of  the  parties  under  this  policy,  the  subject  thereof  shall  be  submitted  to  ref- 
referred  to  three  disinterested  men,  the  company  and  the 
insured  each  choosing  one  out  of  three  persons  to  be  named  by  the  other, 
and  the  third  being  selected  by  the  two  so  chosen,  and  the  decision  of  a 
majority  of  said  referees  shall  be  final  and  binding  on  the  parties. 

In  tcitness  rchereqf,  the  said  company  has  caused  this  policy  to  be  signed 
by  its   president  and  countersigned  by  its  secretary  ^ this  day  of 

in  the  year  one  thousand  eight  hundred  and 

President. 
Secretary. 

Skct.  2.  The  provisions  of  the  preceding  section  shall  not  prevent  any 
company  from  printing  on  or  in  any  policy  so  to  be  designated  as  "Massa- 
chusetts Standard  Policy,"  the  name,  location,  and  date  of  incorporation  of 
the  company,  the  amount  of  its  capital  stock,  the  names  of  its  officers  and 
agents,  and  the  number  and  date  of  the  policy ;  and  shall  not  prevent  the 
use  of  printed  forms  of  description  and  specification  of  the  property  insured 
under  said  policies ;  nor,  in  case  any  such  policy  is  issued  through  any  agent 
of  such  company,  shall  said  provisions  prevent  tbe  company  from  printing  on 
or  in  any  policy  the  following  words:  "  This  policy  shall  not  be  valid  until 
countersigned  by  the  duly  authorized  agent  of  the  company  at  ." 


736  APPENDIX. 

Sect.  3.  Any  insurance  company,  and  any  agent  of  any  insurance  com- 
pany, or  any  person  soliciting  insurance,  wbo  shall  issue  any  policy  of  insur- 
ance not  conforming  to  the  provisions  of  this  act,  which  shall  contain  on  or 
in  such  policy,  the  words  "Massachusetts  Standard  Policy"  or  any  other 
similar  designation,  shall  for  each  offence  forfeit  and  pay  to  the  use  of  the 
Commonwealth  one  thousand  dollars,  to  be  sued  for  and  recovered  with  costs, 
in  the  name  of  the  Commonwealth,  in  an  action  of  tort. 

Sect.  4.  Any  insurance  company,  and  any  agent  of  such  company  or 
other  person  soliciting  insurance,  who  shall  after  July  first,  eighteen  hun- 
dred and  seventy-three,  issue  or  deliver  any  policy  of  insurance  against  loss 
or  damage  by  fire,  differing  as  to  any  of  its  printed  words  from  the  form  set 
forth  in  this  act,  shall  first  file  with  the  insurance  commissioner  a  copy  of  the 
printed  form  of  contract  or  policy  intended  to  be  thereafter  used  and  issued 
by  said  company,  agent,  or  person  in  this  Commonwealth,  and  thereafter,  in 
case  of  any  change  in  such  printed  form,  a  statement  thereof  shall  also  be 
filed  with  the  insurance  commissioner  prior  to  the  use  of  a  form  containing 
such  change  in  printed  words  ;  and  any  company,  agent,  or  person  failing  or 
refusing  to  comply  with  the  provisions  of  this  section,  may  be  enjoined,  on 
complaint  of  the  insurance  commissioner,  from  issuing  any  more  policies  of 
insurance  in  this  Commonwealth.  And,  upon  a  request  made  by  the  sec- 
retary of  any  incorporated  board  of  trade,  chamber  of  commerce,  or  corn 
exchange,  said  insurance  companies,  agents,  or  persons  shall  furnish  them, 
through  the  insurance  commissioner,  with  copies  of  the  printed  forms  of  pol- 
icy used  or  issued  by  them  respectively  in  this  Commonwealth,  and  of  all 
changes  made  in  such  forms  as  above  provided. 

Sect.  5.  It  shall  be  the  duty  of  the  insurance  commissioner  to  keep  such 
forms  of  contract  or  policy  of  insurance,  and  changes  therein,  in  a  book 
provided  for  such  purpose,  and  also  to  examine  such  forms,  and  to  note  in 
said  book,  in  a  convenient  manner  for  reference,  the  material  variations  of 
such  forms  from  the  form  set  forth  in  this  act,  which  book  shall  be  open 
to  the  inspection  of, the  public,  at  the  office  of  the  insurance  commissioner. 
Said  insurance  commissioner  shall  furnish  a  copy  of  such  variations  to  any 
person  applying  for  the  same,  and  may  charge  a  fee  not  exceeding  one  dollar 
for  each  such  service ;  2)rovided,  such  service  shall  be  performed  in  his  indi- 
vidual capacity,  and  that  the  Commonwealth  shall  not  assume  any  responsi- 
bility therefor. 

Sect.  6.  Any  policy  of  insurance  issued  or  delivered  in  this  Common- 
wealth in  violation  of  any  of  the  pi'ovisions  of  this  act,  shall  nevertheless  be 
binding  upon  the  company  issuing  the  same.     \_Approved  June  3,  1873. 


APPENDIX.  737 

Form  of  policy  adopted  by  the  Massachusetts  Mutual  Insurance  Com- 
pany on  reorganization  after  the  great  fire  in  Boston,  Nov.  9,  1872. 
It  ivill  be  observed  that  no  application  is  referred  to  in  the  policy,  and 
no  formal  application  is  required. 

No. 
]\IASSACHUSETTS   MUTUAL  INSURANCE   COMPANY. 

CASH   GUARANTEE   CAPITAL,  §200,000. 

This   policy  of  ixsuuance  witnesseth,  that  whereas  of 

ill  the  county  of  and  State  of  a  member  of  the 

Massachusetts  Mutual  Ixsurajjce  Comp^\js'y,  incorporated  Dec.  21, 
A.D.  1872,  paid  the  sum  of  dollars  as  premium  and  deposit 

money ;  and  also  bound  and  obliged  heirs,  executors,  administrators, 

and  assigns  to  pay,  in  addition  to  said  premium  and  deposit,  all  such  sum 
or  sums  as  may  be  assessed  by  the  directors  of  said  company,  pursuant  to 
the  laws  of  the  State  of  Massachusetts,  but  not  in  any  event  to  exceed  the 
amount  of  said  premium  and  deposit,  as  per  margin. 

In  consideration  of  the  premises,  the  said  heirs,  executors, 

and  administrators,  are  hereby  insured  against  loss  or  damage  by  fire  or 
lightning,  under  the  conditions  and  limitations  hereinafter  expressed,  the 
sum  of  dollars 

situated  in  in  the  State  of  occupied  for  In  case  of 

loss  payable  to  The  risk  commencing  with  the  date  of  this  policy,  at 

noon,  and  terminating  on  the  first  day  of  at  noon,  in  the  year  one 

thousand  eight  hundred  and  seventy-  being  five  years  from  the  first 

day  of  the  month  m  which  this  policy  is  dated ;  provided  always,  that  in 
case  the  said  insured  shall  have  made,  or  shall  hei-eafter  make,  any  other 
insurance  against  fire  or  lightning,  whether  valid  or  void,  upon  the  property 
hereby  insured,  or  any  part  thereof,  without  the  consent  of  this  company 
expressed  in  this  policy,  then  this  insurance  shall  be  void.  And  the  insured, 
having  other  insurance  (with  such  consent)  either  valid  or  void,  upon  the 
property  hereby  insured,  whether  prior  or  subse<juent  to  the  date  of  this 
policy,  in  case  of  loss  caused  by  fire  or  lightning,  or  both,  shall  not  re- 
ceive any  greater  portion  of  the  loss  or  damage  sustained,  than  the  amount 
hereby  insured  shall  bear  to  the  whole  amount  insured  on  said  property 
against  loss  by  fire  or  lightning,  or  both.     And  it  is  further  agreed,  — 

I.  That  the  company  have  the  right  of  cancelling  any  policy  at  any  time 
when  two-thirds  of  the  directors  present  at  any  meeting  shall  deem  there 
is  sufficient  cause  therefor ;  in  such  case  the  secretary  shall  give  the  party 
insured,  and  the  party  to  whom  the  policy  is  payable  in  case  of  loss,  ten 
days'  notice,  in  writing,  of  the  determination  of  the  directors  to  exercise 

47 


738  APPENDIX. 

this  right,  and  the  insured,  in  such  case,  shall  be  entitled  to  a  return  of  his 
premium  and  deposit  money,  less  his  proportion  of  the  expenses,  losses,  and 
reserve. 

II.  That  the  proprietor  of  any  policy  may  surrender  the  same  at  any 
time,  with  the  consent  of  the  party  to  whom  it  is  payable,  and  be  entitled 
to  a  return  of  his  premium  and  deposit  money,  as  provided  In  Art.  I.,  sub- 
ject to  a  deduction  of  ten  per  cent,  to  be  retained  for  the  benefit  of  the 
company. 

III.  That  whenever  a  building  hereby  insured,  or  a  building  containing 
personal  property  hereby  insured,  shall  be  altered,  enlarged,  or  appropri- 
ated to  any  other  purposes  than  those  herein  mentioned,  or  the  risk  other- 
wise increased,  by  the  act,  or  with  the  knowledge  or  consent  of  the  insured, 
without  the  consent  of  the  president  first  obtained,  in  writing,  this  policy 
shall  be  void ;  but  the  president  may,  upon  application  of  the  insured, 
revive  the  policy  upon  such  terms  as  he  may  deem  equitable,  but,  if  not 
revived,  the  insured  shall  be  entitled  to  a  return  of  his  premium  and  deposit 
money,  as  provided  in  Art.  II. 

Ordinary  repairs  assented  to. 

IV.  That  upon  the  alienation  of  anj' property  hereby  insured,  this  policy 
shall  thereupon  be  void,  unless  payable  to  a  mortgagee ;  but  the  purchaser, 
having  this  policy  legally  transfierred  to  him,  may,  upon  application,  have 
the  policy  revived  with  the  approval  of  the  president  expressed  in  writing ; 
and  by  such  revival  the  company  and  such  purchaser  shall  be  entitled  to  all 
the  rights  to  which  the  original  parties  respectively  were  entitled  before 
such  alienation.  When  the  policy  Is  not  transferred,  the  party  insured  shall 
be  entitled  to  a  return  of  his  premium  and  deposit  money,  as  provided  in 
Art.  II.  No  estate  shall  be  deemed  to  be  alienated  by  mortgage,  until  the 
foreclosure  of  such  mortgage ;  and  this  policy,  if  payable  to  a  mortgagee, 
shall  continue  so  payable,  until  foreclosure,  notwithstanding  any  alienation 
of  the  property  made  subsequent  to  such  mortgage ;  and  such  mortgagee 
shall  pay  all  assessments,  provided  the  insured  shall  not  pay  the  same  on 
demand. 

V.  That  when  a  policy  is  payable  in  case  of  loss  to  a  mortgagee,  the 
interest  of  the  mortgagee  therein  shall  not  l)e  hazarded  by  any  act  or  neg- 
lect of  the  mortgagor  or  owner  increasing  the  hazard  of  the  insurance,  pro- 
vided the  mortgagee  does  not  aid  or  consent  thereto,  and  provided  the 
mortgagee  shall,  on  knowing  of  any  increased  risk,  notify  the  company 
thereof,  and  pay  the  additional  premium  therefor.  It  is  also  agreed  that  if 
the  company  pay  a  mortgagee  any  loss  under  this  policy,  and  claim  that, 
as  to  the  mortgagor  or  owner  no  liability  of  the  company  therefor  existed, 
then  the  company  shall  be  subrogated  to  all  the  rights  of  the  mortgagee 
under  his  mortgage  and  other  securities  for  the  mortgage  debt,  to  the  extent 
of  the  loss  so  paid  by  the  company  to  the  mortgagee.  Or  the  company 
may,  at  its  option,  pay  to  the  mortgagee  the  whole  principal  and  interest 
due  on  his  mortgage,  and  receive  an  absolute  assignment  of  the  mortgage 


APPENDIX.  739 

and  of  all  other  securities  held  by  the  mortgagee  as  collateral  to  the  mort- 
gage debt. 

VI.  That  any  member  sustaining  loss  shall  notify  the  secretary  in  writ- 
ing, before  any  repairs  are  made ;  and  in  case  of  disagreement  respecting 
the  amount  of  damage,  the  insured  and  the  president  shall  submit  the  mat- 
ter to  competent  and  impartial  men,  whose  award  in  writing  shall  be  binding 
on  the  parties  ;  payment  shall  be  made  in  sixty  days  after  receiving  proof  of 
the  loss.  Provided  always,  that  the  company,  either  alone,  or,  in  the  case 
of  other  insurance,  with  the  other  insurers,  shall  have  the  right  to  enter 
upon  and  rebuild  or  repair  the  premises,  or  replace  the  property  damaged. 

VII.  That  whenever  the  company  shall  pay  any  loss,  the  insured  shall 
assign  over  to  said  company  all  his  rights  to  recover  satisfaction  therefor, 
fi-om  any  other  person  or  persons,  town  or  other  corporation,  or  to  bring 
suit  therefor  at  the  charge  and  for  the  account  of  the  said  company,  if 
requested. 

VIII.  That  this  insurance  is  not  to  apply  to,  or  cover,  any  books  of  ac- 
count, bills  of  exchange,  notes,  deeds,  or  evidences  or  security  of  property 
of  any  kind,  books,  musical  instruments,  wearing  apparel,  plate,  money, 
jewels,  medals,  paintings,  statuary  or  other  curiosities,  unless  specified  in 
this  policy. 

Now  BE  IT  KNOWX,  that  the  absolute  and  conditional  funds  of  said 
company  are  hereby  bound  and  subjected  to  satisfy  and  make  good  unto 
the  said  insured,  heirs,  executors,  and  administrators,  all  the  damage 

by  fire  or  liglitning  which  may  happen  to  the  property  hereby  insured 
(not  exceeding  in  the  aggregate  the  sum  hereby  insured)  within  the  term 
aforesaid,  according  to  the  true  intent  and  meaning  of  the  conditions  of  this 
policy.  Provided,  nevertheless,  that  if  the  whole  of  the  absolute  and  condi- 
tional funds  of  said  company  should  be  insuflTicient  to  pay  and  satisfy  all 
losses  that  may  happen,  in  such  case,  a  just  average  shall  be  made  to  the 
suiferers ;  and  the  payment  to  be  demanded,  in  virtue  of  this  policy,  shall 
be  such  a  proportion  of  said  funds  as  the  loss  sustained  by  the  party  hereby 
insured  bears  to  the  whole  amount  of  losses  then  remaining  unpaid. 

In  witness  whereof,  the  Massachusetts  Mutual  Insurance  Com- 
pany have  caused  this  policy  to  be  subscribed  by  their  president,  and  coun- 
tersigned by  their  secretary,  at  Boston,  this  day  of  in  the 
year  one  thousand  eight  hundred  and  seventy- 

President. 

Secretary. 

Endorsed  on  this  poliq/  is  the  following  notice  :  — 

By  virtue  of  this  policy,  the  assured  is  hereby  notified  that  he  is  a  member  of 
the  Massachusetts  Mutual  Insurance  Company,  and  that  the  annual  meet- 
ings of  said  company  are  hoUlen  at  its  home  office,  on  the  second  Tuesday  of 
January,  in  each  year,  at  12  o'clock,  m. 


740 


APPENDIX. 


County  of  State  of 


Form  of  application  for  insurance  in  the  Neic  England  Mutual  Life 
Insurance  Company. 

NEW  ENGLAND  MUTUAL  LIFE  INSURANCE  COMPANY. 

No. 

(Every  application,  whether  for  the  original  or  an  additional  insurance,  is  to 
be  filled  out  in  detail ;  otherwise  it  will  not  receive  the  consideration  of  the 
company.) 

This  applicant  of  proposes  to  insure  the  life  of 

with  the  New  England  Mutual  Life  Insurance  Company,  to  the  amount 
of  dollars,  for  the  period  of  on  the  plan,  and 

thereby  to  become  a  member  of  said  company ;  and  with  that  view,  and  as 
the  basis  of  such  insurance,  makes  the  following  statements,  which  he  declares 
to  be  warranties,  and  in  all  respects  true :  — 

1  —  Place   and  date   of  birth  —  the 

year  and  month  ?     .     ,     .     . 

2  —  Residence  and  address  of  the 

person  whose  life  is  proposed 
for  insurance 

3  —  Single  or  married  ?      .     .     .     . 

4  —  Profession  or  occupation  ?    . 

5  —  Weight  ? 

Height?  feet         inches. 

General  state  of  health  ?  .     . 

6  —  Whether  now,  or  at  any  time, 

and  when,  and  how  long,  and 
under  what  circumstances,  and 
to  what  degree,  subject  to,  or 
at  all  affected  by,  any  of  the 
following  symptoms,  diseases, 
or  infirmities  ;  or  suspected  to 
be  so,  by  himself  or  by  any 
medical  authority,  viz. :  — 

Apoplexy ;  Asthma  ;  Bronchitis  ;  Can- 
cer ;  Chronic  Diarrhoea,  or  Dysen- 
tery ;  Consumption,  Spitting  of 
Blood,  or  any  disease  of  tlie  Lungs ; 
Convulsions,  or  Spasms ;  Coughs, 
prolonged  or  habitual;  Disease  ot  tlie 
Brain,  iservous  System,  Heart,  Stom- 
ach, Liv^ . .  Bowels,  Kidneys,  Bladder, 
Prostate  Gland,  or  of  the  Generative 
Organs  ;  Dropsy  ;  Dyspepsia  ;  Epi- 
leptic or  other  Fits  or  Fainting  Turns ; 
Erysipelas  ;  Eruptive  Diseases  ;  Fis- 
tula (in  una),  or  Piles ;  Gout,  or  Rheu- 
matism ;  Pleurisy  ;  Rupture  ;  Scrof- 
ula, or  any  disease  so  called  ;  Small 
Pox,  or  Varioloid  ;  Tumors  ;  Vertigo, 
Dizziness,  or  Giddiness. 


APPENDIX. 


741 


7  —  Has  the  person  now,  or  has    he 

had,  any  serious  illness,  dis- 
ease, or  symptoms  of  disease, 
not  enumerated  above,  or  met 
with  any  accident  or  injury ; 
and  if  so,  of  what  nature  ?  and 
when  ?    •     ; 

8  —  Has  there  ever  been  a  predis- 

position or  tendency  to  any 
hereditary  disease,  insanity, 
mental  derangement,  or  un- 
soundness, or  imbecility,  or  to 
suicide,  in  the  person  whose 
life  is  proposed  for  insurance, 
or  in  any  member  of  h 
family,  or  collateral  branches 
thereof,  such  as  uncles  or 
aunts  ? 

9  —  Is  the  person  now,  and  has   he 

always  been,  of  sound  mind? 

10  —  What  are  the  person's  habits  in 

regard  to  the  use  of  intoxicat- 
ing liquors  or  narcotics  ;  and 
are  they  correct  in  every  other 
respect?     

11  —  Has  the  person  resided  out  of  the 

United  States,  or  in  any  part 
of  the  United  States  south  of 
the  southern  boundary  of  Vir- 
ginia, either  for  health,  busi- 
ness, or  pleasure  ?  If  so,  for 
what  purpose,  and  where,  and 
for  what  period  ?      .     .     .     . 

12  —  Has  any  life  insurance  company 

declined  issuing  a  policy  on 
the  life  of  the  person  proposed 
for  insurance,  either  orally  or 
in  writing? 

13  —  Has  any  application  for  a  policy, 

or  statement  with  regard  to  the 
health  of  the  person,  been  pre- 
sented to  any  life  insurance 
company,  or  agent  thereof,  in 
any  form  wJiatsoecer,  prior  to 
this  date  ?  If  so,  state  the  par- 
ticulars  

14  —  Has  any  medical  opinion  or  ex- 

amination been  obtained,  or 
applied  for,  by  h  se'f  or  oth- 
ers, in  behalf  of  the  person 
whose  life  is  proposed  for  in- 
surance, for  any  disease  or 
suspicion  thereof,  or  for  life 
insurance,  or  for  any  purpose 
whatsoever,  prior  to  the  pres- 
ent occasion  ?  If  so,  state  the 
particulars 


742 


APPENDIX. 


15  —  If  now  insured,  state  in  -what  ^ 

company   or   companies,    the 
amount,  and  for  what  period  I 
in   each,  and  whether  at  the   f 
ordinary  or  an  extra  rate  of  | 
premium J 

16  —  What  is  the  name  of  the  usual  ^ 

medical  attendant  of  the  per- 
son whose  life  is  proposed  for 
insurance,  and  the  names  of 
any  who  may  have  been  con- 
sulted within  five  years  past  ?  }■ 
Please  state  the  particulars  of 
the  symptoms,  diseases,  or  in- 
firmities prescribed  for,  or  con- 
sulted about,  and  the  medical 
opinion  thereon 

17  —  Age  of  the  parents,  if  living?  .  ^  Father,      years. 

Age    attained    by  grandpar-  I  P.  G.  F.        ,, 
ents? J  M.  G.  F.      ,, 

18  —  Age  of  the  brothers,  and  sisters,  /  Brothers,      ,, 

if  living? (  Sisters,  ,, 


19  —  State  of  health  of  the  surviving 

parents,  brothers,  and  sisters  ? 

20  —  At  what  age,  and  of  what  dis-  ' 

ease,  have  both  or  either  of 
the  parents  died  ?    .     .     . 


Father, 
Brothers, 

Father's    age. 
Mother's    ,, 


Mother, 
P.  G.  M. 
M.  G.  M 


Mother, 
Sisters, 


years. 


Cause  of  death, 


21  —  At  what  age,  and  of  what  dis-  "J  Brother's 
ease,  have  any  of  the  brothers  |  ,, 

and  sisters  died?      .... 


If  deaths  in  the  family  record  have  been 
ascribed  to  childbirth,  state  distindtly  whether 
there  was  any  actual  or  suspected  pulmonary 
disease  connected  therewith. 


Sister's 


22  —  Name  and  residence  of  a  disin-  ") 

terested  friend,  who  knows  the 
state  of  health  of  the  person 
whose  life  is  proposed  for  in- 
surance, to  be  referred  to  con-  ' 
fidentially  for  information ; 
and  whose  answers  will  form 
a  part  of  this  application  .     . 

23  —  Are  there  any  facts  or  circum-  "j 

stances  not  herein  stated  which 
affect  tlie  risk  on  the  proposed 
life  unfavorably  ?     .     .     •     . 


APPENDIX. 


743 


24  —  Does  the  applicant  warrant  the  "1 

truth  of  all  the  foregoing  an- 
swers, and  agree  that  if  any 
answer  to  the  above  questions, 
or  in  said  statement,  or  anj' 
one  of  them,  is  fraudulent  or 
untrue,  or  if  there  is  any  con- 
cealment of  fact  bearing  upon 
the  proposed  risk,  whether  in-  ;• 
quired  about  or  not,  or  any 
non-compliance  with  the  terms 
and  conditions  of  the  policy, 
anil  the  rules  of  the  company, 
it  shall  vitiate  the  insurance, 
and  that,  in  such  cases,  no 
return  of  premium  shall  be 
made? 

25  —  How  are  payments  of  premiums 

to  be  made,  —  annually,  semi- 
annually, or  quarterly  ?     . 

26  —  For  whose  benefit,  or  on  whose 

behalf,  is  this  application 
made  ?  and  what  is  the  inter- 
est of  such  person  in  the  life  to 
he  assured  ? 

27  —  Has  the  applicant  carefully  read  ^ 

the  above  questions  and  the   ^ 
answers  thereto  ?     ....  J 

If  the  proposed  life  be  a  female,  she 
will  answer  the  following  additional 
questions,  viz. :  — 

Is  she  single,  or  married,  or  soon  ex-  > 
pecting  to  be  married?    .     .     .     .  ^ 

If  pregnant,  how  far  advanced  ?    .     . 

Is  there  any  reason  to  apprehend  un-  } 
usual  difficulty  of  labor  ?  .     .     .     .  \ 

Has  any  former  labor  been  difficult? 
If  so,  from  what  cause  ?  .     .     .     . 

Has  she  ever  been  affected,  or  sus- 
pected to  be  so,  either  by  herself 
or  any  medical  or  other  authority, 
of  any  disease  of  the  urinary  or 
generative  organs  ? 

The  foregoing  are  full  and  true  answers  to  the  questions  proposed 

Dated  at  on  the  day  of  a.d.  187  . 

To  be  signed  by  the 


To  be  sifjned  in  presence  of  the  medical 
examiner,  by  the  person  whose  life  is  pro- 
posed for  insurance. 


Applicant. 


744  APPENDIX. 

Questions  to  be  answered  by  a  friend  of  the  person  whose  life  is  proposed 
for  insurance. 

1.  How  long  have  you  known  h      ,  and  are  you  on  terms  of  intimacy? 

2.  Is    he  now,  and  has    he  always  been,  temperate  ? 

3.  Are  h      habits  otherwise  correct?     Active  or  sedentary  ? 

4.  Has  he  been  afflicted  with  any  mental  or  physical  disease  or  infirmity, 
or  symptoms  thereof,  to  your  knowledge  ? 

5.  Had    he  been  so  afflicted,  would  you  have  been  likely  to  know  it? 

6.  Is  he  in  general  good  health,  and  do  you  esteem  h  to  be  equal,  as 
regards  expectation  of  life,  to  the  average  of  persons  of  h  age  who  are 
now  in  good  health  ? 

MEDICAL  EXAMINER'S   CERTIFICATE. 

2i;^=' Before  or  after  making  the  physical  examination,  the  medical  examiner  will 
put  such  further  inquiries  as  he  may  think  necessary,  respecting  the  risk, 
which  he  may  deem  wortliy  the  consideration  of  the  company. 

Examination  of  Mr. 

1  — Have  you  read  each  question  and  answer  thereto,  } 

of  the  person  appearing  for  examination  ?      .  \       '*' 

2  —  Has  he  (or  she)  signed,  in  your  presence,  the  }    ^ 

foregoing  application  ? ^  Ans. 

3  —  Does  said  person  now  appear  to  enjoy  good  ? 

health  in  every  respect? ^  -Ans. 

4  —  What  is  his  or  her  temperament,  complexion,  >     , 

carriage,  and  general  appearance  ?  .  .  .  .  \ 
State  —  a.  Girth  of  chest  (about  midway)  over  ^ 

the  linen,  and  the  degree  of  expansion  on  >  Ans. 

forced  inspiration  — ) 

6,  Girth  of  loaist  — ,       Ans. 

c,  Con(Z(7joH  o/"Zi<n^.s,  on  examination  by  percus-  }     . 

sion  and  auscultation  — C  -^"■^• 

d,  Character  of  the  respiration ;  is  it  full,  easy,  ^ 

regular,  and  symmetrical  ?  number  of  inspi-  >  Ans. 
rations  per  minute ) 

e,  Heart — Are  its  sounds  clear,  distinct,  rhyth-  ") 

mical  ?     Are  there  any  indications  of  dis-  >  Ans. 
ease? 5 

f,  Liver  —  Is  there  any  evidence  of  disease  in  >     , 

this  organ  ? \  ^"*- 

g,  Condition  of  abdominal  and  urinary  organs.  > 

Any  evidence  of  disease  of  kidneys  ?     .     .  C  ^"** 
h.  Pulse,  number  per  minute,  when  not  unusu-  ^ 

ally  accelerated ;   hard   or  soft,  strong  or  >  Ans. 

weak,  regular  or  intermittinor  ?  —      .     .     .  S 
i,  Brain  —  Are  there  any  indications  of  disease  ") 

or  impairment  of  the  functions  of  this  or-  >  Ans. 

gan,  or  of  the  nervous  system  ?....) 


APPENDIX.  745 


5  —  Are  there  any  indications  of  a  predisposition,  "\ 

either  hereditary  or  acquired,  to  any  local  or  >  Ans. 
constitutional  disease  ? j 

6  —  Is  there  evidence  of  successful  vaccination  ?      .      Ans. 

7  —  Has  the  person  had  any  ailments  or  injury;  and  "j 

if  so,  will  the  medical  examiner  stafe  liis  opin-   }  Ans. 
ion  of  their  value  as  affecting  the  risk')      .     .  ] 

8  —  Are  the  vital  and  other  organs  in  a  normal  con-  )     . 

T.-      n                             °  >  Ans. 

dition  ? ^ 

9  —  Is  the  person,  in  your  opinion,  as  good  a  life  ") 

for  insurance  as  the  average  of  persons  of  the  | 
same  age,  who  are  of  sound  constitution,  in  I     a 
good  health,  and  lohose  family  histori/  is  good ;  \ 
and  do  you,  acting  in  the  interest  of  the  com-   I 
pany,  advise  the  acceptance  of  the  risk  ?  .     .J 

(Please  certify  to  this  directly  and  specif  cally.) 


187  .  MB. 


Form  of  policy  issued  hy  the  New  England  Mutual  Life  Insurance 

Company. 

NEW  ENGLAND  MUTUAL  LIFE  INSURANCE  COMPANY, 

BOSTON. 
No.  Age, 

Amount,  $  Premium,  $ 

This  policy  of  insurance   witne«setii,   that    the    Xew  England 
Mutual  Life  Insurance  Comp.OiY,  in  consideration  of  the  payment  of 

dollars,  and  cents,  this  day  made  by 

of  in  the  State  of  being  the  assured  in  this  policy,  and 

of  the  punctual  payment  of  a  like  sum  to  be  made  in  the  same  manner 
to  them,  at  their  office  in  Boston,  or  to  their  agent  duly  authorized,  on 
or  before  the  day  of  in  every  year  during  the  con- 

tinuance of  this  policy,  do  promise  and  agree  to  pay,  at  their  office  in 
Boston,  the  amount  of  dollars,  in  lawful  money  of  the  United 

States,  to   the   said  his  executors   or  administrators,  in  sixty  days 

after  due  proof  of  the  death  of  after  deducting  therefrom  all  indebt- 

edness of  the  party  to  the  company,  together  with  the  residue,  if  any,  of 
the  year's  premium. 

The  only  conditions  upon  which  this  policy  is  issued  by  the  company, 
and  accepted  by  the  assured,  are  the  following  :  — 

That  the  statements   and  declarations  made  by,  and  on  behalf  of,  the 
insured  in  the  application  for  this  policy,  which  are  hereby  referred  to  as 


746  APPENDIX. 

the  basis  of  this  contract  and  are  a  part  thereof,  and  on  the  faith  of  which 
it  is  issued,  are  in  all  respects  true,  and  that  no  fact  has  been  suppressed 
relating  to  the  health  or  circumstances  of  the  insured  affecting  the  interests 
of  said  company,  or  their  inducement  to  accept  the  risk. 

The  insured  may  reside  in  the  United  States  and  its  Territories  (except 
in  localities  where  yellow  fever  is  prevailing  at  the  time  as  an  epidemic)  ; 
and  in  the  British  Provinces,  and  travel  in  and  make  passages  along  the 
coasts  thereof;  and  may  go  to,  return  from,  reside  and  travel  in  Europe, 
the  West  Indies  (between  the  months  of  November  and  May  inclusive), 
and  the  islands  of  the  Pacific  Ocean. 

The  insured  may,  without  previous  notice  to  the  company,  go  and 
remain  beyond  the  above  limits ;  or  may  engage  in  any  military  or  naval 
service ;  or  engage  in  voyages  upon  the  high  seas  as  an  occupation :  or  in 
blasting,  mining,  or  submarine  operations ;  or  in  the  production  or  manu- 
facture of  highly  inflammable  or  explosive  substances ;  or  in  working  a 
steam-engine  on  land  or  water  as  engineer  or  fireman,  or  in  a  similar  capac- 
ity ;  or  as  an  employe  on  any  railroad  train;  but  in  such  case  he  shall  pay 
for  remaining  beyond  the  above  limits  of  residence  and  travel,  or  for  the 
risk  of  military  or  naval  service  in  time  of  war,  or  for  either  of  said  occu- 
pations, an  extra  premium,  equal  to  that  charged  in  similar  cases  by  other 
first-class  companies  in  the  United  States,  which,  if  not  paid  at  the  time  of 
the  assumption  of  the  risk,  shall  not  invalidate  this  contract,  but  shall  be  a 
lien  upon  the  policy. 

Any  assignment  of  this  policy  shall  be  void  unless  assented  to  in  writing 
by  said  company,  but  the  policy  shall  not  be  invalidated  thereby. 

In  case  of  any  indebtedness  due  to  this  company  from  the  assured,  this 
policy,  and  all  sums  due  thereunder,  are  hereby  pledged  to  secure  said 
indebtedness,  and  the  company  shall  have  a  lien  therefor  on  this  policy; 
and  said  debt  or  demand  may  be  set  off  against  the  amount  due  thereon. 

This  policy  is  payable  only  at  the  office  of  the  company  in  Boston,  from 
which  it  is  issued,  and  this  contract  shall  be  governed  and  construed  by  the 
laws  of  Massachusetts. 

The  loss  shall  be  payable  in  sixty  days  after  satisfactory  proof  thereof 
shall  have  been  furnished  at  the  office  in  Boston,  by  the  sworn  certificate  of 
the  attending  physician,  if  there  were  any,  and  the  full  and  particular  state- 
ment, under  oath,  of  at  least  one  competent  and  disinterested  witness,  stat- 
ing the  time,  place,  cause,  and  circumstances  of  the  death  of  the  insured. 

No  suit  shall  be  brought  against  the  company  on  any  claim  under  th?s 
policy,  unless  said  suit  is  commenced  within  two  years  from  the  time  when 
the  right  of  action  accrues,  and  also  within  three  years  from  the  termina- 
tion of  the  life  insured. 

This  policy  shall  not  take  effect  until  the  first  premium  is  actually  paid, 
and  agents  are  not  authorized  to  deliver  the  policy  to  the  assured  until 
such  payment  has  been  made. 

General  agents  appointed  directly  by  the  company  are  alone  authorized 


APPENDIX.  747 

to  receive  premiums  at  the  day  when  payable,  and  not  afterwards,  but  can- 
not give  credit,  or  make,  alter,  or  discharge  contracts,  or  waive  forfeitures. 

No  alteration  or  waiver  of  the  conditions  of  this  policy  shall  be  valid 
unless  made  in  writing  at  the  office  in  Boston,  and  signed  by  the  president. 

All  premiums  due  under  this  policy  shall  be  paid  in  advance,  but  any 
annual  premium  may,  at  the  election  of  the  assured,  be  paid  in  cash,  either 
in  one  sum  or  in  semi-annual  or  quarterly  instalments,  to  be  secured  by  the 
notes  of  the  assured ;  it  being  understood  that  the  company  assumes  no 
risk  for  the  period  covered  by  such  deferred  payments,  but  only  for  that 
portion  of  the  year  for  which  the  premium  shall  have  been  actually  paid  IN 
CASH,  in  advance ;  and  that  in  case  of  loss  all  such  deferred  payments  are 
to  be  deducted  from  the  amount  payable. 

In  case  any  premium  upon  this  policy,  or  any  part  of  a  premium,  or  any 
note  given  therefor,  shall  not  be  paid  at  the  day  when  payable,  the  policy 
shall  thereupon  become  forfeited  and  void,  except  as  provided  by  I86th 
chapter  of  the  acts  of  the  Legislature  of  Massachusetts,  in  the  year  1861, 
entitled  "  An  Act  to  Regulate  the  Forfeiture  of  Policies  of  Life  Insurance," 
and  in  such  cases  the  holder  of  the  policy  shall  not  be  entitled  to  any  return 
of  premium  or  share  of  the  surplus  funds. 

This  policy  shall  be  void  if  the  insured  shall  die  by  his  own  hand  or  act, 
or  in,  or  in  consequence  of,  a  duel,  or  by  the  hands  of  justice,  or  in  the 
violation  of,  or  attempt  to  violate,  any  criminal  law  of  the  United  States,  or 
of  any  State  or  country  in  which  the  insured  may  be. 

In  witness  whereof,  the  said  New  England  Mutual  Life  Insur- 
ance Company  have,  by  their  president,  signed  and  delivered  this  contract, 
this  day  of  in  the  year  one  thousand  eight  hundred 

and  seventy- 

President. 
Secretary. 

This  policy  is  not  valid  till  countersigned  by 
Countersigned, 


Form  of  application  for  insurance  in  the  Travelers  Insurance  Company, 
of  Hartford,  Conn. 

TRAVELERS  INSURANCE  COMPANY,  OF  HARTFORD, 

CONN. 

APPLICATION   FOR   INSURANCE    AGAINST    ACCIDENTS. 

1.  Name  in  full.  |  2.  Age. 

3.  Residence.     ]  Town,  County,  State, 

Place  of  Business 
(Street  and  No.) 


748  APPENDIX. 

4.  Occupations. 
If  more  than  one,  name  them  all. 

5.  To  whom  payable,  in  case   |  Name. 

of  death  by  accident.        i 

Give  full  name,  relationship,  and      j   Residence  and  ) 
residence.  J   Kelationship.   ) 

6.  Have  you  any  other  insurance  in  this  company  ? 
If"  so,  to  what  amount  ? 

7.  Class  of  risk  —  preferred,  ordinary,  medium,  haz-  ? 

ardous,  extra  hazardous,  or  special  contract.         ^ 

8.  Death  only,  indemnity  only,  or  both. 

9.  Amount  insured  for  )  ^  1 

death  by  accident.  \^  |  11.  Term,  Months. 

10.  Weekly  indemnity.      $  |  12.  Premium.     $ 

13. 'a.  Have  you  ever  had,  or  are  you  now  suffering  from,  any  ^ 
disease,  especially  rheumatism,  erysipelas,  scrofula,  ul- 
cers, varicose  veins,  bodily  infirmities,  or  wounds,  which 
would  retard  recovery  from,  or  be  aggravated  by,  per- 
sonal injuries  ? 
h.  Have  you  ever  had  or  are  you  subject  to  fits,  or  to  any 
disorders  of  the  brain,  or  any  physical  or  mental  infirm- 
ity which  would  thereby  render  you  liable  to  personal 
injuries  ? 

14.  Are  you  aware  that  you  will  not  be  entitled  to  recover  for  ^ 

disability  arising  from  or  aggravated  by  disease,  or  for  [ 
the  result  of  accident  induced  thereby ;  or  for  death  at-  j 
tributable  to  natural  causes  ?  J 

15.  Have  you   in   contemplation  any  special  journey,  or  haz- 

ardous undertaking,  not  disclosed  in  this  application  for 
insurance  ?  j 

16.  Are  your  habits  of  life  correct  and  temperate,  and  do  you  ^ 

understand  that  the  policy  will  not  cover  any  accident  or  [ 
injury  caused  by,  or  resulting  from,  intoxicating  drinks,  ( 
or  happening  while  under  the  influence  thereof?  j 

17.  Has  your  attention  been  called  to  the  classification  of  risks,  "I 

and  the  fact  that  you  will  not  be  entitled  to  recover  for 
any  injury  received   by  exposure   to   accidents   or  risks   )■ 
classified  as  more  hazardous  than  the  occupations  or  haz-  j 
ards  against  which  you  hereby  elect  to  insure  ?  J 

Declaration  :  I,  being  desirous  of  effecting  an  insurance  with 

the  Travelers  Insurance  Company,  do  warrant  the  above  statements  to 
be  true  ;  and  I  hereby  agree  that  this  declaration  and  warranty  shall  be  the 
basis  of  the  contract  between  me  and  the  said  company,  and  that  the  policy 
hereby  applied  for  is  accepted,  subject  to  all  the  conditions,  classifications, 
and  provisions  contained  or  referred  to  therein. 

Dated  at  this  day  of  187  . 

Signed, 

Rates  and  classification  in  all  cases  to  conform  to  latest  edition  of 
3fanual. 


APPENDIX.  749 

Form  of  policy  against  accident  issued  hy  the   Travelers  Insurance 
Company,  of  Hartford,  Conn, 

GENERAL  ACCIDENTS. 

THE  TRAVELERS  INSURANCE  COMPANY,  OF  HART- 
FORD, CONN. 

Amount,  $  Premium,  $ 

In  consideration  of  the  representations  made  in  the  application  for 
this  insurance,  and  of  the  sum  of  dollars,  does  hereby  insure 

by  occupation,  profession,  or  employment,  a  residing  in  county 

of  and  State  of  in  the  principal  sum  of  dollars,  for 

the  term  of  months,  ending  on  the  day  of  eighteen 

hundred  and  at  twelve  o'clock  noon.     The  said  sum  insured  to  be 

paid  to  or  legal  representatives,  within  ninety  days  after 

sufficient  proof  that  the  insured,  at  any  time  within  the  continuance  of  this 
policy,  shall  have  sustained  bodily  injuries,  effected  through  external,  vio- 
lent, and  accidental  means,  within  the  intent  and  meaning  of  this  contract 
and  the  conditions  hereunto  annexed,  and  such  injuries  alone  shall  have 
occasioned  death  within  ninety  days*  from  the  happening  thereof;  or,  if  the 
insured  shall  sustain  bodily  injuries,  by  means  as  albresaid,  which  shall,  inde- 
pendently of  all  other  causes,  immediately  and  wholly  disable  and  prevent 
him  from  the  prosecution  of  any  and  every  kind  of  business;  then,  on  satis- 
factory proof  of  such  injuries,  he  shall  be  indemnified  against  loss  of  time 
thereby,  in  a  sum  not  exceeding  dollars  per  week,  for  such  period 

of  continuous  total  disability  as  shall  immediately  follow  the  accident  and 
injuries  as  aforesaid ;  not  exceeding,  however,  twenty-six  consecutive  weeks 
from  the  time  of  the  happening  of  such  accident. 

Provided  always,  that  this  polity  is  issued  and  accepted  subject  to 
all  the  provisions,  conditions,  limitations,  and  exceptions  herein  contained 
or  referred  to,  and  upon  the  express  agreement  that  the  statements  and 
declarations  of  the  insured,  in  his  application  for  this  insurance,  are  war- 
ranted to  be  true  in  all  respects,  and  that  said  ajjplication,  together  with 
the  company's  classification  of  hazards  indorsed  hereon,  is  referred  to  and 
made  a  part  of  this  contract;  and  that  if  this  policy,  or  any  renewal 
thereof,  has  been,  or  shall  be,  obtained  through  misrepresentation,  fraud, 
or  concealment,  or  if  any  attempt  shall  be  made  by  false  swearing,  or  sup- 
pression of  any  material  fact,  on  the  part  of  the  insured,  to  obtain  any  sum 
under  this  policy,  or  any  renewal  thereof,  then  the  same  shall  be  absolutely 
void. 

Provided  always,  that  this  insurance  shall  not  extend  to  any  bodily 
injury  of  which  there  shall  be  no  external  and  visible  sign ;  nor  to  any 
bodily  injury,  happening  directly  or  indirectly  in  consequence  of  disease ; 
nor  to  any  death  or  disability  which  may  have  been  caused  wholly  or  in  part 


750  APPENDIX. 

by  bodily  infirmities  or  disease  existing  prior  or  subsequent  to  the  date  of 
this  contract,  or  by  the  taking  of  poison,  or  by  any  surgical  operation  or 
medical  or  mechanical  treatment  for  disease ;  nor  to  any  case  except  where 
the  injury  aforesaid  is  the  proximate  and  sole  cause  of  the  disability  or 
death.  And  no  claim  shall  be  made  under  this  policy  when  the  death  or 
injury  may  have  been  caused  by  duelling,  fighting,  wrestling,  lifting,  or  by 
over-exertion,  or  by  suicide  (felonious  or  otherwise,  sane  or  insane),  or 
by  sun-stroke,  freezing,  or  self-inflicted  injuries,  or  by  concealed  weapons 
carried  by  the  insured,  or  when  the  death  or  injury  may  have  happened  in 
consequence  of  war,  riot,  or  invasion,  or  of  riding  or  driving  races,  or  of 
exposure  to  any  obvious  or  unnecessary  danger,  hazard,  or  perilous  advent- 
ure, or  of  violating  the  rules  of  any  company  or  corporation,  or  when  the 
death  or  injury  may  have  happened  while  the  insured  was,  or  in  consequence 
of  his  having  been,  under  the  influence  of  intoxicating  drinks,  or  taking  part 
in  gymnastic  sports,  or  while  employed  in  mining,  blasting,  or  wrecking,  or 
in  the  manufacture,  transportation,  or  use  of  gunpowder  or  other  explosive 
substances,  or  while  engaged  in,  or  in  consequence  of,  any  unlawful  act. 
And  this  insurance  shall  not  be  held  to  extend  to  mysterious  disappearances, 
nor  to  any  case  of  death  or  disability,  'the  nature,  cause,  or  manner  of 
which  is  unknown,  or  incapable  of  direct  and  positive  proof. 

Provided  always,  that  if  the  insured  shall  travel  or  be  beyond  or 
without  the  limits  of  travel  and  residence  hereinafter  prescribed,  without 
first  obtaining  from  this  company,  or  one  of  its  agents,  a  special  permit  in 
writing,  and  paying  the  extra  premium  therefor,  then  this  policy  shall  be 
wholly  void  as  to  all  accidents  occurring  beyond  such  limits.  No  indemnity 
shall  be  paid  for  loss  of  time  resulting  from  accident  occurring  while  the 
insured  is  without  or  beyond  such  limits.  Said  limits  of  travel  and  resi- 
dence are  as  follows,  viz.  :  The  inhabited  portions  of  civilized  abodes  of 
the  States  of  the  United  States,  the  Dominion  of  Canada,  and  Prince  Ed- 
ward's Island,  and  coastwise  by  regular  lines  of  passenger  or  mail  convey- 
ance from  port  to  port  on  the  Atlantic  seaboard  or  Gulf  of  Mexico  ;  but  in 
no  event  to  include  any  voyage  past  or  around  Cape  Hatteras,  or  upon  the 
high  seas,  without  special  permit  and  extra  premium  therefor.  Provided, 
however,  that  the  insured  may  travel  to  California,  or  return,  in  the  cars  of 
the  Pacific  Railroad,  without  permit,  the  insurance  being  limited  during  said 
journey  to  such  fatal  or  non-fatal  injuries  as  may  be  received  while  actually 
riding  in  railway  coaches  provided  for  the  transportation  of  passengers.  No 
insurance  is  granted  under  this  contract  against  any  fatal  or  non-fatal  injuries 
caused  by  Indians. 

Provided  always,  that  all  sums  which  may  be  paid  by  way  of  indem- 
nity to  the  insured,  by  virtue  of  this  policy,  shall  be  accounted  in  diminu- 
tion of  the  principal  sum  hereby  insured,  so  that  in  case  of  subsequent 
death  or  injury,  during  the  continuance  of  this  policy,  and  the  year  in  which 
such  indemnity  may  have  been  paid,  the  total  amount  to  be  paid  by  the  said 
company  shall  not  in  any  case  exceed  the  principal  sum  hereby  insured. 


APPENDIX.  751 

Claims  under  this  policy  are  payable  only  at  the  company's  office  in 
Hartford,  and  this  policy  is  subject  also  to  the  following  conditions  :  — 

1.  The  party  insured  is  required  to  use  all  due  diligence  for  personal 
safety  and  protection,  and  to  notify  the  secretary  of  this  company  immedi- 
ately, and  in  writing,  of  any  change  from  the  occupation,  profession,  or 
employment  under  which  this  insurance  is  granted.  He  is  insured  under 
classification  as  indorsed  hereon,  the  same  being  a  part  of  this  con- 
tract, and  this  policy  shall  be  wholly  void  as  to  all  accidents  occurring  in 
any  occupation,  profession,  employment,  or  exposure  not  named,  incident 
to  or  included  in  the  classification  under  which  he  is  insured,  unless  he  shall 
have  first  procured  from  this  company  or  one  of  its  agents,  a  written  per- 
mit therefor,  and  paid  the  additional  premium  required.  [^^  Standing, 
riding,  or  being  upon  the  platforms  of  moving  railway  coaches,  other  than 
street  cars,  or  riding  in  any  other  place  not  provided  for  the  transportation 
of  passengers,  or  entering  or  attempting  to  enter  or  leave  any  public  con- 
veyance using  steam  as  motive  power,  while  the  same  is  in  motion,  are 
hazards  not  contemplated  or  covered  by  this  contract;  and  no  sum  will  be 
paid  for  loss  of  life  or  disability  (in  consequence  of  such  exposures)  happen- 
ing to  any  person,  other  than  employes  on  such  conveyances,  who  shall 
have  given  notice  of  such  occupation,  and  paid  the  fixed  premium  for  such 
hazards. 

2.  In  the  event  of  any  accident  or  injury  for  which  claim  may  be  made 
under  this  policy,  or,  in  case  of  death  resulting  therefrom,  immediate  notice 
shall  be  given  in  writing,  addressed  to  the  secretary  of  this  company,  at 
Hartford,  Conn.,  stating  the  full  name,  occupation,  and  address  of  the 
insured,  with  full  particulars  of  the  accident  and  injury  ;  and  failure  to  give 
such  immediate  written  notice  shall  invalidate  all  claims  under  this  policy ; 
and  unless  direct  and  affirmative  proof  of  the  same,  and  of  the  death  or 
duration  of  total  disability  shall  be  furnished  to  the  company  within  seven 
months  from  the  happening  of  such  accident,  then  all  claims  accruing  under 
this  policy  shall  be  waived  and  forfeited  to  the  company. 

3.  No  suit  or  proceeding  at  law  or  in  equity  shall  be  brought  to  recover 
any  sum  hereby  insured,  unless  the  same  is  commenced  within  one  year  from 
the  time  the  right  of  action  accrues. 

4.  The  insured  shall  not  be  entitled  to  indemnity  for  disabling  injuries 
beyond  the  amount  of  his  ordinary  wages,  salary,  or  the  money  value  of  his 
time  during  the  period  of  continuous  total  disability,  not  exceeding  twenty- 
six  weeks  as  aforesaid. 

5.  No  claim  shall  be  payable  under  this  policy,  unless  any  medical 
adviser  of  the  company  shall  be  allowed  to  examine  the  person  of  the 
insured,  in  respect  to  any  alleged  injury  or  cause  of  death,  when  and  so 
often  as  may  be  reasonably  required  on  behalf  of  the  company. 

0.  The  risk  taken  by  this  company  on  any  one  life  is  limited  to  ten 
thousand  dollars  and  fifty  dollars  weekly  indemnity :  and  no  insurance, 
whether  effected   by   the   company's   life    or    accident   policies,   or  tickets, 


752  APPENDIX. 

shall  hold  good  as  to  the  surplus  insured  above  those  amounts,  respec- 
tively , 

7.  No  assignment  of  this  policy  shall  be  valid  unless  made  in  writing, 
indorsed  hereon,  and  unless  a  copy  of  such  assignment  shall  be  given  to  this 
company  within  thirty  days  after  its  execution ;  and  any  claim  under  this 
policy  made  by  any  assignee  shall  be  subject  to  proof  of  interest. 

8.  If  the  company  shall  so  elect,  this  policy  may  be  cancelled  at  any 
time,  by  refunding  to  the  insured  the  premium  paid  by  him,  less  a  jvo  rata 
part  thereof  for  the  time  said  policy  has  been  in  force. 

9.  The  actual  payvient  of  premium,  before  the  happening  of  any  accident 
under  which  claim  for  loss  may  be  made,  as  well  as  all  the  provisions  and 
conditions  aforesaid,  and  a  strict  compliance  therewith  during  the  continu- 
ance of  this  policy,  are  conditions  precedent  to  the  making  of  this  contract, 
and  no  waiver  shall  be  claimed  by  reason  of  the  act  or  acts  of  any  local 
agent,  unless  such  act  or  waiver  be  specially  authorized  in  writing,  over  the 
signature  of  the  president  or  secretary  of  this  company. 

10.  This  policy  is  issued  only  upon  the  express  condition  that  the  person 
or  persons,  if  any  other  than  the  insured,  who  have  procured  this  insurance 
to  be  taken  by  this  company,  shall  be  deemed  the  agent  or  agents  of  the 
insured,  and  not  of  this  company,  in  any  transactions  relating  to  this  insur- 
ance, and  if  the  premium  on  this  policy  shall  be  paid  to  any  person  or  per- 
sons other  than  the  duly  commissioned  agent  of  this  company,  such  payment 
shall  be  at  the  sole  risk  of  the  insured. 

In  witness  whereof,  the  Travelers'  Insurance  Company,  of  Hart- 
ford, has  caused  these  presents  to  be  signed  by  its  president,  and  attested 
by  its  secretary,  and  delivered  at  the  home  office,  in  the  city  of  Hartford, 
State  of  Connecticut,  and  this  policy  countersigned  by  agent  of 

this  company,  at 
Attest : 

President. 
Secretary. 
Countersigned  at  this  > 

day  of  187    .  S 

Agent. 

CLASSIFICATION  REFERRED  TO  IN  THE  POLICY. 

[See  Condition  No.  1.] 

Classification  preferred,  includes  the  following  named  occupations,  pro- 
fessions, and  employments  :  Actuary,  Apothecary,  Artist,  painter.  Attorney, 
lawyer.  Auditor,  Army  or  Navy  Officer,  not  in  service,  Author,  writer,  Bank 
Officer  or  Clerk,  Barber,  Book-keeper,  accountant,  Book  seller.  Broker,  in 
merchandise,  stocks,  or  gold.  Copyist,  Clergyman,  minister,  Clerk,  gener- 
ally, Clothier,  Commission  Merciiant,  Dressmaker,  Draughtsman,  Druggist, 
Editor,  reporter,  Express  agent,  office  duty.  Grocer,  Hotel  Keeper,  propri- 


APPENDIX.  753 

etor,  Insurance  Officer  or  Clerk,  not  travelling,  Lithographer,  not  working, 
Manufacturer,  not  working,  Milliner,  Musician,  not  travelling,  Physician, 
surgeon.  Postmaster,  P.  O.  Clerk,  Paymaster,  office,  Phonograplier,  Photog- 
rapher, Publisher,  President  or  Secretary  of  Corporation,  Schoolmaster, 
Tailor,  merchant,  Teacher,  Telegraph  Operator,  Ticket  Agent,  at  office,  Wig 
Maker. 

Classification  ordinary,  includes  the  occupations,  profi^ssions,  and  em- 
ployments named  under  classification  preferred,  and  also  the  following 
named:  Actor,  Actress,  Agricultural  Implement  Maker,  not  using  circular 
saw,  Ale  or  Beer  Manufacturer,  Architect,  Armorer,  Artificial  Limb  Maker, 
Baker,  Barber  on  Steamboat,  Basket  Maker,  Brick  Maker,  Bell  Hanger,  Boat 
Builder,  Book  Binder,  Boot  and  Shoe  Maker,  Box  and  Trunk  Maker,  Brass 
Polisher,  finisher,  Brewer,  Builder,  Cabinet  Maker,  not  using  circular  saw, 
Cap  or  Carpet  Bag  Maker,  Carpet  Weaver,  Carriage  Maker,  Chair  Maker, 
Chief  Engineer,  Civil  Engineer,  Clerk  on  River  Steamboat,  Clock  Maker, 
Coach  Maker,  Coffee  House  Keeper,  Commercial  Agent,  Compositor,  Con- 
fectioner, Cook,  professional,  Coppersmith,  Copperplate  Printer,  Chiropodist, 
Cornice  Moulder,  Cotton  Packer  and  Pressor,  Cotton  Dyer,  Cotton  Piinter, 
Currier,  Custom  House  Officer,  inspector,  &c..  Cutler,  Die  Engraver,  mould 
maker,  Distiller,  rectifier.  Drug  Grinder,  Eating  House  Keeper,  Electro- 
typer.  Embosser,  Embroiderer,  Engineer  of  Stationary  Engine,  li^ngraver, 
Farmer,  not  working.  File  Maker,  Fish  Curer,  Fish  and  Oyster  Dealer,  Fur- 
rier, Gardener,  Gas  Fitter,  Gas  Works,  service.  Ganger,  Glazier,  (Jlover, 
Gold  Beater,  Gold  or  Silver  Refiner  and  Worker,  Grain  Measurer,  Grave 
Digger,  Gunsmith,  Harness  Maker,  Hat  and  Cap  Maker,  Hollow  Ware 
Maker,  Hoop  Maker,  Hotel  or  Tavern  Keeper,  country.  Horse  Car  Con- 
ductor, House  Decorator,  India  Rubber  Manufactory,  employe  in.  Ink 
]\Iaker,  Instrument  Case  Maker,  not- using  circular  saw,  Japanner,  Jeweller, 
working.  Leather  Dyer,  Lithographer,  working.  Locksmith,  Looking  Glass 
Maker,  ^Machinist,  Master  INIason,  Marble  Cutter,  Medical  Student,  Market- 
man,  Master  Mechanic,  Metal  Refiner,  Miller,  grain  and  flour,  ]\Iilkman, 
Mould  Maker,  Musician,  travelling.  Nail  :\Iaker,  Naval  x\.rchitect.  Nursery- 
man, working.  Operator  in  Cotton  or  Woollen  Mill,  Organ  Builder,  Oyster 
Dealer,  Packer  of  Hay,  cotton,  pork,  or  beef.  Packing  Case  Maker,  not 
using  circular  saw.  Paper  Hanger,  Paper  Box  jNIaker,  Pastry  Cook,  Pavior, 
Pawnbroker,  Paymaster,  travelling.  Peddler,  Pencil  Maker,  Picture  Frame 
Maker,  Plasterer,  Plater,  Plumber,  Porter,  Pressman,  Printer,  Pump  Maker, 
Rectifier,  Rope  Maker,  Saddler,  Sail  Maker,  Saloon  Keeper,  Sausage  :\Laker, 
Scourer,  dyer,  Segar  Maker,  Sheriff  or  Deputy,  Ship  r>roker,  agent.  Ship 
Builder,  contractor,  Ship  Inspector,  Shovel  Maker,  Silversmith,  Spectacle 
Maker,  Spindle  Maker,  Spinner,  Spring  Maker,  Steel  Pen  JNIaker,  Stereo- 
typer.  Steward  on  River  Steamer,  low  pressure.  Stone  Cutter  and  Dresser, 
Surgical  Instrument  Maker,  Surveyor,  Superintendent,  railroad.  Tailor,  work- 
ing. Tallow  Chandler,  Tanner,  Tinman,  Travelling  Agent,  Tool  Maker,  Type 
Founder,  Umbrella  Maker,  Upholsterer,  Wagon  Maker,  Warehouseman, 

48 


754  APPENDIX. 

Watchmaker,  working,  Weaver,  Weigher,  gauger,  Weighing  Machine  or 
Scale  Maker,  Wharfinger,  Whij)  Maker,  Whitesmith,  Wire  Maker,  Wood 
Dealer. 

Classification  medium,  includes  the  occupations,  professions,  and  employ- 
ments named  under  classifications  preferred  and  ordinary,  and  also  the 
following  named :  Baggage  Master,  at  station.  Bar  Keeper,  Blacksmith,  work- 
ing. Blast  furnace,  workman  in,  Block,  Oar,  and  Mast  Maker,  Bolt  Maker, 
Brass  Founder,  working,  Bricklayer,  Broker  in  Cattle  and  Horses,  Boiler- 
Maker,  Butcher,  Button  Maker,  Captain  of  River  Steamer,  Car  Driver,  Car 
Builder,  Cleaner,  or  Repairer,  Cai-penter  and  Joiner,  Caulker,  ship.  Coach- 
man, Coal  Heaver,  Conductor  on  Passenger  Train,  Cooper,  Cork  Cutter, 
Drayman,  Driver  of  Express  Wagon,  cities,  Drover,  cattle  dealer,  Engineer 
on  River  Steamer,  low  pressure.  Farm  Laborer,  Farmer,  working.  Fireman, 
engine,  hose,  hook  and  ladder.  Foundry,  employe  in.  Freight  Agent,  at  sta- 
tion, Glass  Blower,  Horse  Dealer,  Hod  Carrier,  Hostler,  Jailer,  Laborer, 
wharf,  warehouse,  grain  elevator.  Lead  Pipe  and  Tube  Maker,  Lighthouse 
or  Lightship  Keeper,  Lightning  Rods,  one  who  puts  up.  Livery  Stable 
Keeper,  Lumberman,  manufacturer.  Mail  Agent,  travelling.  Mason,  brick- 
layer, stone  setter,  Mate  of  River  Steamer,  Metal  Turner,  Moulder,  Naval 
Officer,  in  service.  Oil  Dealer,  petroleum.  Painter,  house  or  ornamental. 
Policeman,  Prison  Keeper,  Puddler,  Quarryman,  Railroad  Contractor,  Road- 
master,  Rolling  Mill,  workman  in,  Scythe  and  Sickle  Maker,  Signalman, 
Ship  Carpenter,  Shipsmith,  Signalman,  railroad,  Showman,  Slate  Quarrier, 
Soda  Water  Manufacturer,  Stationman,  Stable  Keeper,  Stage  Driver,  Sugar 
Refinery,  workman  in.  Telegraph  Builder  or  Repairer,  Thresher,  Track 
Laborer,  Track  Superintendent  or  Inspector,  Truckman,  Turpentine,  Tar, 
and  Rosin  Manufacturer,  Varnish  Maker,  Watchman,  Wheelwright,  Wood 
Chopper. 

Classification  Jiazardoiis,  includes  the  occupations,  professions,  and  em- 
ployments named  under  classifications  preferred,  ordinary,  and  medium,  and 
also  the  following  named :  Base  Ball  Player,  Boatman,  Canal  Boatman,  Cap- 
tain of  Lake  or.  Sea  Vessel,  Captain  of  Lake  or  Sea  Steamer,  Chemist, 
manufacturing.  Dock  Laborer,  Engineer  of  River  Steamer,  high  pressure. 
Engineer,  mining.  Employe  on  Construction  Train,  Farrier,  Fisherman, 
Fireman,  river  or  sound  steamer.  Grinder  of  Edged  Tools,  Horse  Shoer, 
Hunter,  Ivory  Cutter  and  Worker,  Lighterman,  bargeman.  Limestone  Quar- 
rier, or  Burner,  Lumberman,  logger,  chopper.  Master  or  Mate  of  Sailing 
Vessel  or  Steamer,  on  lake  or  sea.  Match  Maker,  Nightman,  Operative  in 
Saw  or  Planing  Mill,  not  buzz  sawyer.  Pilot,  Roofer,  slate  or  tin.  Sash  and 
Blind  Maker,  Scavenger,  Ship  Rigger,  Seaman  on  Lake  or  Sea  Steamer, 
Shooting  Gallery  Keeper,  Slater,  Soap  Boiler,  Steel  Polisher,  Stevedore, 
Steward  on  Vessel  or  Steamer,  Switchman,  railroad.  Timber  Hewer,  Trap- 
per, Turner,  wood  or  ivory.  Veterinary  Surgeon,  Vitriol  Manufacturer. 

Classification  extra  hazardous,  includes  all  the  occupations,  professions, 
and  employments  named  under  classifications  jireferred,  ordinary,  medium. 


APPENDIX. 


755 


and  hazardous,  and  also  the  following :  Brakeman  on  Passenger  Trains,  Buzz 
Sawyer,  Circular  Sawyer,  Cartridge  Maker,  Conductor  on  Freight  Trains, 
Common  Sailor,  Fireworks,  maker  of.  Horse  Breaker,  Locomotive  Engineer 
or  Fireman,  Percussion  Cap  Maker,  Pyrotechnist,  Raftsman,  Yardmaster, 
Dispatcher  or  Coupler,  railroad. 

Persons  engaged  in  occupations  other  than  those  named  in  the  above 
classifications  may  be  insured  by  special  contract,  the  rates  for  which  may 
be  learned  from  the  company  or  its  agents. 

NOTICE   RESPECTING  ASSIGNMENTS. 

[See  Condition  No.  7.] 

The  principal  sum  insured  herein  can  be  assigned  only  by  the  person  or 
persons  to  whom  it  is,  by  the  terms  of  the  policy,  made  payable ;  and  such 
principal  sum  is  always  subject  to  diminution  to  the  extent  of  the  weekly 
indemnity  paid  to  the  insured  during  the  policy  year. 

The  weekly  indemnity  herein  insured  can  be  assigned  only  by  the  person 
whose  life  is  insured. 

A  copy  of  every  assignment  must  be  given  to  the  company  within  thirty 
days  after  its  execution. 


Travellers  General  Accident  Ticket. 


RAILWAY    PASSENGERS    ASSURANCE    COMPANY, 

Of  Hartford,  Conx. 
$3,000.  Station-  No. 


This  policy  wiU  be  good  for 

ONE   DAY, 
commencing    with    the    hour 
of  date,  and  is  subject  to  pro- 
visions   of    contract    on    the 
back  hereof. 

Secretary. 


Form 
1 


Not  Transferable. 
TWENTY   CENTS. 


Provisions  on  the  back  referred  to. 

The  Railway  Passengkrs  Assurance  Company,  of  Hartford,  Conn., 
will  indemnify  the  insured  under  this  contract  in  the  sum  of  fifteen  dollars 


756  appendix! 

per  week  against  loss  of  time,  not  exceeding  twenty-six  consecutive  weeks 
from  the  date  of  the  accident  under  which  claim  is  made,  while  totally  dis- 
abled and  pi'evented  from  the  transaction  of  all  kinds  of  business,  solely  by 
reason  of  bodily  injuries,  effected  through  outward  and  accidental  violence ; 
or  in  the  event  of  death  within  ninety  days  from  the  happening  of  such  acci- 
dent, when  caused  proximately  and  solely  by  bodily  injuries  as  aforesaid, 
will  pay  to  the  legal  representatives  of  the  insured  the  sum  of  three  thousand 
dollars. 

Provided  ahoays,  that  this  insurance  shall  only  extend  to  bodily  injuries, 
fatal  or  non-fatal,  as  aforesaid,  when  accidentally  received  by  the  insured 
while  actually  riding  in  a  public  conveyance,  provided  by  common  carriers, 
for  the  transportation  of  passengers  in  the  United  States  or  Dominion  of 
Canada,  and  in  compliance  with  all  rules  and  regulations  of  such  carriers, 
and  not  neglecting  to  use  due  diligence  for  self-protection ;  and  provided, 
that  in  the  event  of  bodily  injury  or  death  insured  against,  by  reason  of 
which  a  claim  for  loss  may  be  made  under  this  contract,  immediate  notice 
shall  be  given  to  the  company,  at  Hartford,  Conn.  Insurance  on  any  one 
person  is  limited  to  $6,000  in  case  of  death,  and  no  one  holding  more  than 
one  policy  issued  by  this  company  will  be  entitled  to  receive  in  excess  of  that 
sum,  or  $30  weekly  indemnity  for  total  disability  as  aforesaid.  Women  will 
be  insured  under  this  contract  against  death  only,  and  this  insurance  shall 
not  extend  to  children  under  sixteen  years  of  age,  nor  to  persons  bereft  of 
reason,  sight,  or  heai'ing,  nor  to  employes  on  public  conveyances  while  on 
duty,  nor  to  any  voyage  or  exposure  upon  the  high  seas,  nor  to  disabilities 
or  death  by  reason  of  bodily  infirmities  or  disease  of  any  kind,  nor  to  mys- 
terious disappearances,  or  any  case  of  death  or  disability  the  cause  or  man- 
ner of  which  is  unknown  or  incapable  of  positive  proof.  ' 

No  suit  shall  be  brought  for  loss  under  this  contract  unless  within  one 
year  from  the  time  the  right  of  action  accrues. 

This  policy  is  not  transferable,  and  the  name  and  residence  of  the  insured 
is  required  to  be  written  below. 

President. 

Name, 
Residence, 


INDEX. 


A. 

ACCIDENT,  insurance  ticket,  71. 

definition  of,  628. 

rupture  from  jumping,  629. 

drowning,  631-634. 

secondary  cause  of,  631-634. 

cause  of,  arising  within  the  system,  634. 

sunstroke,  641. 

to  carriages,  673. 

robbery,  642. 

notice  of,  674. 

railway,  642. 

total  disability  from,  644. 
«   by  conveyance,  647-659. 

negligence,  wilful  exposure,  661. 

condition  to  be  careful,  667. 
ACKN0\VLEDG:\IENT  of  notice,  450. 
ACT  OF  GOD,  whether  it  excuses  default,  402,  424. 
ACTIOX,  parties  to,  where  there  is  change  of  interest,  305,  544. 
ADMINISTRATOR,  has  insurable  interest,  80,  86. 

claims  to  proceeds  of  life  policy  as  against  creditor,  471. 
•    on  fire  policy,  as  against  heirs,  544. 
AGE,  representation  as  to,  339,  582. 
AGENT,  powers  of,  how  affected  by  late  civil  war,  36. 

rights,  powers,  and  duties  generally,  119-159. 

powers  in  soliciting  risks,  120. 

powers  in  taking  application,  120. 

in  receiving  premiums,' 122. 

of  the  insured,  122,  124. 

how  far  person  referred  to  is,  123. 

is  responsible  for  negligence,  124. 

miist  be  disinterested,  125. 

authority  of,  what  it  appears  to  be,  125. 

general  and  local,  125. 

of  stock  and  mutual  companies,  127. 

may  bind  the  company  by  parol  contract,  127. 


758 


INDEX. 


AGENT,  —  continued. 

general  agent  of  stock  company,  128. 

may  insure  property  out  of  his  district,  130. 

may  bind  company  by  expression  of  opinion,  131. 

and  by  his  mistake,  131,  144. 

knowledge  of,  imputable  to  principal,  131,  132,  144,  157. 

representations  of,  133. 

representations  of,  of  mutual  company,  136. 

authority  of,  as  to  premiums,  136. 

may  waive  forfeiture,  137. 

limitation  of  authority,  of,  by  terms  of  policy,  138. 

authority  after  negotiations  are  concluded,  140. 

of  mutual  insurance  company,  140,  151-155. 

of  company  whether  agent  of  applicant,  141. 

estoppel  and  waiver  by  act  of,  142,  144-151. 

general,  with  unlimited  powers,  155. 

notice  to,  notice  to  principal,  when,  156. 

of  accident  insurance  company,  159. 

concealment  by,  imputable  to  principal,  225. 

by  the  life  insured,  226. 

•waiver  of  forfeiture  by,  605-609. 

acting  in  violation  of  instructions,  622. 

collusion  between,  and  insured,  626. 

claim  of,  for  commissions,  718. 
AGREEMENT  for  insurance,  when  complete,  42. 

to  insure  and  policy  distinguished,  42. 
ALEATORY   CONTRACT  defined,  5. 
ALIENATION,  289-305. 

defined,  289. 

temporary,  290. 

title  by  descent,  291. 

of  personal  property,  292. 

by  mortgage,  294,  297,  300. 

conditional  sale,  297. 

by  levy  of  execution,  300. 

increase  of  interest  by,  300. 

of  one  part,  302. 

by  joint  owner,  304. 

by  change  in  partnership,  300. 

forfeiture  by,  waived,  306. 
ALTERATION,  of  circumstances  pending  negotiations,  199. 

increasing  and  decreasing  risk,  237,  244. 

materiality  and  extent  of,  237-239. 

by  strangers,  245. 

at  risk  of  insured,  246. 

in  modes  of  use,  230. 

of  ownership,  297. 
ANSWER  to  special  and  general  questions  distinguished,  329. 


INDEX.  759 

APPLICATION,  when  part  of  contract,  164. 

not  essential,  173. 

may  limit  and  control  the  terms  of  the  policy,  174-176. 
APPORTIONMENT  of  loss,  529. 
ARBITRATION,  agreement  for,  593-603. 
ASHES,  representations  as  to  care  of,  279. 
ASSESSMENT,  right  of,  strictly  construed,  693. 

errors  in,  700. 

may  include  what,  700. 

classification  of  risks  and  funds,  704. 

notice  of,  705. 
ASSIGNEE, 

insurable  interest  of,  107. 

rights  under  policy,  457-461,  582. 
ASSIGNMENT,  of  policy  and  transfer  of  property,  73. 

of  policy,  at  common  law,  456. 

modes  and  effect  of,  457. 

what  is,  and  what  is  not,  459,  470,  478. 

in  whole  or  in  part,  462. 

of  interest  in  policy,  463. 

by  consent,  465. 

assent  to,  and  approval  of,  466,  467. 

waiver  of,  forfeiture  by,  467. 

assent  to,  procured  by  fraud,  invalid,  468. 

condition  against,  does  not  apply  after  loss,  468. 

arbitrary  refusal  of  assent  to,  468. 

of  life  policy,  more  favored  than  fire,  469. 

requisites  to  valid,  470. 

of  life  policy  by  wife,  effect  of,  473. 

delivery  and  possession  of  policy  evidence  of,  478. 

notice  of,  480,  481. 

vitiated  by  fraud  or  undue  influence,  481. 

to  party  without  interest,  void,  482. 

of  part,  invalid,  482. 
ASSIGNOR,  defaults  of,  imputable  to  assignee,  461. 
ATTENDANT,  medical,  335,  336. 
ATTENDING  PHYSICIAN,  672. 

B. 

BAILEE,  insurable  interest  of,  80,  81,  89. 

BANKRUPTCY,  does  not  deprive  wife  and  children  of  proceeds  of  policy, 
548. 

and  insolvency,  726. 

status  of  company,  727. 

powers  and  duties  of  assignor  and  receiver,  725 
BAWDY  HOUSE,  265. 
BELIEF,  expression  of,  no  warranty,  323. 


760  INDEX. 

BELLIGERENT  FORCES,  death  by,  396. 

BELLIGERENTS,  power  to  contract,  32,  33. 

BENEFICIARY,  insurable  interest  of,  108. 

BETROTHED,  insurable  interest  in  life  of  person  to  whom  she  is  engaged, 

548. 
BILL  IN  EQUITY,  to  reform  policy.  (See  Equity.) 

BLOOD-SPITTING.  (See  Spitting  Blood.) 

BRONCHITIS,  chronic,  representation  as  to,  327. 
BROTHER,  sister's  interest  in  life  of,  96. 
BUILDING,  brick,  288. 

what  it  includes,  520. 
BY-LAWS,  and  charter,  effect  of,  on  rights  of  parties,  63-65. 

how  far  may  be  waived  by  officers  of  company,  151,  152.  • 


CANCELLATION,  of  contract,  68-70. 

effect  of  a  premium  note,  690. 

right  of,  strictly  construed,  716. 
CAPTOR,  has  insurable  interest,  80. 
CARE  of  premises  insured,  272,  279. 
CASUALTY  of  war,  death  by,  396. 
CAUSE,  proximate,  of  death,  332,  518. 

proximate,  of  loss  by  fire,  459,  496. 

proximate,  of  loss  by  explosion,  496,  497. 

proximate,  of  loss  by  collision,  614. 
CERTIFICATE  of  secretary,  evidence  of  contract,  21. 
CHANCERY.  (See  Equity.) 

CHANGE.  (See  Alteration.) 

CHARTER  AND  BY-LAWS,  effect  of,  on  rights  of  parties,  63. 
CHILD,  insurable  interest  in  life  of  parent,  101. 

rights  in  life  policy  of  parent,  473. 
CIVIL  COMMOTION,  loss  by,  489. 
CLASSIFICATION,  of  risks,  248,  704. 

of  funds,  704. 
CLERKS  AND  SUB-AGENTS,  powers  of,  158. 
COMMISSION,  goods  held  on,  521,  525. 
COMMISSIONS,  right  of  agents  to,  718. 
COMMON  CARRIER  has  insurable  interest,  80. 
COMPLETION  OF  CONTRACT.  (See  Consummation.) 

CONCEALMENT,  effect  of  change  of  circumstances  pending  negotiations, 
and  after,  199,  201. 

defined,  .210. 

when  fact  is  unknown,  210,  21] . 

or  not  believed  to  be  material,  211. 

question  for  jury,  213. 

violation  of  good  faith,  not  error  of  opinion,  214. 

of  facts  known  to  insurer,  217. 


INDEX.  761 

CONCEALMENT,  —  continued. 

of  facts  open  to  general  observation,  218. 

general  statement  of  facts  sufficient,  219. 

what  facts  must  be  disclosed,  218,  228. 

answers  to  equivocal  interrogatories,  220-224. 

of  agent  imputable  to  principal,  225. 

of  symptoms  of  disease,  or  habits  tending  to  shorten  life,  322-329. 
CONCUSSION,  loss  by,  501. 
CONDITION,  precedent,  what  amounts  to,  167. 

to  be  careful,  667. 
CONSENT  of  directors,  how  signified,  451. 
CONSIGNEE,  has  insurable  interest,  80. 

has  claim  for  loss,  521,  526. 
CONSTRUCTION,  rules  of,  179-189. 

favorable  to  object  of  contract,  181. 

of  language  against  those  using  it,  182. 
CONSUMMATION  OF  CONTRACT,  41-71. 
CONSUMPTION,  328. 
CONTRACT,  form  of,  13,  39,  673. 

oral,  valid,  when,  13. 

non-compliance  with  statutory  requisitions  as  to  form  not  fatal,  14-21. 

provisions  in  charter  as  to  form  directory,  15,  16. 

for  a  year,  not  within  Statute  of  Frauds,  16. 

certificate  of  secretary,  evidence  of,  21. 

oral  agreement  to  extend,  valid,  22. 

stamp  acts,  effect  of,  22. 

consummation  and  completion  of,  41-71,  673. 

completion  of,  after  loss,  43. 

completion  of,  by  correspondence,  43-52. 

none,  unless  all  the  terms  agreed  upon,  52. 

acceptance  of  terras  of,  56,  59. 

negotiation  of,  through  agents,  56. 

prima  facie  incomplete,  when,  57. 

place  of,  68. 

cancellation  of,  68. 

subject-matter  of,  72-118. 

what  constitutes  part  of.  162. 

of  insurance   interpreted   by   same  rules   as   other   contracts,   179, 
181. 

liberally  consti-ued  in  favor  of  its  object,  181. 

most  strongly  construed  in  favor  of  insured,  182. 

written  words  in,  prevail  over  printed,  185. 

when  entire,  avoided  by  breach  of  condition  as  to  part,  301. 
CONTRACTOR,  insurable  interest  of,  104. 
CONTRIBUTION  to  loss  by  several  insurers,  535-542. 
CONTRIBUTORY  NEGLIGENCE,  6G1,  674. 
CONVEYANCE,  public,  what  is  travelling  by,  647-661. 
CORRESPONDENCE,  negotiations  by,  43-52. 


762  INDEX. 

COUGH,  328. 
COUNTERSIGN,  by  agent,  67. 

may  be  waived,  07. 
CREDITOR,  interested  in  life  of  debtor,  8,  103. 

claims  to  proceeds  of  life  policy  as  against  administrator,  471,  483. 

right  of  subrogation,  558. 
CUSTOM,  in  aid  of  interpretation,  187. 

evidence  of,  720. 

D. 

DAMAGES.  (See  Loss.) 

DAYS  OF  GRACE,  for  payment  of  premium,  412,  424-428,  430,  434. 

usage  as  to  allowing,  413. 
DEATH,  by  intemperance,  332. 

by  one's  own  hand,  342,  366,  370,  371,  372. 

in  consequence  of  a  duel,  366. 

in  violation  of  law,  366,  386-395. 

by  the  hands  of  justice,  366,  386. 

by  violence  in  every  form,  covered  by  policy,  396. 

in  military  service,  by  casualty  of  war,  or  belligerent  forces,  396. 
DEBTOR,  interested  in  proceeds  of  insurance  by  creditor,  when  he  pays 
the  premium,  9. 

insurable  interest  in  property  attached,  89. 

right  of  subrogation,  558. 
DELIRIUM  TREMENS,  329. 
DELIVERY  OF  POLICY,  what  constitutes,  61. 
DEPOSIT  NOTE.  (See  Puemium  Note.) 

DESCRIPTION,  when  representation,  280. 

when  warranty,  281. 

of  person,  287. 
DIRECTORS,  liable  to  stockholders  for  negligence,  16. 

liable  to  insured  for  misrepresentation,  715. 

liability  of,  for  not  making  assessments,  707. 
DISABILITY,  to  contract,  32,  33. 

belligerents,  32,  33. 
DISEASE,  326. 

subject  to,  or  afflicted  with,  324. 

requiring  confinement,  325. 
DISTANCE  from  otlier  buildings,  284. 
DIVIDEND  in  mutual  insurance,  715. 

DOUBLE  INSURANCE,  11.  (See  Other  Insuiunce.) 

DRINKING.  (See  Intemperance.) 

DROWNING,  death  by,  631-634. 

DUTIES  AND  IMPO'STS,  whether  included  in  loss   525 
DWELLING-HOUSE,  267. 

occupancy  of,  269. 


INDEX.  763 


E. 


EARNINGS,  future,  insurablo  interest  in,  104. 
EMPLOYER  AND  EMPLOYE,  insurable  interest  of,  106. 
ENCUMBRANCE,  what  is,  and  what  is  not,  310-320. 
EQUITAHLE  ADJUSTMENT  after  forfeiture,  693. 
EQUITY,  will  reform  policy,  when,  709. 

will  compel  delivery  up  of  policy  obtained  by  fraud,  when,  715. 
ESTOPPEL,  by  act  of  agent,  142,  144-151,  59.J-G09. 

by  knowle<lge  of  untruth  of  statement,  2()3,  609. 

where  facts  arise  pending  negotiations,  611. 

where  (acts  arise  during  the  currency  of  the  policy,  612. 

dedned,  613. 

if  act  required  is  known  to  be  impossible,  614. 

where  facts  arise  after  loss,  617. 

what  acts  or  omissions  amount  to,  618. 

none,  if  facts  are  not  known,  520. 

none,  where  insured  is  not  prejudiced,  620. 

whether  silence  amounts  to,  621. 

where  act  is  [jrohibited  by  charter,  622. 

by  notice  from  stranger,  626. 

(See  Waiveu). 
EVIDENCE,  of  usage,  180,  187,  262. 

of  experts,  719,  720. 

of  custom,  720. 

wilful  burning,  581. 

organization  of  company,  721. 

of  state  of  health,  722. 

intentional  suicide,  723. 

of  effect  of  misrepresentation,  722. 
EXECUTOR  lias  insurable  interest,  80. 
EXPECTED  i'ROFITS  insurable,  79. 
EXPERT,  testimony  of,  720. 
EXI^LOSION,  loss  by,  497-518. 

of  steam,  501. 

of  gas,  505. 

of  gunpowder,  498.  / 

F. 

FALSE  SWEARING,  580. 
FAMILY  PHYSICIAN,  who  is,  335. 
FATHER,  interest  in  life  of  child,  97. 
FEE-SIMPLE,  289. 

FEME  SOLE,  under  contract  of  marriage,  insurable  interest  of,  648. 
FIRE,  what  is  loss  by,  487,  492,  497. 
FITS,  subject  to  or  affected  with,  325. 
fainting,  not  epileptic,  327. 


764  INDEX. 

FIXTURES,  520. 

FORECLOSURE  OF  MORTGAGE  is  alienation  when  it  takes  place, 

294. 
FOREIGN  COMPANIES,  remedies  by  and  against,  718. 

policies  of,  valid,  when,  718. 

right  to  remove  action,  719. 
FORTHWITH,  meaning  of,  565. 
FRAUD  and  false  swearing,  580. 

FRAUDS,  STATUTE  OF,  policy  for  a  year  not  within,  16. 
FRAUDULENT  REPRESENTATIONS.         (See  Representations.) 


G. 

GAMING  POLICY,  void,  74. 

GOOD  HEALTH,  321. 

GOODS  IN  TRUST,  and  on  commission,  521,  525. 

GRACE,  days  of,  412. 

GROCERIES,  stock  of,  619. 

GUARANTEE  LN^SURANCE,  675-683. 

warranty  in,  677. 

misrepresentation  in,  678. 
GUNPOWDER,  loss  by,  498. 


H. 

HABITS,  representation  as  to,  328. 

of  intemperance,  328. 

of  opium  eating,  328. 
HAZARDOUS  ARTICLES,  248,  252. 
HAZARDOUS  USE,  253. 
HEALTH,  good,  warranty  of,  321,  582. 
HEALTHY  LIFE,  321. 
HEAT,  loss  by,  487. 
HOUSE,  520. 
HUSBAND,  insurable  interest  of,  in  pi-operty  of  wife,  81. 

insurable  interest  of,  in  life  of  wife,  102. 


IGNITION,  whether  necessary  to  constitute  loss  by  fire,  487. 

ILLNESS,  serious,  323. 

IMPLIED  WARRANTY.  (See  Warranty.) 

INCUMBRANCE.  (See  Encumbrance.) 

INDEMNITY,  insurance,  contract  of,  2,  7,  8,  114-118. 

INJURY,  notice  of,  674. 

INQUIRY,  conclusive  as  to  materiality  of  subject  of,  194-197. 


INDEX.  765 

INSANITY,  not  presumed  from  suicide,  373. 

impulsive,  378. 

must  be  proved  by  party  who  alleges,  384. 
INSOLVENCY,  no  defence  against  premium  note,  690. 

status  of  company  and  insured  under,  727,  728. 
INSOLVENT,  insurable  interest  of,  87. 

INSURABLE  INTEREST.  (See  Interest,  Insurable.) 

INSURANCE,  defined,  1. 

contract  of  indemnity,  2,  7,  8,  114. 

to  what  applied,  3. 

nature  of  the  contract,  3,  6. 

a  conditional  contract,  3. 

an  aleatory  conti'act,  5. 

a  personal  contract,  5. 

does  not  run  with  the  subject-matter,  6. 

distinction  between  life  and  other  insurances,  6,  7. 

what  may  be  subject-matter  of,  72-118. 

other,  over,  and  double,  437-445. 

specific,  538. 

guarantee,  675. 

solvency,  680,  681. 

against  birth  of  issue,  681. 

of  rents,  titles,  against  theft,  storms,  and  upon  the  lives  of  cattle, 
682. 

accident,  ticket,  71.  (See  Accident.) 

donble,  what,  11,  12. 

guarantee.  (See  Guarantee  Insurance.) 

life,  distinguished  from  other  kinds,  how,  7. 

contract  of  indemnity  as  between  debtor  and  creditor,  8. 

insurable  interest  in,  95-118. 

assignment  of  policy  of,  469. 

right  of  creditor  in  proceeds  of,  471. 

right  of  wife  and  children  in  proceeds  of,  477. 

right  of  wife  to  assign  policy  of,  473. 

proceeds  of,  who  may  sue  for,  477. 

proceeds  of,  to  whom  they  belong,  477. 
INSURED  must  have  an  interest,  74. 
INTEMPERANCE,  death  by,  332. 

proximate  cause  of  death,  518. 
INTEREST,  insurable,  essential  to  the  contract,  7. 

amount  of,  how  fixed,  and  when,  7. 

whether  essential  at  time  of  loss,  8,  9,  110-118. 

what  constitutes,  76. 

of  mortgagee  and  mortgagor,  80,  82. 

of  executors  and  administrators,  80,  86. 

of  trustees,  80. 

of  sheriffs,  80. 


766  INDEX. 

INTEREST,  —  continued. 

of  consignees,  80. 

of  common  carriers,  80. 

of  supercargoes,  80. 

of  captors,  80. 

of  pledgees,  innkeepers,  &c.,  81. 

divers  interests  in  same  subject-matter,  81. 

of  lessor  and  lessee,  83. 

of  landlord,  83. 

of  stockholder  in  corporate  property,  85. 

of  intruder,  84. 

of  insolvent,  87. 

of  mechanic,  for  lien,  87. 

of  parties  liable  for  loss,  88. 

of  debtor  in  property  attached,  89. 

of  bailee  of  attached  property,  89. 

of  vendor  and  vendee,  89. 

of  holder  of  promissory  note,  90. 

of  reinsurer,  91. 

duration  of,  92. 

continuity  of,  92. 

in  life  insurance,  95-118. 

of  sister  in  life  of  brother,  96. 

of  father  in  life  of  son,  97-102. 

of  child  in  life  of  parent,  101. 

of  wife  in  life  of  husband,  102. 

of  creditor  in  life  of  debtor,  103. 

of  partner  in  life  of  copartner,  104. 

of  employer  in  life  of  employe,  105,  106. 

of  contractors,  104. 

valuation  of,  104,  105. 

of  employe  in  life  of  employer,  106. 

of  assignee,  107. 

of  trustee,  108. 

of  payee  or  beneficiary,  108,  109. 

oi  feme  sole  under  contract  of  marriage,  548. 

of  married  sister  in  life  of  brother,  581. 

every  one  has  in  his  own  life,  671. 
INTEREST  POLICY,  what,  27,  30. 
INTERPRETATION,  rules  of,  (See  Construction)  . 

usage  in  aid  of,  180,  187. 
INTRUDER  has  no  insurable  interest,  85. 


JUSTICE,  death  by  the  hands  of.  (See  Death.) 


INDEX.  7G7 


K 


KEEPING  of  prohibited  goods,  25G,  261. 
KNOWLEDGE  of  agent  imputable  to  principal,  131,  132. 


L. 

LANDLORD,  insurable  interest  in  goods  of  tenant,  83. 
LAPSED   POLICY,  elTect  on  premium  note,  692. 

suit  to  revive,  712. 
LAW,  death  in  violation  of.  (See  Death.) 

LESSEE,  insurable  interest  of,  83. 

claim  of,  for  loss,  525,  547,  558. 
LESSOR,  insurable  interest  of,  83. 

claim  for  loss,  547,  558. 
LICENSE  to  travel  or  reside  abroad,  396-463. 
LIEN,  mechanic's,  insurable,  87. 

of  mutual  insurance  companies,  707. 
LIFE  INSURANCE.  (See  Insurance,  Life.) 

LIGHTNING,  loss  by,  492. 
LIMITATION,  of  suit  as  to  time,  583-591. 

of  time  of  levying  execution,  585. 

of  suit,  reinsurance,  585. 

of  suit,  avoidance  of,  new  promise,  585. 

excuse,  absence  of  defendant,  586. 

excuse,  pending  negotiations,  587. 

excuse,  war,  588. 

excuse,  inconsistent  conditions,  588. 

waiver  of,  589. 

as  to  place,  591. 

as  to  time  and  place  strictly  construed,  592. 
LIMITS,  settled,  403. 
LOSS,  covered  by  policy,  487-496. 

by  usurped  power,  civil  commotion,  mobs,  and  riots,  489. 

by  theft,  injury  by  water,  removal,  491. 

by  lightning,  smoking,  illegal  practices,  492. 

by  negligence,  misconduct,  and  fraud,  492-495. 

by  wilful  destruction  and  exposure,  492,  494. 

by  design,  495. 

by  explosion,  497-518. 

by  collision,  514. 

amount  of,  adjustment,  and  to  whom  payable,  523- 

limitation  of  amount  of,  527. 

by  lessee,  mortgagee,  mortgagor,  partner,  525. 

market  value  of  goods  the  test  of,  525. 

of  commission  merchant,  527. 

on  "-oods  sold  but  not  delivered,  527 


768 


INDEX. 


LOSS,  —  continued. 

by  successive  owners,  527. 

payment  of,  by  rebuilding,  623-529. 

apportionment  of,  529, 

interest  on,  530. 

mode  of  payment,  and  in  what  funds,  530,  542. 

contribution  by  several  insurers,  535-542. 

in  the  alternative,  543. 

payment  of  loss  by  mistake,  543,  580. 

evidence  of  payment  of,  543. 

nominal  and  real  claimants  of,  544. 

who  may  claim,  545. 

payable  to  whom  it  may  concern,  546. 

notice,  proof,  account,  and  payment  of,  5C4-581. 

payment  of,  procured  by  fraud,  717. 

M. 

MAGISTRATE'S   CERTIFICATE,  570. 

MARRIED   WOMAN,  insurable  interest  of,  in  life  of  husband,  102. 

rights  in  life  policy  for  benefit  of,  and  children,  473. 
MATERIALITY,  not  an  open  question  in  warranties,  193,  204. 

an  open  one  in  representations,  193. 

and  concealment,  193. 

when  question  for  the  jury,  193-195,  204. 

when  for  the  court,  194-199. 

question  and  answer  conclusive  as  to,  194-197. 
MEDICAL  ATTENDANT,  usual,  335. 

object  of  reference  to,  336. 
MEDICAL  EXAMINER,  statements  to,  334. 

examination,  object  of,  335. 
MEMBERSHIP  of  mutual  insurance  company,  684-687. 
MEMORANDUM,  what,  27. 
MILITARY   SERVICE,  of  the  enemy,  death  in,  not  insurable,  33. 

what  is,  33,  396. 

death  -n,  396. 

entering,  399. 

voluntary  or  involuntary,  400. 
MILL,  includes  machinery  in  loss,  620. 
MISCONDUCT,  loss  by,  493. 

defined  and  distinguished  from  negligence,  495. 
MISREPRESENTATION,  of  title  as  to  part,  74. 

defined, 190. 

if  doubtful,  insured  to  have  benefit  of  doubt,  203. 

as  to  part  of  property  insured,  301. 

as  to  title,  312. 

as  to  incumbrance,  316. 

as  to  use,  267. 


INDEX.  769 

MISREPRESENTATION,  —  continued.  * 

waiver  of,  609. 

in  guarantee  insurance,  678. 
MOBS  AND   RIOTS,  loss  by,  489. 
MORTGAGE,  before  foreclosure,  no  alienation,  294. 
MORTGAGEE,  interest  independent  of  mortgagor,  115. 

what  he  may  insure,  115. 

state  of  his  account   with   mortgagor  no  concern  of  the  insurer, 
115. 

claim  of,  for  loss,  526,  547. 

right  of  subrogation,  558,  561. 
MORTGAGOR,  when  not  interested  in  proceeds  of  insurance  by  mort- 
gagee, 115. 

title  of,  in  personal  property,  311. 

claim  of,  for  loss,  525,  547. 

right  of  subrogation,  558,  561. 
MUTUAL   COMPANIES,  684. 

may  contract  with  parties  out  of  the  State,  707. 

liability  of  directors  of,  707. 
MUTUAL  INSURANCE,  684. 

membership,  684,  687. 

capital,  684,  685. 

life,  686. 

guaranty  fund,  686. 

N. 

NEGLIGENCE,  loss  by,  493-496. 

gross,  495. 

contributory,  no  defence,  494,  661,  674. 
NON-PAYMENT  OF  PREMIUM.  (See  Premium.) 

NOTE,  premium.  (See  Premium  Note.) 

NOTICE,  to  agent  notice  to  principal,  when,  130,  156. 

of  other  insurance,  what,  and  when,  448. 

of  other  insurance  in  writing,  449. 

of  assignment  of  policy,  480. 

of  loss,  564,  565. 

forthwith,  565. 

by  whom  and  to  whom  given,  566. 

waiver  of,  567. 

by  stranger,  effect  of,  626. 

of  death,  672. 

o. 

OCCUPATION,  representation  as  to,  339. 
change  of,  668. 

49 


770  INDEX. 

OCCUPANCY,  change  of,  267. 

OFFICER  of  mutual  insurance  company,  power  of,  151,  152. 

OPEN   POLICY.  (See  Policy.) 

OPINIONS,  of  agents,  131,  328. 

of  witness,  384. 
OPIUM   EATING,  representations  as  to  habit  of,  328. 
ORAL,  insurance,  valid,  J3. 

representation  prior  to  application,  eifect  of,  202. 
OTHER   INSURANCE,  437. 

of  part,  301. 

what  is,  438-445. 

identity  of  interest  not  necessary,  445. 

notice  of,  what,  and  when,  448. 

notice  of,  in  writing,  449. 

notice  of,  by  indorsement,  449. 

consent  to,  in  writing,  449. 

approval  of  and  consent  to,  450. 

waiver  of  forfeiture  for,  452. 

in  life  insurance,  542. 
OVER  INSURANCE.  (See  Other  Insurance.) 

OVERVALUATION.  (See  Valuation.) 

OWNERSHIP,  alteration  of,  297. 

change  of,  305. 


PAPERS  referred  to  in  policy  when  part  of  contract,  162,  1C5. 

PARENT,  interest  of,  in  life  of  child,  97-102. 

PAROL   CONTRACT.  (See  Contract.) 

PARTIES  to  contract,  who  may  be,  31. 

PARTNERS,  insurable  interest  of,  in  property  of  copartnership,  91. 

insuralile  interest  of,  in  life  of  copartners,  104. 
PART-OWNERS,  insurable  interest  of,  91. 
PAYMENT,  what  constitutes  payment  of  premium,  412. 

in  work  and  board,  &c.,  413. 

by  promise  of  officer  of  insurers,  414. 

of  premium  when  it  becomes  due  on  Sunday,  414. 

waiver  of  payment  of  premium,  433. 
PERMIT,  to  reside  abroad,  397. 

to  travel,  400. 
PHYSICIAN,  family,  335. 
PLACE  of  contract,  68. 
PLEADING,  what  parties  must  allege  and  prove,  193. 

general  statement  of  plaintiff's  case,  723. 

matters  in  defence,  725. 

statement  of  interest,  724. 


INDEX.  771 

PLEAD  IiSTG,  —  continued. 

value,  724. 

compliance  with  statutes,  724. 

negative  allegations,  724. 
POLICY,  a  lax  and  informal  instrument,  23. 

form  not  essential,  24. 

different  modes  of  execution,  24,  26. 

open,  valued,  wager,  interest,  time,  and  voyage,  27. 

may  be  open  and  valued,  30. 

parties  to,  who  may  be,  31. 

dislingui.-^hed  from  agreement  to  insure,  42. 

valuation  in  life,  105,  lOG. 

life,  generally  a  valued  one,  110. 

suspension  of,  265. 

assignment  of,  456. 

lapse  of,  effect  on  premium  note,  692. 

suit  to  revive,  712. 
POSSESSION,  of  insured,  effect  of  change  in,  271. 
PRELBIIXARY  PROOF  of  loss,  568-581. 

time  and  form,  due  notice,  568. 

form  and  mode,  570. 

waiver  of,  572-584. 

of  death,  672. 
PREMISES  defined,  245,  263. 
PREMIUM,  may  be  recovered  back  when  risk  does  not  atta(  h,  4. 

payment  of,  whether  necessary  to  completion  of  contract,  406. 

when  failure  to  pay  works  forfeiture,  407-411. 

what  constitutes  payment  of,  412. 

parol  agreement  to  pay,  412. 

days  of  grace  for,  412. 

may  be  paid  in  work,  or  board,  or  goods,  413. 

agreement  by  officer  of  insurers  to  pay,  or  see  it  paid,  414. 

time  of  payment  of,  Sunday,  414. 

excuse  for  non-payment  of,  war,  415. 

waiver  of  prepayment  of,  423,  424-428,  430,  434,  435. 

payment  of,  after  death,  424-428. 

excuse  for  non-payment,  prospectus,  429. 

payment  of,  cy  pres  performance,  430. 

insolvency  excuses  non-payment.  432. 

acceptance  of  part  payment  of,  435. 

recovery  back  of,  711,  714. 
PREMIUM  NOTE,  forfeiture  of  policy  no  defence  against,  688. 

effect  of  surrender  and  cancellation  of  policy  on,  690. 

insolvency  no  defence  against,  690. 

liability  on,  after  lapse  of  policy,  692. 

when  and  how  assessable,  693. 
PROFITS,  expected,  insurable  interest  in,  79. 


772  INDEX. 

PROSPECTUS,  effect  on  contract,  430. 
PROXIMATE   CAUSE.  (See  Cause.) 

Q. 

QUESTION,  conclusive  as  to  materiality,  194-197. 


R. 

RAILWAY  ACCIDENT,  642. 

REASONABLE  NOTICE,  what  is,  when  for  court  and  when  for  jury, 

448. 
REBUILDING,  payment  of  loss  by,  523,  529,  531-535. 
RECEIPT,  for  insurance,  effect  of,  60,  70. 

contract  by,  70. 

for  premium  open  to  explanation,'  432. 
RECITAL,  in  policy  of  receipt  of  premium,  prima  facie  proof,  432. 

in  premium  note  that  policy  has   issued,  prima  facie  evidence, 
721. 
REFEREE,  statements  of,  161,  170. 
REFERENCE,  in  policy  to  application,  effect  of,  162-169. 

to  third  persons  for  information,  123. 
REFORM  of  contract  in  equity,  709. 
REFUSAL,  to  assent  to  assignment,  468. 

to  approve  proposal,  469. 

to  renew  policy,  damages  for,  631. 
REINSURANCE,  what,  9-11. 

prohibited  in  England,  but  allowed  elsewhere,  9. 

contract  of  indemnity,  9. 

rights  and  liabilities  of  reinsurer  and  reinsured,  10,  11. 
RELATIONSHIP,  representation  as  to,  339. 
REMEDIES,  several  forms  of,  709. 
REMOVAL  of  goods,  loss  by,  491. 
RENEWAL,  of  contract,  20,  200. 

receipt  for  premium,  effect  of,  432. 

refusal  of,  damages  for,  531. 
RENTS   AND  PROFITS,  insurable,  79,  82,  682. 
REPAIRS,  how  far  permissible,  239. 

payment  of  loss  by,  523. 
REPRESENTATION,  of  agent,  133,  135. 

inferred,  rather  than  warranty,  in  case  of  doubt,  167. 

construed  strictly  as  to  its  scope,  178. 

defined,  190. 

affirmative  and  promissory,  191,  203. 

distinguished  from  warranty,  192. 

not  part  of  contract,  192. 


INDEX.  773 

REPRESENTATION,  —continued. 

may  be  by  parol,  192. 

substantial  compliance  with,  only  required,  193-199. 

in  part  true  and  in  part  false,  199,  301. 

must  be  true  at  time  when  contract  is  completed,  199. 

subsequent  change  of  circumstances  immaterial,  201. 

material,  though  not  relating  to  risk,  204. 

oral,  prior  to  application,  immaterial,  202. 

substantial  compliance  with,  equivalent,  207,  208. 

literal  compliance  with,  insufficient,  208. 

good  faith  required,  208. 

as  to  health,  symptoms  of  disease,  and  physical  condition,  321-336, 
582. 

as  to  habits,  328. 

answers  to  special  and  general  questions  distinguished,  329. 
RESIDENCE,  representation  as  to,  339. 

abroad,  permit,  397. 

restrictions  upon,  400,  404. 
RISK,  where  none  attaches,  premium  may  be  recovered  back,  4. 

increase  of,  230-244,  668. 

increase  of,  by  ordinary  use,  234. 

increase  of,  by  improvements  and  repairs,  235-244. 

increase  of,  by  alteration,  236,  243. 

increase  of,  by  change  in  surroundings,  243,  263. 

increase  of,  by  enlargement,  243. 

classification  of,  248,  253,  668. 

increase  of,  by  unlawful  use,  266. 

increase  of,  by  change  of  use,  256.  « 

duration  and  extent  of,  484,  486,  668. 

what  it  includes,  fire,  487. 

injury  by  water  and  removal,  491. 

injury  by  falling  of  walls,  496. 

property  included  in,  519,  522. 
RUPTURE,  warranty  as  to,  582. 

accidental,  628. 

s. 

SERIOUS   ILLNESS,  323. 

SET-OFF,  729. 

SETTLED   LIMITS,  403. 

SHERIFF  has  insurable  interest,  80. 

SHIPYARD,  520. 

SHORTEN  LIFE,  tendency  to,  328. 

SILENCE,  when  waiver,  621. 

SISTER,  insurable  interest  in  life  of  brother,  96,  581. 

SITUATION  of  insured  premises,  statement  as  to,  2S6. 


774  INDEX.  , 

SMOKING,  265,  492. 

SPITTING   BLOOD,  representation  as  to,  192,  327. 

SPONTANEOUS   COMBUSTION,  loss  by,  497. 

STAMP   ACTS,  effect  of.  22. 

STATEMENT  of  loss,  568-570. 

STATUTE   OF   FRAUDS  not  applicable  to  insurance  for  a  year,  16. 

STOCK   IN   TRADE,  what  included  in,  251,  520. 

STOCK   COMPANIES.  (See  Joint-Stock  Companies.) 

STOCKHOLDER  in  corporate  property,  insurable  interest  of,  85. 

STORING,  defined,  261. 

SUB-AGENTS  and  clerks,  power  of,  158. 

SUBROGATION,  right  of,  549-563. 

of  mortgagor  and  mortgagee,  vendor  and  vendee,  debtor  and  creditor, 
lessor  and  lessee,  558. 

right  of,  insurer  of,  by  contract,  561. 
SUICIDE,  342,  380. 

raises  no  presumption  of  insanity,  373. 

sane  or  insane,  380. 

unless  excepted,  does  not  avoid  policy,  381. 

insurance  against,  void  as  against  public  policy,  381. 

tona  _/?cZe_assignee,  or  beneficiary,  protected  against  by  express  pro- 
vision, 383. 

if  doubtful,  presumption  against,  384. 

no  presumption  of,  from  religious  views,  384. 

not  provable  by  opinion  of  unprofessional  witness,  384. 

voluntary,  not  covered  by  policy,  493. 
SUIT,  meaning  of,  591. 

limitation  of,  583-591. 

to  recover  policy,  712. 
SUNDAY,  premium  falling  due  on,  414. 
SUNSTROKE,  death  by,  641. 
SUPERCARGO  has  insurable  interest,  80. 
SURVEY,  when  part  of  contract,  164. 

meaning  of,  165. 
SURRENDER  of  policy,  690. 
SURROUNDINGS,  statements  as  to,  243,  263,  286. 
SUSPENSION  of  risk,  92. 


T. 


TAVERN-  KEEPING,  265. 
TENANT,  insurable  interest  of,  83. 
TENDENCY  to  shorten  life,  323. 
THEFT,  loss  by,  491. 
TICKET,  accident  insurance,  71. 
TIME,  computation  of,  486. 
TIME  POLICY,  what,  27,  31. 


INDEX.  775 

TITLE,  equitable  and  incomplete,  insurable  interest  in,  84,  85. 

misrepresentation  as  to,  307-315. 

transfer  of,  291. 

change  of,  294,  299. 

and  property  distinguished,  307. 

what  constitutes,  307-315. 

true,  312. 
TOTAL   DISABILITY  from  accident,  644-«646. 
TRADES,  hazardous,  253,  257. 
TRAVELLING,  permit  for,  396. 

restrictions  upon,  404. 

waiver  of,  405. 

what  is,  647,  674. 

in  a  conveyance,  647. 
TRUSTEE,  insurable  interest  of,  108. 


u. 

USAGE,  in  aid  of  interpretation,  180,  187,  262. 
USE,  change  in  mode  of,  246. 

meaning  of,  256,  259. 

of  prohibited  articles,  257. 

prohibited,  260-263. 

unlawful,  266. 
USURPED   POWER,  loss  by,  488. 
UNLAWFUL  ENTERPRISES  not  insurable,  72. 
UNTRUE   STATEMENT.  (See  Representatiox.) 


V. 

VALUATION,  over,  what  is,  and  effect  of,  in  valued  policy,  27,  28,  452, 
543. 

by  reference,  29. 

what  avoids  the  policy,  452-454. 

renewal  of  changing  stock,  454. 

restriction  of,  in  charter  and  by-laws,  455. 
VALUED   POLICY,  what,  27,  30. 

how  distinguished  from  open,  27. 

may  be  open  and  valued,  30. 
VENDEE,  insurable  interest  of,  90. 

claim  for  loss,  547,  558. 
VENDOR,  insurable  interest  of,  90. 

claim  for  loss,  547,  558. 
VIOLATION   OF   LAW,  death  by.  (See  DEAtH.) 


776  INDEX. 

w. 

WAGER  POLICY,  what,  27,  30. 

unlawful,  74. 
WAIVER,  of  payment  of  premium,  64,  433,  435. 

of  counter-signature  of  agent,  67. 

by  agent,  142,  144-151. 

of  answer  to  question,  173. 

of  forfeiture  by  alienation,  306. 

breach  of  license  to  reside  abroad,  404. 

of  notice  of  loss,  567. 

of  preliminary  proof,  573,  582. 

of  limitation  of  suit,  589. 

and  estoppel,  605-672. 

by  act  of  agent,  605-609. 

after  loss,  618. 
;;  silence  and  intent,  621. 

:/.  of  acts  prohibited  by  charter,  623. 

]~.  effect  of  express  stipulation  against,  626. 

'('  (See  Estoppel.) 

'-'.  WAR,  effect  of,  on  contract,  34,  415. 

^_  the  late  civil  war  did  not  dissolve  contracts,  34-40. 

'^;  excuses  failure  to  sue,  589. 

^.  excuses  non-payment  of  premium,  415. 

';,.  WAREHOUSEMAN  has  claim  for  loss,  527. 

i:"  WARMING,  representations  as  to  mode  of,  280. 

■/  WARRANTY,  160-189. 

y  ■  defined,  160. 

*•  must  be  strictly  true,  161. 

•':  no  particular  form  necessary  to  constitute,  161. 

no  warranty  if  not  intended,  161,  170,  172. 
''  statement  by  reference  made  part  of  the  policy  not  necessarily  a, 

i-  161,  170. 

affirmative  and  promissory,  162. 
V;  constructive,  not  favored,  167-170. 

not  implied,  unless  material,  177. 

construed  strictly  as  to  their  scope,  178. 

construed  strictly  against  insurer,  182,  185. 

distinguished  from  representation,  192. 

a  part  of  the  contract,  192. 

distinction  between,  and  representations  as  to  pleading  and  evidence, 
193. 

colorable  compliance  with,  208. 

statement  of  present  use  not,  247. 

of  good  health,  321. 

misrepresentations  made  warranties  by  reference,  avoid  the  policy 
only  if  material  to  the  risk,  582. 

effect  of  express  stipulation  against,  626. 


INDEX.  777 

WATCH,  what  constitutes,  197,  272. 
WATCHMAN,  197. 

absence  of,  275. 
WEARING   APPAREL,  519. 

WIDOW,  rights  in  policy  for  benefit  of  wife  and  children,  473. 
WIFE,  insurable  interest  in  life  of  husband,  102. 

rights  in  policy  for  benefit  of  her  and  children,  473. 

insurance  of  life  of,  for  benefit  of  husband,  548. 
WILFUL   EXPOSURE,  loss  by,  493,  661. 
WILFUL   BURNING,  what.  721. 
WORK,  examination  after,  276. 
WORKING  of  mills,  276. 
WOUND,  proximate  cause  of  death  by,  518. 


50 


Cambridge:  Press  of  John  Wilson  &  Son. 


™"-S&- 


^OS  AmELES 


*  Jf^V^',u 


AtioTiv^y  n.t  Law, 


